Guest: Chris Bedingfield, Quay Global Investors.

Australian housing is expensive. Hardly a shocking statement. But if you ask a bunch of investors and economists why it’s expensive, you’re bound to get a wide range of answers. Most of them will refer to credit availability in some way. A few might mention a lack of supply and demographics, and almost all of them will discuss interest rates.

But according to Chris Bedingfield, Principal and Portfolio Manager at Quay Global Investors, there’s a simple and absolutely critical reason that almost everyone overlooks. Indeed, in more than a decade of closely following markets, I’ve never heard this view put forward.

It all boils down to the replacement cost – or the cost of building a new home. Sure, there’s a premium for being closer to the city or the beach, and various other niceties that come with expensive inner suburb houses. But it’s the cost of building new property in Bankstown or Craigieburn that ultimately drives prices in the rest of the city in the long term.

As The Rules of Investing podcast returns after a break, Chris explains why it’s so expensive to build new housing in Australia, shares some of the best opportunities in real estate today, and he tell us why he thinks many people are overestimating the impact of working from home.