Mike Mortlock: Thank you for joining me on Geared for Growth, this week we're chatting with Luke Murdoch from First National Real Estate Newcastle City. Luke is a real estate agent and project marketing specialist so we have a chat to Luke about the construction boom in the Newcastle CBD and he has some tips and tricks for investors to make sure that they're purchasing well off the plan. Without further ado, here is Luke. Luke Murdoch, thanks for joining us.
Luke Murdoch: No problem. Thanks for having me in, Mike.
Mike Mortlock: Luke, to get a bit of a background into you, who are you, and what do you do?
Luke Murdoch: Yes, so I work with First National Newcastle City in The Junction. Basically in there I do predominantly project marketing for the company as well as a little bit non-residential selling in the business. I've been around for nearly 12 years and that's just a little bit about me.
Mike Mortlock: Excellent, we will dive into that for sure. What posters did you have on the bedroom wall as a youngster? You're about to embarrass yourself, I can tell.
Luke Murdoch: I think there was probably Gun'n'Roses and maybe, I remember an Aerosmith one.
Mike Mortlock: Aerosmith, that's a little bit earlier vintage.
Luke Murdoch: Yeah, I've now got them on record. I had a listen at home and it's good to see vinyl making a bit of a comeback.
Mike Mortlock: Awesome, how did you get started in property? What's your background? How did you land where you are now?
Luke Murdoch: Yeah, I guess going back to where I kicked off in real estate when my wife and I bought our first property we were actually pregnant with our first child.
Mike Mortlock: That's terrible timing, you're not meant to do it that way.
Luke Murdoch: No, I know and I think that was probably the thing, we both thought well now we'd better buy property so that's what we did basically and that kicked off my interest in real estate at that point and then after we bought it, moved in, had our son and about six months after that I was working at a security company at the time doing business to business sales, at that point I was like I think I might give this real estate business a go, just doing what I knew at the time I just went door to door looking for real estate work basically, going to real estate offices looking for work.
Mike Mortlock: That's an old school approach but it works.
Luke Murdoch: It works and it did so I kicked off working in an agency in Hamilton. Although I've been round for nearly 12 years I'm a bit of a stayer, I've only been in three companies during that period of time. I was there for about three years and then I moved into the next company and that's where I sort of started doing some project marketing work and that's a little bit of background.
Mike Mortlock: Awesome, Newcastle has come a long way in terms of property, not just gentrification but just the attitude to property and certainly with development. I know you were pretty pivotal in setting up the first project office in the Newcastle CBD which we're used to seeing in the Gold Coast where you can go in and look at developments on display but Newcastle didn't really have that, did it?
Luke Murdoch: Yeah, no, you're right. It was something that was fairly new and I guess it was quite timely when we embarked on certain setting up project specific office in Newcastle and it was designed as an opportunity where developers didn't necessarily have to have the budget to fill out a display suite. Also with the way the market was for Newcastle and buying off the plan it was, we've been a little bit up and down with it. The last, over the past few years we've had some good years of off the plan sales but prior to that it was fairly irregular investors I guess settling off the plan selling that was happening so the timing of setting up that office and Newcastle starting to pick up some momentum in development really quite worked well.
Mike Mortlock: Yeah so with your traditional display suite like that and like we're used to seeing in places like the Gold Coast is it a tool for getting development listings or is it more about moving the stock or is it a mixture of both?
Luke Murdoch: It's really about both, yeah, I think it serves a good purpose for both that the developer have an opportunity to showcase their product publicly again on a specific sort of a budget and also for the purchasing public just get a bit of social proof and sort of put projects side by side so to speak.
Mike Mortlock: Yeah, no, I definitely want to come back to the development side of things in Newcastle but the property market in general normally there's a little bit of a delay when we release these podcasts but I think whether it comes out next week or in four weeks we're probably looking at the bottom of, well the top of the market. I mean Herron Todd White have been calling that for probably ten months which I guess shows the strength that's been going pretty hard. What are you seeing at the moment and how has the market changed in the last 12 to 18 months?
Luke Murdoch: Yeah, the past 12 to 18 months has seen some good continued strong growth in Newcastle. I guess if you go back, wind back the clock to say 2013, 2014 is when really things started to really kick along and I think one of the big catalysts in Newcastle was the announcement of the university coming into the CBD. I think there's a lot of credit there needs to go towards that building and that decision to come into the city because then it all became quite viable for developers to start, the private sector to start produce apartments knowing there's going to be at least the student part of the market place coming into the city that they could produce so from as early as 2013, 2014 we started to see some consistent growth and then in some circumstances you've seen a shift of about 30% since then in the past two to three years really.
I guess where is it going is everyone's question on everybody's lips. I certainly don't see it backing off, I think we will see some steady growth from here. I'd be very brave to say it was going to be as aggressive as it has been in the past few years but when you look at the amount of government spending happening in Newcastle at the moment they're not going to be doing that to not see a return on it and when you're looking at the West End transporting to change, university, there's a cruise terminal coming in, we've got the super cars coming in, all these sorts of things and the super cars will potentially start to bring s tourism element to Newcastle so I think there's just too many things falling into place that it's going to lose momentum even if external factors change like interest rates or whatever, I think we'll still see some.
Mike Mortlock: I really think that's the only thing that's necessarily going to slow it down is more of the macro conditions rather than Newcastle itself. It seems to be there's still a lot of momentum there. Obviously Newcastle's seen some great growth from an affordability point not being that far from Sydney. Do you find that the Newcastle market, it almost copies what Sydney does but albeit maybe six months down the track so is Sydney is booming it's a bit of an indication that something's to come for Newcastle?
Luke Murdoch: Yeah, I think so in what I've seen in the past where you've had some steady growth happening in Sydney will follow suit up Newcastle maybe six or 12 months later or what have you but I think what's interesting with Newcastle now is we're definitely on the map for a national, more of a national stage if not international stage now we're being watched by lots of different types of buyers and I think we're probably been growing as quickly as Sydney has been from what I've seen, maybe there's more capital in Sydney so there's probably been a bit more growth from that perspective but yeah, I certainly think that we've been following that trend.
Mike Mortlock: Yeah and you mentioned the Newcastle university has moved a campus into the city, did that dictate the apartment stock that came on, was it all the one bedroom places or was there a bit of a mix? Obviously there's been a boost in apartment construction in Newcastle, what types of apartments are we seeing?
Luke Murdoch: Yeah, it was interesting to watch from say about prior to the announcement of the university in Newcastle we were seeing a building or two each year popping up and to make it feasible for developers they had to be kind of 80% full of studio one and two bedroom apartments, small ones, kind of $500,000 because first homeowners and investors were picking those up, first homeowners got good grants and stamp duty and all those sort of things.
The announcement of the university around that 2013 period of time the buildings that came up in the following 12 to 24 months did follow that same trend because of that student element was expected plus when developers were looking at other buildings in town and seeing what was working it was easy to see that those units under 500,000 were shifting well, the project would work and off they'd go and do it. I'd probably only say the past 18 months or so we're starting to see the continued announcements of new things happening in Newcastle off the back of the uni, the transport, the cruise terminal ...
Mike Mortlock: The law courts and all that sort of stuff.
Luke Murdoch: The law courts yeah, better public amenity, by cars, all these sort of things, we're now starting to see people recognise that the city is somewhere they'd perhaps like to downsize and retire to in the future or if they're a busy family, a lot of people don't have the time and I don't think it's specific to Newcastle but I think a lot of people don't have the time to maintain the 5, 600 square metre block and the big house so living has really started to become popular in Newcastle and so because you've got those buyers that now want to occupy apartments you're seeing the sizes get bigger so bigger two bedders with two bathrooms, one or two car spaces and then bigger three bedroom apartments are now, it's now at a place where I was recently involved in a building where what would have been a reverse scenario where 80% of the building was actually bigger two or three bedroom apartments as opposed to the way it was going back four or five years.
Mike Mortlock: They're looking more to the owner occupy maybe downsizer market rather than the first homeowner and student accommodation type sale?
Luke Murdoch: Yeah, that's right. It depends on the volume of apartments in the building. I think obviously the bigger the number the more, obviously the developer's got to shift so there needs to be probably a good percentage of stock in there that they know they're going to sell quickly and sell well to make it all work but I guess when developers break it down to a rate per square metre so to speak the rates per square metre for your bigger apartments are now getting stronger than what they were that makes it feasible to put bigger ones in there as well which is good.
Mike Mortlock: Yeah, awesome. In terms of where we are now there's been a lot of construction underway, it's been really interesting to see the cranes dominating the city skyline, are we at a point where there's an oversupply or is there still quite a lot of demand for the market? Is it soaking up the units that are coming on now?
Luke Murdoch: Yeah, look it really is, any new projects that come on the market they do get absorbed relatively quickly. Rarely do you see a project struggling to make sales and from my perspective in project marketing it's about, from a sales perspective creating a good campaign for that project to start the project with some good momentum in sales and to see all the way through to the point where the developer can get their finance approved to do the project and then generally speaking it, anything at the tail end of the project there's not as much urgency from the developers perspective to sell it but we're finding now moving fairly quickly. With all that development there's an obvious question to worry about oversupply but I think what's parallel with the development is more announcements as to why people will be coming to the city as well, the university's put their foot on another piece of land in Honeysuckle so that's going to go from 4,000 students they've got now to 8,000 students.
Mike Mortlock: Yeah, that's going to make a huge difference.
Luke Murdoch: Yeah, so it kind of squashes that fear of oversupply.
Mike Mortlock: Yeah, now we were just chatting off air a moment ago, I think you might actually be the first real estate agent on the podcast so I'm going to have to pick on you now just for that fact. Now real estate agents they're a notch above used car salesmen when we get to these trust studies. I think quantity surveyors maybe a little bit higher, we'll continue with the trash talk along those lines. There's real estate agents and then there's project marketers, right? We hear bad things about project marketers, professionals in the property industry such as myself will get emails saying flick me a client and they buy a unit and you get 20 grand back in your pocket. What is the state of project marketing in Australia and are there grubby things that you see in the industry or is that confined to more of the capital cities? I want some dirt, Luke.
Luke Murdoch: Well I guess from my perspective the story you've just given about the big referral fees and all those sort of things look that's not any business I've personally been involved with although we do cross paths and hear people from purchases in the market saying that they've maybe had units put in front of them in areas you kind of a little bit confused as to why their financial planners or adviser's suggesting that they buy in some of these positions so look, those sort of things do happen and generally where I've seen that happen in the market those referral fees generally get put on top of the purchase price so the purchasing client isn't the person that's obviously benefiting out of that. Where my awareness of it and you might be talking to the wrong agent to get all the dirt I'm proud to say.
Mike Mortlock: We might need to go to Brisbane CBD, that's a hot spot at the moment.
Luke Murdoch: Yeah that's right but you mentioned capital cities and I guess that's where the more higher end for individuals or those sort of planners or firms or whoever that's getting those referrals fees will be putting them in stock around Sydney or they'll come to Newcastle with the, the planner might come to Newcastle with something to suggest to agents that you know, we've got buyers, we can take 20% of your stock or what have you so it's not really something I've gotten involved in.
Mike Mortlock: No, that's good, I'm glad. I don't have to kick you out. I think we've got a no spruiker sort of policy but I'm interested in your insights from sort of behind the scenes. Hypothetically let's say someone wants to buy an apartment as an investment, they've heard good things about Newcastle, they don't really know the price of units, they don't really know what they should be paying for a one bedder in the city, they're not going to do research in this weird scenario, how do they make sure that they're not buying something and settling and then finding out that the market valuation is 50 or 100 grand less than what they paid? What's your best advice for a purchaser for making sure they're getting a good property.
Luke Murdoch: Yeah there's a number of things to pay attention to and look, if the buyer's not doing the research themselves I guess if you were sitting in front of an agent selling you something that's where you'd be asking the agent for some research and some evidence around it so that would be the first thing is I just found myself in a real estate office in a city I didn't know what was going on I'd be saying what have you got and what are the comparable evidence not on the comparable evidence on what else is selling off the plan at the moment if you're in that space I'd be saying what has settled on completed apartments recently that suggests that these market relative values relative values, finding out what rental returns might be, what sort of a yield you'd be expecting to be getting out of it.
Mike Mortlock: What about the resale? Is that a good thing to look at a property that sold off the plan and then it sold to a subsequent purchaser, maybe a building that's only three or four years? Is that a good guide to saying well somethings been bought from a flashy project marketing office and then resold where it's a little bit more maybe of an open market, is that a good way to get an idea of comparables as well?
Luke Murdoch: Yeah so when you say a resale like a resale after the building's completed and what have you? That will definitely give you some good and it's not uncommon that you would see people would buy off the plan and those purchasers who get in nice and early will sometimes see a little bit of an uplifting in growth over the construction phase of the project and then when the project is finished it's not uncommon to see some units come on the market because those people who did speculate early off the plan will resell them so that's a very good plan as well number one just to see has there been some growth and what is the way the market is responding to it. It's also a good idea to keep an idea that the rental when those investment properties come on the market when they purchase them off the plan what the rental figures are getting for it there so that's a good way.
Mike Mortlock: That yield should match other apartments, even established buildings in the same sort of price range you think?
Luke Murdoch: Yeah, that's right. You can always apply a bit of a premium to something that's brand new. Let's just say that the market hasn't changed a great deal since it was purchased but you'd expect a brand new apartment to fetch more than an existing apartment but you just need to find out when some of these buildings were, your comparable properties when they were actually built and constructed, who built them and finding out some of that detail as well.
Mike Mortlock: We know that if you're buying a new Mercedes for example you're getting some serious depreciation in the first year and some clever buggers can come along after the lawyers and plastic surgeons have had their fun and buy that second hand asset, is there any parallel with real estate there? Obviously it's not going to be the same extent but do you advocate buying new property rather than used? What's your personal view as what makes a better investment?
Luke Murdoch: Yeah there's a lot of things to weigh up and for me whenever I'm meeting with purchasers and we're talking about buying off the plan or one of the first things I want to work out is off the plan really what you're looking for at the moment, is that really the best suited product for you? I'll often ask particularly if they're investing, why have you chosen to buy off the plan or what's made you look at off the plan and are you looking for a quick return or are you looking for something to buy and hold or what is it that fits your profile as an investor because obviously with depreciation and if you're going to buy and hold something as you mentioned before the first seven years is when you're going to get the most out of your apartments and maybe it's just the taxing the purchaser is paying too much tax when you get a taxable income and as long as it serves well to do that.
Mike Mortlock: Which we've talked about on the podcast before, it's not a great strategy but people do go their accountants and say I need to buy a property because I'm paying too much tax. We shouldn't advocate that but there will be people that come to you and say, "I want off the plan because of the tax benefits."
Luke Murdoch: Yeah and that goes back to what you were mentioning before about the guys that are taking the big referral fees or what have you, those are perhaps tops of the buyers that will end up in one of those likes where they're just asking their financial planners or accountants or what have you, I've got to buy an investment property and they say well have you thought of this one? This type of thing so that happens there so yeah, you've got to look at other things in the market that would make it a good investment, how close it is to amenity and if you're buying off the plan you've got to look at whose building it, who the architect is and what the time frame is, all that sort of things.
Buying something existing isn't to be discounted either. Obviously in certain areas there's only so much land, like in Newcastle for example there's only so much land around the harbour and the beach and the buildings have got to come west from there obviously so buying something existing in a better position potentially there's a bit to be said for capital growth on that as opposed to something brand new a few blocks back or you know.
Mike Mortlock: I know you're real estate but of course focus more on the project marketing stuff so focusing on the off the plan stuff you mentioned before there's an opportunity for people to perhaps purchase a property and see capital gain during the construction phase and then sell and lock in that gain I guess, it sounds like a risky approach, you've got to time the market very well, it's a bit out of your hands with the construction phase, there might be delays or variations or problems during construction, how often do you see that and is that a strategy for investors? Can you time that well and make money during the construction phase?
Luke Murdoch: Yeah, I've seen it and personally had clients doing it and it does happen and I think with any investment there always needs to be a plan B so if that is your plan A, I want to get in as early as I can because generally speaking too as sales campaigns continue throughout the sale of a project prices may shift up during the campaign once the demand and there's some momentum in the building then you'll quite often see that happen so the first few that get in can quite often have a good opportunity where as sales prices move up during the sales campaign by the time it's finished you're definitely in front. It's all about timing, 100% so if you get in early and the market continues to grow during that construction time then yeah, you can on sell it before the completion even takes place or you can chose to sell it as immediately as happens.
Mike Mortlock: I guess there's also there's only two units left effect, we know that scarcity is a motivator for price increases so if you do do your research well and you're happy to be one of the first people that buy in that you're saying you can potentially buy under market and get a good deal and that's a good strategy?
Luke Murdoch: Yeah, it can be, it can be and as I say with this and also make it clear to purchasers that I don't have a crystal ball, I don't where we'll be in a year or so or we can look in the rear view mirror and just say if things continue to go the way they've been going we can plan some growth in here, if that's the intention of you buying to then sell it before settlement. The plan B is can you settle on it and hold it and rent it and is that something you can do, let's just say the market doesn't do anything in the next 12 months or even retracts a little bit which isn't what we're expecting here but if that's the case are in a position to hold it and yeah?
Mike Mortlock: Yeah. Let's talk about buying off the plan, there'll be certainly some investors listening or would be investors that have never bought off the plan how does it work, how do you buy something that doesn't yet exist?
Luke Murdoch: Fair question, generally speaking the way that the process works is once the developer's obviously got the site, got the marketing plans, go the contracts for sale for all of them, the site might may or not be DA approved for the project which is something to always ask.
Mike Mortlock: That would be part of the contract to say this is not DA approved subject to that going through?
Luke Murdoch: That's right, if a project isn't DA approved it will always state in the contract that or it should state in the contract that it is subject to the approval the project actually being approved by council.
Mike Mortlock: We do see developers on Current Affair but to my knowledge that hasn't happened in Newcastle.
Luke Murdoch: No, it hasn't and it's one of those things with the market being as buoyant as it has in Newcastle developers have been able to, if they can present a good concept and certainly reassure the market they're serious about what they're doing they've been able to launch a project, make sales conditional the DA approval because of the excitement around I guess the marketplace which we have seen at the moment but getting back to it too we always explain to a developer there's a bit of risk there that the buyers taking as well, they take themselves out of the market for a period of time.
Mike Mortlock: True, they've got the opportunity cost so that's got to be priced in to what they're paying I guess.
Luke Murdoch: That's right so you'll generally see a fairly sharp price list in order for people to go well even if it doesn't come off or even if it doesn't come off, we have given ourselves a good opportunity to make some capital gain on this project potentially based on what they've seen in other sales in the area that are happening at the time. Generally speaking you'd like to see the project DA approved, the marketing would then commence basically. In terms of the off the plan purchasing process once you make your selection of your apartment generally speaking you would pay a holding deposit to secure it for perhaps a period of time, might be five days or 10 days and then at the end of that cooling off period essentially you're expected to pay your 10% deposit, sign your contract with your solicitor and have it exchanged during that timeframe.
You don't have to pay the balance of the purchase until it's completed at the very end basically. Another thing to point out you can't get formal finance approval for purchasing something off the plan because it doesn't exist yet so if you're borrowing money for the purchase the bank won't formally approve you when you buy it off the plan, they will value the property and give you formal approval at completion time.
Mike Mortlock: You're taking a bit of a risk that they find that the value is less than what you're paying or you're not approved for finance because your situation has changed.
Luke Murdoch: Yeah and that's generally what I say to buyers when I meet with them, I say do you expect your financial circumstances to be just as good, if you're pre-approved now at this price do you expect your financial circumstances to be just as good if not better come 18 months’ time when this is finished? If there's real uncertainty around that for people, this is getting back to your question before about buying new versus buying old, that's where we could start talking about maybe buying something that's existing or is there a building that's coming to completion in the next month or two that maybe they could still get something new without the uncertainty of getting approved financially in 18 months’ time.
Mike Mortlock: Do you often see sales fall over between the exchange and the settlement on the buyers side?
Luke Murdoch: No, it's very rare, yeah, personally I haven't had that happen, where I've had people that their circumstances have changed we've been able to resell them for them and lucky enough the market's been good so we've resold them for more money for them so that's worked out well for them but if the market hadn't increased it would have cost them money.
Mike Mortlock: Yeah. What about on the developers side of things? We had a lot of press around sunset clauses and issues with developers settling on property, is that something that you've seen and are there any traps for purchasers when it comes to the developers side of the equation?
Luke Murdoch: I think there was, I'm not sure how long ago it was in Sydney where developers let sunset clauses lapse and those sort of things. My understanding and to all the listeners you obviously see a lot of my comments here you have to seek solicitors and conveyancers’ approvals.
Mike Mortlock: Standard disclaimer.
Luke Murdoch: Yeah, I hope there is one on the screen but my understanding the conveyancing laws have changed now to help protect from those sort of things happening. We never saw that in Newcastle and I haven't seen that in Newcastle. The things to look for, again when I meet the buyers there's three things I bring their attention to. I like to make sure that by the time they get to the solicitor's office they're not hearing things in the contract that's going to be a surprise for them. Generally there'll be something in the contract that says that if the developer has to for arguments sake we're here in August 2017 we might sell something off the plan today and the contract says that the developer has the right to pull out of the project for whatever reason by December 2017 for example so there might be a clause in there saying that they have the right to not do the project, that there's a period of time on that date.
The second thing is that there is a sunset clause in the contract which does give the, generally it's an overestimated timeframe of how long the whole project would take so if it's anticipated it might take 18 months for it to build don't be surprised if the sunset date is 24 months or maybe a little bit longer down the track. That's just so there's an actual end date to the contract and the buyer's not tied up for an indefinite period of time.
Mike Mortlock: They can't hold the deposit for 15 years on a three story development.
Luke Murdoch: That's exactly right, yeah, that's exactly right. As things approach completion the buyer will be given notice generally at the stage when all the plans have got to be registered at plans and titles office so that can generally be a four to six week process from what I understand in most circumstances so when the plans get sent to lands and titles to be registered if a buyer's notified at that point in time as we approach completion they'll at least have a bit of a heads up that okay, we've got 30 days to get ready to buy this thing so better tell the solicitor and the bank and all those sort of things. The other thing I generally tell purchasers with off the plan is that with finishes and inclusions and those sort of things the developer does have a right to replace some of those finishes throughout the apartment and the building.
Mike Mortlock: But it's like for like really, isn't it?
Luke Murdoch: Yeah, the phrasing in most contracts is something like that it can be replaced with something of equal or better quality and then generally speaking as well there's a five percent tolerance in the size of your lot because the architects and surveyors only get to say close on a drawing so that there's a bit of a contingency in there that if it's a bit smaller then that's okay, if it's a lot smaller, bigger than five percent then the purchaser can walk away from the deal so they're just a few things you should be aware of when you're buying off the plan that will be in the contract that your solicitor would take you through.
Mike Mortlock: Now what's happening in the investment side of things in Newcastle? Obviously you've been around for longer than a decade buying and selling property, are units getting great capital growth compared to houses at the moment? Has that always been the case, vice versa, what are you seeing? Are there any particular people you've come across that have been pretty savvy investors that you've seen put some good deals together?
Luke Murdoch: Yeah, so I think when we look back across the way attitudes have changed around strata in Newcastle for example as opposed to specifically a house, the benefit of a strata dwelling or a strata property is that you can get closer to areas that you otherwise wouldn't be able to afford to to live in. With that being said a house and land or land will always appreciate at a rate that's quicker than strata from what I've seen in lots of areas but there's always exceptions to the rule as well. It depends also with strata there's just a bit of a less, with a house obviously within council's regulations you can really pick and choose and do whatever you want with that property because it's yours and you're free to do it. With strata internally you can generally change whatever you like but you're stuck with the way it's facing and all these sort of things.
I think when we're looking at capital growth if that's a big focus and you've got the budget to go for a house and land you're going to see some good capital growth and that might grow more rapidly than say your unit may do it but buying a strata titled unit can be a more affordable option to buy in a central location to get better growth as opposed to a house out in the suburbs for example so it comes down to location. That's the catch phrase out of all of it.
Mike Mortlock: That makes sense. In terms of unit prices at the moment in Newcastle what are your average one and two and three bedroom units going for in those medium rise developments?
Luke Murdoch: Yeah, the one bedroom apartments have steadily shifted, 50 odd square metres with a balcony without a car space might be around 400,000 in Newcastle at the moment. You add a car space and all of a sudden you're at 450, 460. Two bedroom, two bath, one car, I'd say 70 to 80 square metres you're looking at 550 to 600 and then when you're stepping into bigger more owner occupied style, two bedders with maybe an extra car space you can certainly get to that 750 to 900 sort of a range and three bedders are generally north of that, you're getting to 900 to 1.3, it depends how big they are, 1.5 in some circumstances generally speaking but then you're looking into aspect, views, location, position all those sort of things.
Mike Mortlock: For a three bedroom house with a similar proximity to the CBD, I know there's not a terrible amount of them in the CBD but you're looking upwards of what, two or three million dollars for a three bedder riding close to the city now?
Luke Murdoch: Yeah there's lots of in and around Newcastle in particular there's smaller cottages and smaller lots of land and what have you so you can get a bit of a range between one and a half to three million. If it's a knock down and complete rebuild in some areas of Mereweather and the Junction, The Hill in Newcastle, those sort of areas you can certainly be expecting your two to three million dollar price tags on them but also you've got some heritage probably in Newcastle as well which is certainly well received and if it's restored and looked after it can certainly be getting good money as well.
Mike Mortlock: Just one final question about the market, are you seeing a lot of buyers coming from Sydney or Interstate or is it locally driven? Where are the buyers coming from in the apartment market?
Luke Murdoch: Yeah, it's coming from outside of Newcastle more than what I've ever seen and I guess to refer back to what I was mentioning earlier about buildings prior to perhaps the university announcement were generally wholly and solely bought by local investors and local people to live in and now I would certainly suggest that the amount of investors coming from outside of Newcastle has from me personally in terms of what we've sold in our buildings has probably doubled in the past 18 months.
Mike Mortlock: Wow.
Luke Murdoch: The amount of investors buying them.
Mike Mortlock: You're a busy man.
Luke Murdoch: It has been good but very good, good busy.
Mike Mortlock: It's good news for Newcastle and developers and just the gentrification of the city, I guess it's come a long way from a BHP mining cottage type place where we're seeing a lot more brew houses and wine bars and coffee shops. I call it the Melbournification of Newcastle.
Luke Murdoch: Yeah, that's very true and everyone knows that and people from out of town are certainly spending a bit more time looking around saying how much potential it's got and what they see and people from Sydney in particular are because Sydney is so hot as well they'll often come to Newcastle and invest, well their intentions are to invest in buying some property up here so they can resell and have more capital to get back into something in Sydney so younger people in Sydney are coming to Newcastle for the reason, for some capital growth or they're looking at a lifestyle change.
Mike Mortlock: Awesome, thanks very much Luke, I appreciate your time. How do people get in touch with you?
Luke Murdoch: They can reach me at our office in The Junction. I don't know if you want my details on the website.
Mike Mortlock: We can do that so you're at First National Newcastle City there.
Luke Murdoch: Yeah, we're at 36 Kemp Street in The Junction.
Mike Mortlock: You're very Googleable I would imagine.
Luke Murdoch: Yeah, yeah, there might be some shots on there.
Mike Mortlock: Interesting, well I'm going to have to have a look now. Just to wind things up, if there's one piece of advice you can give especially to property investors with your experience in real estate and project marketing what would that be?
Luke Murdoch: I'd probably say the amount of people I sit and talk with is just be clear on the direction you're heading in whether it's you want to buy one property or you want to buy a few properties, it certainly helps you make a decision on taking that first step so it's just because some people have busy lifestyles they want a bit of a set and forget approach so buying an old run down house is probably not going to be the way to go, that's where off the plan can certainly sit quite well for you so if you're clear on what you want your property to do for you whether it's one or five properties then it helps making the decisions in between a lot easier and then the next bit is just do something rather than nothing as well.
Mike Mortlock: I think that's very good advice. Cheers Luke, thanks very much for joining us.
Luke Murdoch: No worries, thank s for having me Mike.
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