Latest / The Good Builder Podcast / The Daily Dose #286 | The Market Is Splitting: Modular, Mansions and the Squeeze in the Middle (with Emily Pollard)
Transcript
- Aaron Ng (00:00) Now, before I get into it, a big shout out to the legends at my construct. If you're still managing your jobs, contracts, client comms across text messaging and spreadsheets, there is a better way. My construct is built by Australian builders for Australian builders. And it is the best platform out there as a construction software. Jake and the team are working on some really exciting stuff that we've got to have a sneak peek at. But go and check them out. is myconstruct.com. You can get a 30 day trial and the guys there are absolute legends and they're taking the Australian building industry by storm. So go and check out their platform. They are very, very cool. And thank you once again, MyConstruct for being the proud sponsors of this podcast. Aaron Ng (00:59) Well, we are back and we are back with the awesome Emily. I know every Monday you love when Emily's on and I'm picking her brains again. One day she will pick mine if I had any, but I am going to today talk about some stuff while I've been looking at them. So I want to get your opinion on a few things. I'm very opinionated. You are very opinionated and you know a lot of stuff and you tell the truth, which is why we love you. And one of the things we want to talk about today is I'm a bit of a data nerd like you. Digital marketing was my previous kind of thing that I used to do. And I was going through Google, like the past 12 months of search and I was like, what are people, what are Aussies looking for? What's changed? What's happening? Blah, blah, blah. And then we'll. Two really interesting things. And we put out a few posts around this and I said, the market is splitting into is what I'm kind of seeing. Of course. You've got people that are looking at alternative methods of building like prefab and tiny home and modular and things like that over here, but not necessarily for the price, but just speed. there's other factors that's planned. All those other things. And then you've got the luxury custom home builders. I want to ask you, are you seeing the same sort of thing out there, like with your clients or what's going on? I think for me personally, I'm extremely interested in the modular prefab world. I don't have any experience in it though. So that's why I'm like, anyone who knows, come to me and tell me all about it. Do you deal with modular builders right now? No, not at all. It's not my forte as of yet. I think there is a real market for it. I've definitely had people who it would have been perfect for. in many instances across, you know, South East and Greenland as a whole. Yeah, people who've come through on one avenue or another, but it's not something we currently deal in. I think an overall consensus about what we're seeing in the market that a lot of people are looking at that. I will be honest though, in many of the spaces that I'm hearing about it, people are looking at it from a hope to be a cost reduction. It's not always going to be the case, to be honest. But it makes sense though, as to why it's not always going to be the case. for people, you know, who live more rurally or who don't have many trades in their areas or whatever it might be, looking at modular or, you know, even these kit homes that people want to try and own a build themselves, which is a whole nother topic. We'll do an episode on that anyway. Renee and I tried to do, we didn't ever get there, but we were looking at one once, I guess. Anyway. Yeah, there's a reason builders are builders for sure. So there is definitely a lot of noise around that at the moment, which I think is really, really interesting. think with everything that's happening, particularly in Southeast Olympics are coming. You know, what happens as soon as January comes and we're in storm season. Yeah. You know, when we're talking about the constraints that exist in the Australian climate, people are also looking at modular in that space as well, because it's a contained system, right, that they can build. within these massive, you know, sheds and whatever. It's all very interesting to me. Tiny homes are a little bit different, I think, because people aren't owning land, right? Because they can't afford to. They're now looking at tiny home systems. There is literally entire villages of tiny homes in the Northern Rivers in New South Wales, which is not far from there. Really? We have a property out there. Yeah. Entire communities down there. Yeah, absolutely. How do you become part of one of those communities? You're hippie or you're smoke a lot of I'm pretty sure there's one that there was one new South as well. Yeah, so literally little tiny eco kind of village. But a lot of people, I think are going into like the tiny home space or obviously tiny home as in on wheels, right? So it's more like caravan restrictions than because we're at a housing crisis. Yeah, but you know, some of these tiny homes are hundreds of thousands of dollars and rightfully so they are crafted impeccably. But you know, even that's out of reach for some people now at the end of the day, but there, there is, as you said, a very large divide coming between people who are at this. very starting scale of affordability or who are looking at alternate options, shipping containers, and all of these types of wild and wonderful things that can be done very well to people who are looking to spend several million dollars to build a house. And those people are definitely, definitely out there stronger probably than, yeah, for sure. Yeah. No one cares if you're in a global crisis if you have enough money. Do you know what I Like, this is great. All these tradies are going to be, you know, not working very much. They can come build my $5 million house. Yeah. You know, people are just taking this opportunity before build costs rise too much more to be like, yeah, now's a great time. I wish I had a spare $5 million to build I don't relate to that side of the market. I probably more so relate to the other side of the market if you ask me. I shouldn't be laughing. Renae's not laughing. No, it's laughing. But it's really fascinating. do you have any customers right now talking to you about prefab? Oh, not at the moment. But you have some talking about the other end. Yeah. for very expensive, well not expensive, sorry, let's use that high end, high dollar value, definitely. That was the space we kind of thought we might play in to start with, but it's a very intense world. Very intense world. Definitely someone could become a big player in that space because, know. Especially to help the buyers. Yeah, yeah, from a buyer's standpoint, absolutely. And then I think helped to build us. I mean, I was not a high, high end build up that when we, when we had Avondale, I remember, we were like, we used to go to meetings and I can say this because it's probably won't go out to clients, but we'd be like, what's our biggest problems? And we'd be like, this is and Mr. And, know, we wouldn't talk about the clients we always felt were very hard work, very demanding, still uneducated. Still uneducated about the building, Like, you know, they don't, they probably take less time than the ones spending less money because it's all their money. Like all the, I shouldn't say the poorer ones, but the ones that are a bit less social demographic, they probably had better questions for us than the, the higher end ones who were just demanding. can't also manage a 10 % blowout. Yeah. Like, you know, maybe the higher end often can. So, you know, very, very mindful of that. But also I think about it now. What. constitutes high-end construction? That's a good question. What constitutes it? It's like what constitutes high-end earning? I'm barely in bucks. You're at me. It's true though, but isn't it true? But I used to, I was literally talking to our tire feeder, because I blew a tire again. So one in like three weeks. Who's building a $1.3 million house. that's just casual. You know the houses over at Minyama Island over here? That crazy island? You know when we first moved here. There was this and there was this blood block of land. actually it was a little house on it and it was 2.2 million. And I was like, if we stretched ourself, we could do it. Like we freaking stretch it. You look at it now and it's crazy. But that's why I kind of said, you know, 2 million million, like that's high end, but you're completely right. Because don't know if that's average build right now. Well, like if you have a project build builder, right? We're not talking custom builder. We have project builders building. one and a half, $2 million houses. So is that, does that constitute high-end? I don't know. don't, I don't think so. Not anymore. I would love to say yes, that does. Yeah. Yeah. Yeah. But we're still talking. It's, it's a project build. Yeah. Yeah. Wow. So I don't know. It's, there's definitely people out there with plenty of money. There is, there is. But I do, I do think, um, which, you know, to this search that we're sort of seeing with this sort of market, it's kind of going like that. I really do see value in someone that's able to handle those high end clients for a high end delta. tell you, I just think there's more of them. I think the anticipation is a bit different though, from a client experience. I think they genuinely want to deal with the builder. Yeah, they do. And I know plenty of high end. I'm talking high end. High high end. Who are like, no, no, I run my own show here. The clients want direct access to me at all times. And that's why they're building. million houses, which is, that's great. So it's it's a tricky one to be within for sure. But, you know, we look at, you know, what's happening even in real estate, obviously, that directly correlates into what happens with instruction. People are spending $10 million on a property to knock it down. $20 million on a property to knock it down. Yeah. Which That's fine. We're getting to see this further disparancy, right? Yeah. It's between the areas and how builders can mitigate that or, or pick their target market on these principles. Because, you know, we're having people through to me who are everyday people going, you know, I'm just trying to get into my first house or, you know, might be mid thirties or whatever and going, I have up to a million dollars for land and house. then you have people going, I own a $2 million block of land. I'm in my thirties, forties, fifties, and I'm spending $2 million on a build. But they're still technically all working class people. Do you know what I mean? Like $4 million now is not what $4 million used to be. You know, reasonably speaking. So there is definitely the divide continuing. And I feel like sometimes builders are trying to do a quick race to the bottom to facilitate that lower end. When it goes back to our discussion last week around the Reddit complaints and the, and the, guess dropping your pants on frost, which isn't really the price. But some just genuinely are dropping the price and are doing slithers of a margin. Yeah. that there's always been those players in the game. It was a going solvent. So, you know, that's not great. We've seen it happen before. As you said, you know, sit at home and go broke. Don't don't risk that biscuit. But it's, it is a hard game. So I don't know how this movement moves forward from here in, in what it's saying, but you are a hundred percent right. the disparities between these markets is becoming wider and wider, just like it is in every day. Yeah. Life. Yeah. You're completely right. Yeah. And how, if you don't mind me asking, what is your average like contract price? What's that sort of looking like? Has it gone up a lot? it? for like the first home buyer or like the package type world. first home buyer and I want to talk a little bit about first home buyers because some aren't truly first home buyers anymore too. Not your clients or all of them but clients that are coming into the country. think that also fuels this disparity because I think what we're seeing as I said in search we're seeing like I can't see for instance like the and don't take this personally Trent Gardner but I can't see DJ gardeners, digital footprint and people searching for their type of builds growing. It's not, it's kind of staying quite stagnant. They're either looking at this luxury or they're looking at an alternative way to do it because it's either too slow or too expensive or whatever it may be Emily. So yeah, I'm just trying to figure out like what's happening with the like average contract values. they, when people are looking for luxury home builders, Is it because they're spending the million to 2 million and going, need a luxury home builder and I'm DJs can't do that. But then to your point, which I think is, think what's going to happen actually, I think it will be actually very interesting. I think more people who once dreamt of a custom home build for this beautiful acreage or this big knockdown in the city will be forced into higher level of a project build. Yeah. Well, I think so. Do you, so I get what you're saying with like the GJ product or you could look, you know, similar at the Stroud product or, know, some of those type of, builds that people who want strength as much as much as they do have money. They don't have enough money for this premium custom, you know, the builder only does two builds a year type situation. their expectations are going to have to lower because they will be essentially forced. into the project. So and again, it's kind of this disparity still exists because spending a million dollars or a million and half dollars isn't going to be achievable for everyday people necessarily. But anything under that probably 750 mark to 350 is kind of going to be where it's a little bit quieter, I reckon. But as we said, let's see what the government does. See what the government does here. because it's going to be very interesting as to how we prop up this industry. is it, what are we like 13 % of the workforce is construction along those lines. So if we don't build houses or we don't have construction happening, then that's just a recession. Exactly. I don't know why they can't say we're in a recession right now. Hey, settle down there. Let's not talk about that. So I think, Average wise, when we're talking about people buying a package or we're getting a sample of around that million dollar price for a package, So usually the split that we're finding at the moment is say 60-40. 60 % is going to land, 40 % is going to be going to the build. So 400,000 reasonably is where you're going to be sitting. There's definitely, but we're talking turnkey. We're not talking 150 square meter houses with no flooring and you know, no seven star energy efficiency or whatever. We're talking on average say 190 to 200 square meters with driveway, landscape, all of these kinds of things around 400,000. I think you will take that's a, I think quite a reasonable, you know, assumption. Different builders. We saw on that calculator the other week. to cut you. But anyway. That's exactly right. If someone's telling you, Hey, we're to build you this within 250,000. You're not buying realistically, you're not building a granny flat anymore for 250,000. So yes, the markup and like the allowance associated with the granny flat is higher percentage than what we see in traditional homes, because there's got to be enough meat in it to bother doing the job. But literally people, you'll see it everywhere at the moment, literally everywhere, every buyer's agent under the sun going, build a buy a pre-established house, might be 60 years old or whatever it is, have that rented out, build a granny flat for 300,000 happy days for creating wealth. It's everywhere, literally everywhere. I don't disagree with it. I'm not saying that you shouldn't do that or you're not going to get equity from it or whatever else. But you know, if I have to hear another person say, you know, get access to $250,000 instant equity uplift from your new home build. I'm wanting to shoot myself in the face. Do you know what I mean? It's it's a marketing spin again. You know, I go out here into the world and say, let's find you a house to build, let's find you a build up because that is what you want. Yeah, I'm not here to say building is the absolute best option for you, you're going to receive hundreds of thousands of dollars in equity that I'm apparently somehow going to guarantee, even though we can barely get land stock for the past several months. Do you know what I mean? And then we have people going, but like, that's fine. But it's not my core model. It's not what I appreciate doing and where I find my skills lie. And, know, I people come to me like, well, what kind of equity uplift am I going to get? I fucking know. What are you coming to me for? Like I have in no way told you that this is what I'm delivering and I don't want to. But in saying that, you know, I've had clients buy a block of land in November last year, literally have had slab, you know, took a while to register, had slab. The land is worth $110,000 more. Love it. And the build, they obviously signed their build contract. It's now gone up, you know, another 5 % or whatever it be. So yes, they're to make a lot of money, reasonably speaking, per percentage of that property. Yeah. But for how long is this going to continue? How long can we continue to say, you're going to get this, you're going to get that, whatever it might be. Granny flats. I think are really hard because a lot of people use them as investment strategies, which makes sense. So you have this property at 600 square meters. put a granny flat out the back. That's great. But more so than that, in what my experience has been is people are building granny flats because they're forced to live with their family or they make a choice to live with their family. We're now becoming intergenerational culture. You're completely right. Yeah. I live intergenerationally. Yeah. Not out of necessity, but out of desire. That's how I was raised. So it works. For other people, you know, they look, I've got to build a granny flat at the back of my parents because I cannot afford anything else. Yeah. Yeah. That's it. Stroud does a great, know, house and granny flat attached. They've become really popular. So I think, you know, if, builders are looking at pursuing other options, granny flats, look at, look at the data on granny flats, honestly through the roof. Yep. You are completely correct. That is so good. What information for the builders out there. so as part of your, so have you have clients come to you for a granny? Are you getting a lot of questions around? we always have. Intergenerational to Emily or are they? Yes. Yeah. So we're obviously opening our office in Moreton Bay. So this will be, it will be a lot of, yeah. No, you're not invited. Okay, that's awkward. You've made it awkward. Yeah. So essentially what the location dictates is that we will be on one side of the road is going to be acreage, realistically speaking, and on the other side of the road is going to be thousands of lots. Wow. That's literally the choice that we have made for our positioning. So you go, you know, okay, up the road and you'll have Stockland building the bridge over the river. Do you know what I mean? There's going to be thousands of what come up there as it reaches into Caboolture West. But a lot of the other side on Bellamy road to the right will remain as residency, sorry, remain as residential acreage. Yeah. So that's when people go and say, I'm going to buy this acreage house and I will build a granny flat on it. Or people are coming saying, I want an acreage house built and attached secondary dwelling. So that intergenerational is going to become very normal. Stroud days, definitely that's bread and butter. What we did so many people, and this was before the full extent of what has happened. Yeah. the shift in culture as well. Yeah. And I think a lot of people, again, we probably have different Instagram feeds, but I see a lot of these buyers agents and, you know, reporters going, we're now forced, you know, kind of made it embarrassing that people are living intergenerationally because, you know, they can't afford it. They can't do this. That's not always the case. No, as well. No, no. And at the end of the day, if you can secure a home, you're happy to live in, then good on you. It doesn't need to be an embarrassing feature. that's like culturally, we've got it pretty wrong for a long time. And I think about, my, you know, look back in Sydney or from Sydney and you would have cultures come in and they would buy a house altogether. And then they would buy the next one and the next one and the next one. And you would have siblings buy homes and build homes together. And then they would just create this all round family wealth. Community. They did. And we are very singular. Yeah. I think as a very, very white woman, I kind of say we as a culture, for us everyday people are like, no, it's a competition against your siblings and your family. It's not something you're trying to achieve it together. Yeah. Whereas I look at it. interesting? Do you see it as well? see it as well. Yeah. Whereas now- Because I'm half-half. I'm half Asian, half Australian. yeah. So I'm a mix. I'm like, I want to leave my family and I don't. Yeah, my family died and I see, you know, people of the Asian culture, very much doing that. I think to a degree they have it right. You've got someone to look after your kids when you want to have a night out, there's all sorts of benefits that go on. Yeah. But also just, you know, securing home and all that sort of thing. It's still a high investment front though. Yeah, people like I don't, people come to me, right. And say, Oh, I need, I want to go to duplex. It's like, well, you don't have duplex money. That's it. You don't have the ability to pay for the block of land that a duplex will cost you for its size. You don't have enough money to afford the build of what a duplex will formally require. You don't want to have to wait the time for a DA or a dual lock to be approved if you can manage to secure it and afford it. So I go, okay, well, what about you pick an estate that will allow you to have a house in a secondary dwelling? no DA required if you can meet the self accessible planning scheme requirements for a lot of councils within the area. You don't have your contribution fees then as an intern, but you kind of a strata title it. So if your vision here is that you want to have people rented out separately, which you are now allowed to do, then maybe this is the more affordable, you know, still a decent return for you. again, we've kind of envisioned that this granny flat is for a granny. Yeah, we should stop calling them granny flats. They're secondary dwellings, but yeah. Unless the granny is you know someone living with his best mate because they can't afford to have a house of their own and they're in someone's backyard Yeah, yeah People have this very skewed term about what a granny flat actually was and who lives in them and I would love to see the statistics as to who actually lives in these secondary dwellings now I think that would be really interesting. Yeah, it's a granny This has been another great episode now One last thing I wanted to talk about first time buyer. So we've seen this disparity first time buyers are finding it harder to buy homes, but we also what I've heard in the market from a lot of builders mind you, and particularly when I was down in Melbourne, because when I was down in the other week where I'm talking to the five biggest builders in Australia or in the top 10 anyway. And I said, do you have regional differences between clients? said, Bloody ice we do. course. And particularly the Indian culture. We've seen a lot of, we've seen the ABS statistics. Now more Indian people have been born in India than any other country in Australia. That better have immigrated over. Yeah, they passed the English. Yeah. So they've come through, they're here, everything like that. Now they were saying that in terms of first time buyers now. said, what's your first time buyer profile look like? Like, are they struggling to buy homes? And they said, well, in certain pockets, they're not. And I'm like, who are these first time buyers and how do I get a job like them? they are cashed up immigrants that have two, three, $400,000 deposits with their families and coming over as first time buyers. That's really interesting. Cause I think that pushes, some people out of the market. I'm not trying to get political here and I'm not trying to get on the, I don't know, Pauline Hansen trainer. She probably wouldn't take me anyway. Just cause I have very white skin. right. I'm no longer, but it's an interesting conversation again. I think it does somewhat because there has been a lot of immigration, like that pushes people out, which prices up. It does availability. So let's look at it. from a over level aspect of it, right? Okay, so yes, that's definitely happening. You will talk to anyone in this space and they will say, reckon 50 to 70 % of inquiries will come from Indian or Nepalese people in this under a million space, 100%. I wholeheartedly think that that's the case. What we also need to consider is that they are the people who now are continuing to choose to build while others of different. you know, cultures, demographics, whatever it might be, are choosing not to. so they're choosing to still get into their home going, you know what, like, now, now's the time. They're also, again, this isn't racial stereotyping. But as I said before, I have Indian or Nepalese clients who literally work 80 hours a week. Yeah. Do you know what mean? So I get the consensus as to why people are up in arms about this, because, you know, housing is already very fucked in this country, let alone adding immigration on top of it. And again, this is a very fine line for me to run here from a political standpoint. And we're not being political Emily. Well, think we're having a discussion. that people are very heated about and naturally so. we've also got to understand that these people still pay tax. They still have jobs. They're still actively creating a pipeline of work for our builders because everyone else is for the most part going quiet. Correct. So I get people's outrage about this or whatever you want to call it. And it does get to be a tricky space, I think, when we have entire estates being bought out by certain cultures of people. I think that does become really tricky. Yeah, definitely. This isn't news to anyone. This isn't some outrage that I've just brought to the topic. By any means. But it is a very fine line here. And again, there was uproar about people who are permanent residents, utilizing the 5 % deposit scheme. You know, was a 50 plus thousand had done that. Yeah, I get, you know, why that's a trigger for people who, well, it's people are triggered by it, right? If they hadn't, if those 50,000 people hadn't had access to utilize that scheme, would the people who are outraged still not be able to afford it? I don't know. Yeah. Yeah. No, good question. So question. Yeah. It's, it's a very tricky. There's a lot to unpack. There is a lot to unpack. Yeah. And I think, I guess where I was going from it, Emily is, you know, there's pressure from everywhere, isn't there? There's pressure. Yeah. Obviously people looking at alternative ways to build because I think they can't afford it. There's groups of people. There's gonna sound really bad, but coming in that can afford it and can push people out of the market. And then you've got well off that are looking at. I'm just going to this mansion and I'll get a Porsche while I'm at it. It's a very interesting time, Emily. And it was a very cool discussion to have with you. And it's cool. Like you could kind of valid, not validate, but Talk to not just the data we produce here at The Good Builder. What I love about you is that you actually back it up with real world shit and tell builders what to look for. And this is just my experience, right? A lot of people are going to have different experiences and different, but you know, when I talk to people or when I'm, you know, going out to groups that have had, you know, tens of thousands of people in it, the consensus feels the same. Yeah. And I honestly, I just don't know where this ends when it comes to housing and to the situations or how this flow and effect will continue to impact our industry. If I did, I would, you know, probably be a politician. Do you know what mean? Because I would be sitting on... I wouldn't. I'd be a terrible... I'd get kicked out of the Senate. I would watch Senate TV. If you were on, I would watch you. It'd be like Russian Parliament where I get done for assault. the fuck are you doing? I know I'm up in arms about taxes at the moment, Emily, but anyway. Oh, mate. Tony fucking mentioned taxes Keep going there. But, well, look, if there are any modular builders out there. Yeah, I'm going to put a call out to you. For Emily. I want to know all about you. Bec. Bec Askin. I'm going to put you in touch with her. Steve Nusala, Olly Holmes. Come and talk to Olly Holmes and adapt to Massive. I'm going to get you in touch with Emily because the space is getting bigger, as we can say with the search. Yeah. I think again, like we talked about last episode, they need someone to navigate it for them. you, you know what mean? think even, that's a bad, even the blood, but I get what though. you know what I mean? mean, like modular is even a bit different to construction build. It's new. It's people would be out there going, I like the control aspect. I like the constraints as to how it's cool. Yeah. I've a few in, in practice, actually. should take you to, a doctor modular. I'll take you there one day over to their, where they build them. Yeah. And, it's fascinating, but you know, I think, you know, people are looking at these alternative ways. I'm not saying they're looking at it from a price perspective only, but that's also about accessibility. true. Yeah. But they aren't that much cheaper either. they anyway? in all instances. no, that's what I've don't think so. Yeah. And that's what I don't want. I guess I don't want, you know, there's all this, I'm making a few assumptions here, but I don't want all these search people like it's gone crazy. We're looking for alternative ways to build it because we think it's cheaper. And then they go there and then we get the same old story of a bad modular builder, for example, giving them a base price of some shit that doesn't add up. then we get back on Reddit and we fuel that. have to do another episode like we did last time. If it can't be approved as a dwelling with the... They wouldn't even know. Do you know what mean? That's where it gets really tricky, I think. And a lot of businesses have come out being, you know, making big claims about what they can do and can't do and how it can be done when it can't actually be backed up. Yeah. That's where it gets tricky. Whereas I definitely know there's some really fabulous modular builders. We even looked at modular on our farm. Really? Yeah. Let's keep going with this. Okay. I was like, I don't want to, you know, but yeah, I definitely looked at that. I think it's a really cool idea and can provide a lot of value. in the housing space, even just from, you know, like the process as to, know, the minimalization of time delays or, you know, all of that kind of stuff that comes from it. But we need the support behind us. What does a modular build look like in a brand new estate in the sunny coast? Yeah. What does that look like? I don't know. do mean? I've never seen a modular. I know you're not a big fan of display homes, but I love display homes. just think the concept behind them is cute. Sorry, I shouldn't have said that anyway, but I have been to the modular display home. will be. Modular display home at Adapt. They do have a modular display home at their factory. That's very cool. But they don't have one. it wouldn't it be cool to see in the display village. Yeah. A modular display home. But even more than that, you know, if you read Covenants for Yeah. You know, estate. What will this, if this becomes big, which to be honest, the, the stats behind it tell us that it's going to be, it's going to become a very big thing. Then how are we going to fit that within an everyday world? Let's figure it out. Next episode. All right. That is Monday for you guys. We got Emily back. Emily, we're have to go down that rabbit hole now. Yeah, might do an episode on that. Yeah, that was very cool. Thank you once again. See you Monday.