February 18, 2025 • 23 mins
Louis Christopher, is one of Australia's most recognised and respected property analysts. He reveals:
00:00 - The impact of rate cuts on Australian real estate market
01:49 - Why Reserve Bank of Australia likely to cut interest rates again
05:35 - How population growth and rate cuts drive economic forecast
07:34 - Perth’s housing market outperforms amid Sydney and Melbourne
10:50 - Interest rates, rental market trends, and selling strategies
13:39 - Rising vacancy rates
15:27 - The potential impact of rate cuts and super access on the housing market
This webinar is sponsored by LocalAgentFinder
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
So good evening, good evening.
I've got with me LouisChristopher, who is the head and
owner of SQM, I would say oneof the most accurate forecasters
in the last couple of decades.
In Australia, today's a big daybecause for the last couple of
(00:21):
years we have been having ratesgoing up and today rates went
down, and I thought it wasabsolutely fitting to have Louis
Christopher come in andactually talk about what he
believes this will mean for thereal estate market in Australia,
(00:42):
by city, around the country.
I want to let you know thatthis webinar is brought to you
today by Local Agent Finder.
Local Agent Finder, a bigsupplier of real estate support
to the real estate industry but,more importantly, helping
(01:02):
vendors across Australia makeconsidered decisions when
selecting an agent, and we knowthat there are a lot of people
sitting on the sidelines at themoment.
They have been waiting.
These are potential vendors.
They have been waiting.
Louis, good evening and thankyou for joining us in your
(01:22):
family time on this.
Is it Tuesday night?
It is Tuesday night, it's.
Speaker 2 (01:28):
Tuesday night Tom.
Speaker 1 (01:29):
Sydney.
I'm in New Zealand and I'mgoing to talk.
Speaker 2 (01:33):
You're in New Zealand .
Okay, I'm in New.
Speaker 1 (01:34):
Zealand.
Yes, I'm in New Zealand, sowe're two hours.
It's actually nine o'clock here.
So, louis, I think we wereexpecting what was going to
happen today, but we weren'texpecting a month or two months
ago that it would be happeningso soon.
This year, would you say.
Speaker 2 (01:52):
I think that's a very correct view.
So just two months back we hadnot had the December quarter
inflation results come out.
When those numbers came out,which was just a few weeks ago,
we had not had the Decemberquarter inflation results come
out.
When those numbers came out,which was just a few weeks ago,
(02:15):
it really showed very much abenign inflationary read for
Australia.
The quarterly change in the CPIwas just 0.2% and that's a
second quarter straight wherethe CPI only lifted by 0.2%.
That means for the last sixmonths, according to the ABS.
I don't necessarily agree withit.
Inflation has just increased by0.4% and what this means is
(02:37):
that the Reserve Bank now is atrisk of undershooting on their
inflationary target of 2% to 3%per annum.
Now you can imagine that.
Let's say that inflation doesfall below 2% per annum and
we're on track for that.
It's not a very good look forthe Reserve Bank of Australia to
(02:58):
still have the cash raterunning at, say, 4.35%.
Speaker 1 (03:01):
It was.
Speaker 2 (03:02):
The Reserve Bank of Australia really had to move
today, because if they didn'tmove they would have egg on
their face if inflation were tofall below their target range
and they hadn't cut interestrates.
What's interesting as welltoday is not the fact that
they've announced the rate cuttoday.
(03:24):
I think if you read thestatement closely, they are
essentially putting the word outthere, reading between the
lines they're going to cut again, and history does show us that
when the RBA does change rates,they don't just do one rate
change at a time.
They often do a series of themat a time.
(03:44):
So I think when they meet againwhich I think is the 1st of
April, april Fool's Day they maywell cut interest rates once
again.
There is a real chance thatthey're going to do this.
Speaker 1 (03:57):
Okay, so, Louis, that will make it half a percent.
I mean in history, when rateshistory we saw, when rates go up
, it appears you don't have arate rise or a rate cut and then
nothing happens for a year.
(04:17):
It seems like there's acontinuous, consistent,
repeatable behaviour.
Speaker 2 (04:24):
That's exactly right.
History has shown time and timeagain the RBA doesn't just do
one move and then let it go.
They will do a series of moves.
So the probabilities are quitehigh I think they're greater
than 50% that when they meet inApril they will cut interest
rates again.
Now they are data dependent.
I think there is another CPInumber coming out before they
(04:48):
meet again.
If that number was to be areally bad result, then maybe
they might just hold for alittle bit.
But I think that's unlikely.
I think they're going to cut.
So I think we can safely assumeanother rate cut Thereafter
very much data dependent.
They might just sit on theirhands for the remainder of the
(05:08):
year and we only get a 50 basispoint cut in total until, say,
2026.
But if that were the caseanyway, we think that would be
more than enough to start arally in the housing market
across the country.
Okay.
Speaker 1 (05:25):
So, Louis, late last year you produced your report
giving us four scenarios.
When I spoke to you early ontoday, you've said to me you
have now reduced it to onescenario.
That's right Down to one.
Yeah, it would be good if youcould actually share it visually
to help our viewers actuallyunderstand what you think is
(05:50):
going to happen now.
Speaker 2 (05:51):
No problem, I'm going to do that right now.
Let me know, can you see that?
Speaker 1 (05:56):
Yes, we can see it.
We can see Red Cross, Red Cross.
Then we see Scenario 3 with anice green border around there,
which means that's what youthink is going to happen.
And then you've got scenariofour, Red Cross.
So you actually had rate cutMarch quarter.
Population continues to grow by500,000.
So I presume both those thingsto you are important.
Speaker 2 (06:20):
Those two things are critical to our forecast.
We've had one happen alreadythe rate cut.
Now the next thing, which isthe population growth rate,
growth running at over 500,000people plus, and, based on some
numbers that we had access toregarding net overseas arrivals
(06:41):
for the month of January, we'refeeling pretty confident that
we're going to see thepopulation expand by another
half a million people in 2025.
Now, do I personally agree withthat?
Well, that's another matter.
All together, I'm here to saywhat we think is going to happen
rather than what I think shouldhappen.
I don't necessarily agree withsuch a strong population growth
(07:04):
rate, but I think it's going tohappen.
I don't necessarily agree withsuch a strong population growth
rate, but I think it's going tohappen.
And if we're right about thosetwo key factors, then we're
feeling pretty confident thatour forecast we've got in there,
and that is for nationaldwelling prices to rise this
year between 6% to 10% is goingto come in.
Speaker 1 (07:23):
Yeah Well, louis, I think people have jumped the gun
early too, because I've noticed, since I've come back doing
auctions on the weekend, I'venoticed that the buyers are out
there.
There obviously is a group ofbuyers who think that they'll
outsmart other buyers and jumpin early because they're
gambling that this was going tohappen, and agents have been
(07:44):
reporting sales that couldn'ttake place October to December
are happening now right aroundthe country.
You're still very bullish,perth.
You love Perth, louis.
Speaker 2 (07:55):
I do love Perth at the moment.
Yeah, that's true.
So Perth had a sensational last12 months.
It was up by about 14%.
I noticed that there's beensome discussion of maybe the
market could be slowing down.
The thing is with Perth is thatwhen we look at the rental
market, we're not seeing anyslowdown in the rental market in
(08:18):
Perth, and why that isimportant to us as a research
house is that we've foundhistorically that the rental
market in Perth leads thefor-sale market, leads it by
about 12 months.
There's a strong correlationthere and if we bring up more
charts later on, I'll show youwhat I mean about Perth and why
we're so bullish.
(08:38):
Because the rental market isnot slowing down.
There is a very tight vacancyrate in Perth and rents continue
to rise at double digits, sowe're pretty convinced Perth is
going to be the outperformer for2025.
But, importantly, what's reallychanged here is our outlook for
Sydney and Melbourne.
(08:58):
So those who follow ourresearch closely may recall when
we wind back to November and werelease these numbers, we said
Sydney and Melbourne are lookinglikely to have another negative
year, and you can see it therein our base case forecast.
We said look, it's looking likethey're going to fall between
minus 5% to 1%.
(09:19):
Well, that's all changed.
So we think now that we'regoing to see growth in Melbourne
of somewhere between 2% to 6%and for Sydney growth of 3% to
7%.
Now I've already had someonesay to me oh look, those numbers
look a little bit low given therate cut.
But I think we need just to keepin mind that we have started
(09:44):
the year off with negative houseprice growth in those two
cities.
Housing prices have beenfalling in January in those two
cities and so we need to, whenyou consider our forecast, say
for the full calendar year, sowe've fallen, say 1% to 2% so
far in Melbourne and Sydney.
We've got to wind that back andthat's what I'm taking into
(10:06):
account.
So yeah, we do believe we'llsee the recovery in Melbourne
and Sydney, but the biggestprice gains we think are going
to be in Perth, brisbane andAdelaide, as they were in 2024.
Speaker 1 (10:21):
Okay, okay.
So, louis, was there any otherpart of the commentary that you
heard the Governor or anyoneelse say that was worth talking
about?
Yes, and is there any othergraphs you want to show us today
?
Speaker 2 (10:39):
So one thing that really stuck out in my mind when
I was.
Speaker 1 (10:44):
Maybe you can stop sharing so we can bring you back
onto the screen.
Good idea, Tom Good idea.
Speaker 2 (10:49):
All right, here we go .
You get to see my beautifulface.
Okay, now, one of the thingsthat came out from the statement
was the Reserve Bank ofAustralia stated unequivocally
that monetary policy settings,even after today's rate cut, are
still restrictive.
That monetary policy settings,even after today's rate cut, are
(11:09):
still restrictive.
That means that they don't seethe current interest rate of
4.1% as being normal oraccommodative.
They still think it's slowingthe economy down, and that's why
I have a lot of confidence thatthey will move again, given
they use that language today.
Speaker 1 (11:30):
Okay Now is there any other charts that are worth
looking at?
That send a message out to ourviewers.
Speaker 2 (11:40):
Yeah, yeah, I think there is.
I think it's worthy of bringingup what we think is going on in
the rental market now, Tom.
So what I'm going to do is Iwant to show what national
vacancy rates are doing, Becauselast year we were talking about
the fact that it looked likerents advertised rents are
(12:01):
starting to slow down.
Vacancy rates were picking up alittle bit.
Well, it's been a little bit ofan about face on that at the
start of the year and once again, I'm just going to share the
screen on this particular point.
Just bear with me one moment.
Speaker 1 (12:20):
By the way, while Lou is bringing up that slide, I
know that we've got a lot ofpotential sellers that are
vendors that are here as well,and I would suggest this
information's changed sentiment.
If you are thinking about goingon the market, timing couldn't
be better.
You want to have first moveadvantage.
You want to move before a glutof sellers come onto the market.
(12:40):
Always better to sell inisolation.
And when you're making yourdecision in agent selection, our
group friends at Local AgentFinder are going to allow you to
make a comparison of agents andalso look at their performance,
including their fees and theirreviews.
What's that graph that you'vegot there, louis?
Speaker 2 (12:59):
Okay, so this is national rental vacancy rates.
The pink line there representsthe vacancy rate across
Australia and the blue barsrepresent the number of rental
vacancies right Now.
You'll see here this period,here this is 2024.
Vacancy rates are actuallystarting to rise a little bit
over the course of the year.
(13:20):
But at the start of this yearand it'll be the case of
February as well, because we'veseen the February rental
listings and they're not good.
They've actually below theJanuary listings Vacancy rates
have sharply declined once againacross Australia.
This tells me quite clearly therental crisis rolls on.
Now let's have a think aboutthis for a moment.
(13:42):
Tom, let's assume we're havinganother year of a tight rental
market across Australia.
Yeah, we now know rates havecut.
If you were a renter at thispoint in time and you've been
saving some money and you're apotential first-time buyer, do
you think maybe you'd startlooking at the housing market?
(14:03):
I think you would.
You would.
You would because the rentalmarket sucks if you're a renter.
It's been terrible for sometime now.
It's been terrible for sometime now.
And the beauty of the housingmarket, with the rising interest
rate environment we havebetween 22 and 2024, is it
slowed down housing price growth, at least in our two largest
(14:24):
capital cities.
It certainly didn't do that inBrisbane and Perth and Adelaide,
as we know, but for our twolargest capital cities housing
prices have largely treadedwater.
There's been some gains, alittle bit in 23 that were
reversed a bit back in 24.
I would argue that thevaluation or pricing compared to
(14:49):
interest rates is lookingpretty good for home buyers and
especially if they cut ratesagain, and especially if you're
a renter right now and you'refacing this tight rental market,
I think you're going to have alook at the homebuyer market,
given the fact that the banks,your serviceability with the
banks, have improved.
(15:09):
So in other words, yourborrowing power, given today's
rate cut, has automaticallyincreased and if they cut rates
again it'll increase further.
I think we're going to see alot of first-time buyers out
there.
Speaker 1 (15:23):
So, Louis, the other thing which I want to get your
view on.
So in New Zealand, where I'mnow, I was talking to some
people who were part of the REIhere and a lot of real estate
agents, and they said to me thatwhat Peter Dutton has announced
as a policy, which is, if hewas successful to get in, that
(15:50):
he would allow a first homebuyer to access $50,000 out of
their super.
Now there's a lot of people andeven if it's not 50, I'm sure
that they've got 40.
I mean, there's a lot of peoplethat have got money in super
that don't have that moneysitting in their bank account.
They're going to become a buyerin the marketplace.
(16:12):
This happened in New Zealand in2010,.
Louis and I looked at the dataof New Zealand 2010 for a decade
and I looked at Australia.
New Zealand went crazy duringthat period and it appears that
one of the biggest drivers wasthe fact that you had a lot of
buyers that ended up accessingtheir super.
(16:32):
Surely, that's going to impactprices.
Speaker 2 (16:36):
Well, we would need to see the detail, tom, yeah,
broadly I would agree with youand actually it's not something
I personally agree with that weshould do, but nevertheless it
is on the cards for that tohappen, assuming the LNP
actually gets up when we havethe federal election.
And when you look at the polls,yeah, they've got a good chance
.
Speaker 1 (16:56):
Stop sharing, Louis, so you can come back on.
Speaker 2 (16:58):
Yeah, I thought I actually stopped sharing.
No, that's strange, okay.
Speaker 1 (17:05):
Here you are, You're back in, so, Louis, I'm with you
.
I actually think the winnersare going to be the homeowners,
not necessarily a purchaser, butit stands to.
I mean, if you can borrow moremoney, if the sentiment is down
and there's more buyers becausethey've got the actual deposit
that you need the 10% or the 20%deposit surely that is going to
(17:29):
impact prices.
It certainly could.
Speaker 2 (17:32):
Like I said, we need to see what the detail is from
the L&P if they do allow homebuyers to access the super.
But yeah, I would agree withyou that, combined with interest
rate cuts, low unemployment ofcourse we still have low
unemployment and a tight rentalmarket I think you're going to
see more first-time buyers, forsure.
Speaker 1 (17:55):
Okay, well, look, I'm also going to say we've got a
lot of people, louis, here whoare not just, you know, vendors
and buyers.
I've noticed a few faces herewho are real estate agents.
So if you are an agent and youaren't registered on local agent
finder to meet potentialvendors, then they should
register a profile, as it'sabsolutely free and LAP has a
(18:19):
pay on success model.
That's right.
You only pay when you're makingmoney and you get the bulk of
it.
And, louis, it's been anabsolute pleasure.
I've never seen you as upbeatas this.
By the way, You're very upbeat.
I noticed it in your voice whenI spoke to you a few hours ago.
It's been an absolute pleasure.
I've never seen you as upbeatas this.
(18:39):
By the way, you're very upbeat.
I noticed it in your voice whenI spoke to you a few hours ago.
Speaker 2 (18:42):
You're pretty confident it's a good day for
the Australian real estatemarket.
Oh, that's just the vitamin Bpills I've been having, tom.
No, look, I am more confident,absolutely so.
Look, there's a lot of Xfactors that are still out there
, a lot of global factors.
I'm reasonably bullish on thoseglobal factors.
(19:03):
So I think you know the ducksare lining up and I'm pretty
sure we're going to see, asearly as this weekend, a rise in
option clearance rates inSydney and Melbourne.
I think the buyers will be outthere.
I think we'll see the fear ofmissing out starting to creep in
a little bit into the market.
And there is seasonality atthis time of year as well.
(19:24):
I think you see generally lessautumn listings compared to, say
, the spring selling season andyou see seasonally more home
buyers out there.
So, yeah, I'm pretty confidentthe market is going to turn and
we'll see some indicators ofthat fairly quickly.
Speaker 1 (19:44):
Yeah, and for those of you that are watching this, I
often find that homeownersthink to themselves you know
what?
Okay, this is a positive sign,maybe there'll be more rate cuts
, maybe I'll just ride it andput it on the market when prices
have gone up even more, andthat's not a bad strategy.
However, if you're aseller-buyer, that means that
(20:07):
you're buying and selling in thesame market.
I think you've got to take intoaccount if you're selling in
Newtown and moving to Lane Coveand you decide that you're going
to wait for six months forNewtown to keep going and milk
it as much as you can and thenyou're going to say to yourself
I'll buy in Lane Cove, lane Coveain't staying at today's prices
(20:28):
.
Lane Cove will also go up.
So I think trying to timethings like that is probably not
a great idea.
Thank you, susan, for puttingthat in the chat box.
Louis, it's been an absolutepleasure having you A webinar,
that you've come in and joinedus a couple of times.
Local Agent Finder has put thison.
(20:50):
The data has been sourced bySQM.
Louis hasn't changed his beat.
He gave us four scenarios.
He said if this happens, then Ithink this.
If this happens, I think this.
We now have a clear runway.
Those three scenarios have beencleared.
There's one left, and he hasshared it with us.
(21:11):
You can, by the way, follow himon Twitter or X or LinkedIn.
He has that data on there.
Speaker 2 (21:18):
I'll put up the website now for everyone.
Speaker 1 (21:20):
Yeah, so if you can put that there.
By the way, louis, I lovechecking your auction results
early in the week and the reasonis that I think there you go.
By the way, everyone it's there.
I use listen, since I've beenhaving you on both with Local
(21:41):
Agent Finder and before.
I've invested in some of theproducts that you've got.
They are good value products.
I look at there from your boombus reports.
There's a hell of a lot ofstuff there.
By the way, those of you thatdon't like to spend money,
there's a lot of free stuff onthere as well, I'd say.
Speaker 2 (21:59):
A lot of free stuff.
We've actually had quite a fewreal estate agents who, let's
just say, haven't been too happywith our peers.
Speaker 1 (22:05):
Yes.
Speaker 2 (22:11):
And they've been actually buying out what we call
our property explorer, which is, you know, let's just say, the
equivalent of what our largeappears often to real estate
agents.
So we've been having moreinterest with that by agents.
It's certainly a morecost-effective product.
One disclosure there it doesn'thave ownership details in it,
so we don't publish anyownership details, but it's got
(22:32):
all the property salestransactions you could ever want
.
Speaker 1 (22:36):
Okay, to all our real estate agents and gym members,
I suggest that you've heard theforecast from an analyst, you
use it in your own words and youmake sure you get on the phone
and you speak.
Who you've got to speak totomorrow buyers, sellers Let
them know.
It's all a good news story.
Good evening, louis.
Thank you so much.
Thank you to all that havetuned in.
(22:58):
Thank you and we'll see younext time.
So good evening, good evening.
I've got with me LouisChristopher, who is the head and
owner of SQM, I would say oneof the most accurate forecasters
in the last couple of decades.
In Australia, today's a big daybecause for the last couple of
(00:21):
years we have been having ratesgoing up and today rates went
down, and I thought it wasabsolutely fitting to have Louis
Christopher come in andactually talk about what he
believes this will mean for thereal estate market in Australia,
(00:42):
by city, around the country.
I want to let you know thatthis webinar is brought to you
today by Local Agent Finder.
Local Agent Finder, a bigsupplier of real estate support
to the real estate industry but,more importantly, helping
(01:02):
vendors across Australia makeconsidered decisions when
selecting an agent, and we knowthat there are a lot of people
sitting on the sidelines at themoment.
They have been waiting.
These are potential vendors.
They have been waiting.
Louis, good evening and thankyou for joining us in your
(01:22):
family time on this.
Is it Tuesday night?
It is Tuesday night, it's.
Speaker 2 (01:28):
Tuesday night Tom.
Speaker 1 (01:29):
Sydney.
I'm in New Zealand and I'mgoing to talk.
Speaker 2 (01:33):
You're in New Zealand .
Okay, I'm in New.
Speaker 1 (01:34):
Zealand.
Yes, I'm in New Zealand, sowe're two hours.
It's actually nine o'clock here.
So, louis, I think we wereexpecting what was going to
happen today, but we weren'texpecting a month or two months
ago that it would be happeningso soon.
This year, would you say.
Speaker 2 (01:52):
I think that's a very correct view.
So just two months back we hadnot had the December quarter
inflation results come out.
When those numbers came out,which was just a few weeks ago,
we had not had the Decemberquarter inflation results come
out.
When those numbers came out,which was just a few weeks ago,
(02:15):
it really showed very much abenign inflationary read for
Australia.
The quarterly change in the CPIwas just 0.2% and that's a
second quarter straight wherethe CPI only lifted by 0.2%.
That means for the last sixmonths, according to the ABS.
I don't necessarily agree withit.
Inflation has just increased by0.4% and what this means is
(02:37):
that the Reserve Bank now is atrisk of undershooting on their
inflationary target of 2% to 3%per annum.
Now you can imagine that.
Let's say that inflation doesfall below 2% per annum and
we're on track for that.
It's not a very good look forthe Reserve Bank of Australia to
(02:58):
still have the cash raterunning at, say, 4.35%.
Speaker 1 (03:01):
It was.
Speaker 2 (03:02):
The Reserve Bank of Australia really had to move
today, because if they didn'tmove they would have egg on
their face if inflation were tofall below their target range
and they hadn't cut interestrates.
What's interesting as welltoday is not the fact that
they've announced the rate cuttoday.
(03:24):
I think if you read thestatement closely, they are
essentially putting the word outthere, reading between the
lines they're going to cut again, and history does show us that
when the RBA does change rates,they don't just do one rate
change at a time.
They often do a series of themat a time.
(03:44):
So I think when they meet againwhich I think is the 1st of
April, april Fool's Day they maywell cut interest rates once
again.
There is a real chance thatthey're going to do this.
Speaker 1 (03:57):
Okay, so, Louis, that will make it half a percent.
I mean in history, when rateshistory we saw, when rates go up
, it appears you don't have arate rise or a rate cut and then
nothing happens for a year.
(04:17):
It seems like there's acontinuous, consistent,
repeatable behaviour.
Speaker 2 (04:24):
That's exactly right.
History has shown time and timeagain the RBA doesn't just do
one move and then let it go.
They will do a series of moves.
So the probabilities are quitehigh I think they're greater
than 50% that when they meet inApril they will cut interest
rates again.
Now they are data dependent.
I think there is another CPInumber coming out before they
(04:48):
meet again.
If that number was to be areally bad result, then maybe
they might just hold for alittle bit.
But I think that's unlikely.
I think they're going to cut.
So I think we can safely assumeanother rate cut Thereafter
very much data dependent.
They might just sit on theirhands for the remainder of the
(05:08):
year and we only get a 50 basispoint cut in total until, say,
2026.
But if that were the caseanyway, we think that would be
more than enough to start arally in the housing market
across the country.
Okay.
Speaker 1 (05:25):
So, Louis, late last year you produced your report
giving us four scenarios.
When I spoke to you early ontoday, you've said to me you
have now reduced it to onescenario.
That's right Down to one.
Yeah, it would be good if youcould actually share it visually
to help our viewers actuallyunderstand what you think is
(05:50):
going to happen now.
Speaker 2 (05:51):
No problem, I'm going to do that right now.
Let me know, can you see that?
Speaker 1 (05:56):
Yes, we can see it.
We can see Red Cross, Red Cross.
Then we see Scenario 3 with anice green border around there,
which means that's what youthink is going to happen.
And then you've got scenariofour, Red Cross.
So you actually had rate cutMarch quarter.
Population continues to grow by500,000.
So I presume both those thingsto you are important.
Speaker 2 (06:20):
Those two things are critical to our forecast.
We've had one happen alreadythe rate cut.
Now the next thing, which isthe population growth rate,
growth running at over 500,000people plus, and, based on some
numbers that we had access toregarding net overseas arrivals
(06:41):
for the month of January, we'refeeling pretty confident that
we're going to see thepopulation expand by another
half a million people in 2025.
Now, do I personally agree withthat?
Well, that's another matter.
All together, I'm here to saywhat we think is going to happen
rather than what I think shouldhappen.
I don't necessarily agree withsuch a strong population growth
(07:04):
rate, but I think it's going tohappen.
I don't necessarily agree withsuch a strong population growth
rate, but I think it's going tohappen.
And if we're right about thosetwo key factors, then we're
feeling pretty confident thatour forecast we've got in there,
and that is for nationaldwelling prices to rise this
year between 6% to 10% is goingto come in.
Speaker 1 (07:23):
Yeah Well, louis, I think people have jumped the gun
early too, because I've noticed, since I've come back doing
auctions on the weekend, I'venoticed that the buyers are out
there.
There obviously is a group ofbuyers who think that they'll
outsmart other buyers and jumpin early because they're
gambling that this was going tohappen, and agents have been
(07:44):
reporting sales that couldn'ttake place October to December
are happening now right aroundthe country.
You're still very bullish,perth.
You love Perth, louis.
Speaker 2 (07:55):
I do love Perth at the moment.
Yeah, that's true.
So Perth had a sensational last12 months.
It was up by about 14%.
I noticed that there's beensome discussion of maybe the
market could be slowing down.
The thing is with Perth is thatwhen we look at the rental
market, we're not seeing anyslowdown in the rental market in
(08:18):
Perth, and why that isimportant to us as a research
house is that we've foundhistorically that the rental
market in Perth leads thefor-sale market, leads it by
about 12 months.
There's a strong correlationthere and if we bring up more
charts later on, I'll show youwhat I mean about Perth and why
we're so bullish.
(08:38):
Because the rental market isnot slowing down.
There is a very tight vacancyrate in Perth and rents continue
to rise at double digits, sowe're pretty convinced Perth is
going to be the outperformer for2025.
But, importantly, what's reallychanged here is our outlook for
Sydney and Melbourne.
(08:58):
So those who follow ourresearch closely may recall when
we wind back to November and werelease these numbers, we said
Sydney and Melbourne are lookinglikely to have another negative
year, and you can see it therein our base case forecast.
We said look, it's looking likethey're going to fall between
minus 5% to 1%.
(09:19):
Well, that's all changed.
So we think now that we'regoing to see growth in Melbourne
of somewhere between 2% to 6%and for Sydney growth of 3% to
7%.
Now I've already had someonesay to me oh look, those numbers
look a little bit low given therate cut.
But I think we need just to keepin mind that we have started
(09:44):
the year off with negative houseprice growth in those two
cities.
Housing prices have beenfalling in January in those two
cities and so we need to, whenyou consider our forecast, say
for the full calendar year, sowe've fallen, say 1% to 2% so
far in Melbourne and Sydney.
We've got to wind that back andthat's what I'm taking into
(10:06):
account.
So yeah, we do believe we'llsee the recovery in Melbourne
and Sydney, but the biggestprice gains we think are going
to be in Perth, brisbane andAdelaide, as they were in 2024.
Speaker 1 (10:21):
Okay, okay.
So, louis, was there any otherpart of the commentary that you
heard the Governor or anyoneelse say that was worth talking
about?
Yes, and is there any othergraphs you want to show us today
?
Speaker 2 (10:39):
So one thing that really stuck out in my mind when
I was.
Speaker 1 (10:44):
Maybe you can stop sharing so we can bring you back
onto the screen.
Good idea, Tom Good idea.
Speaker 2 (10:49):
All right, here we go .
You get to see my beautifulface.
Okay, now, one of the thingsthat came out from the statement
was the Reserve Bank ofAustralia stated unequivocally
that monetary policy settings,even after today's rate cut, are
still restrictive.
That monetary policy settings,even after today's rate cut, are
(11:09):
still restrictive.
That means that they don't seethe current interest rate of
4.1% as being normal oraccommodative.
They still think it's slowingthe economy down, and that's why
I have a lot of confidence thatthey will move again, given
they use that language today.
Speaker 1 (11:30):
Okay Now is there any other charts that are worth
looking at?
That send a message out to ourviewers.
Speaker 2 (11:40):
Yeah, yeah, I think there is.
I think it's worthy of bringingup what we think is going on in
the rental market now, Tom.
So what I'm going to do is Iwant to show what national
vacancy rates are doing, Becauselast year we were talking about
the fact that it looked likerents advertised rents are
(12:01):
starting to slow down.
Vacancy rates were picking up alittle bit.
Well, it's been a little bit ofan about face on that at the
start of the year and once again, I'm just going to share the
screen on this particular point.
Just bear with me one moment.
Speaker 1 (12:20):
By the way, while Lou is bringing up that slide, I
know that we've got a lot ofpotential sellers that are
vendors that are here as well,and I would suggest this
information's changed sentiment.
If you are thinking about goingon the market, timing couldn't
be better.
You want to have first moveadvantage.
You want to move before a glutof sellers come onto the market.
(12:40):
Always better to sell inisolation.
And when you're making yourdecision in agent selection, our
group friends at Local AgentFinder are going to allow you to
make a comparison of agents andalso look at their performance,
including their fees and theirreviews.
What's that graph that you'vegot there, louis?
Speaker 2 (12:59):
Okay, so this is national rental vacancy rates.
The pink line there representsthe vacancy rate across
Australia and the blue barsrepresent the number of rental
vacancies right Now.
You'll see here this period,here this is 2024.
Vacancy rates are actuallystarting to rise a little bit
over the course of the year.
(13:20):
But at the start of this yearand it'll be the case of
February as well, because we'veseen the February rental
listings and they're not good.
They've actually below theJanuary listings Vacancy rates
have sharply declined once againacross Australia.
This tells me quite clearly therental crisis rolls on.
Now let's have a think aboutthis for a moment.
(13:42):
Tom, let's assume we're havinganother year of a tight rental
market across Australia.
Yeah, we now know rates havecut.
If you were a renter at thispoint in time and you've been
saving some money and you're apotential first-time buyer, do
you think maybe you'd startlooking at the housing market?
(14:03):
I think you would.
You would.
You would because the rentalmarket sucks if you're a renter.
It's been terrible for sometime now.
It's been terrible for sometime now.
And the beauty of the housingmarket, with the rising interest
rate environment we havebetween 22 and 2024, is it
slowed down housing price growth, at least in our two largest
(14:24):
capital cities.
It certainly didn't do that inBrisbane and Perth and Adelaide,
as we know, but for our twolargest capital cities housing
prices have largely treadedwater.
There's been some gains, alittle bit in 23 that were
reversed a bit back in 24.
I would argue that thevaluation or pricing compared to
(14:49):
interest rates is lookingpretty good for home buyers and
especially if they cut ratesagain, and especially if you're
a renter right now and you'refacing this tight rental market,
I think you're going to have alook at the homebuyer market,
given the fact that the banks,your serviceability with the
banks, have improved.
(15:09):
So in other words, yourborrowing power, given today's
rate cut, has automaticallyincreased and if they cut rates
again it'll increase further.
I think we're going to see alot of first-time buyers out
there.
Speaker 1 (15:23):
So, Louis, the other thing which I want to get your
view on.
So in New Zealand, where I'mnow, I was talking to some
people who were part of the REIhere and a lot of real estate
agents, and they said to me thatwhat Peter Dutton has announced
as a policy, which is, if hewas successful to get in, that
(15:50):
he would allow a first homebuyer to access $50,000 out of
their super.
Now there's a lot of people andeven if it's not 50, I'm sure
that they've got 40.
I mean, there's a lot of peoplethat have got money in super
that don't have that moneysitting in their bank account.
They're going to become a buyerin the marketplace.
(16:12):
This happened in New Zealand in2010,.
Louis and I looked at the dataof New Zealand 2010 for a decade
and I looked at Australia.
New Zealand went crazy duringthat period and it appears that
one of the biggest drivers wasthe fact that you had a lot of
buyers that ended up accessingtheir super.
(16:32):
Surely, that's going to impactprices.
Speaker 2 (16:36):
Well, we would need to see the detail, tom, yeah,
broadly I would agree with youand actually it's not something
I personally agree with that weshould do, but nevertheless it
is on the cards for that tohappen, assuming the LNP
actually gets up when we havethe federal election.
And when you look at the polls,yeah, they've got a good chance
.
Speaker 1 (16:56):
Stop sharing, Louis, so you can come back on.
Speaker 2 (16:58):
Yeah, I thought I actually stopped sharing.
No, that's strange, okay.
Speaker 1 (17:05):
Here you are, You're back in, so, Louis, I'm with you
.
I actually think the winnersare going to be the homeowners,
not necessarily a purchaser, butit stands to.
I mean, if you can borrow moremoney, if the sentiment is down
and there's more buyers becausethey've got the actual deposit
that you need the 10% or the 20%deposit surely that is going to
(17:29):
impact prices.
It certainly could.
Speaker 2 (17:32):
Like I said, we need to see what the detail is from
the L&P if they do allow homebuyers to access the super.
But yeah, I would agree withyou that, combined with interest
rate cuts, low unemployment ofcourse we still have low
unemployment and a tight rentalmarket I think you're going to
see more first-time buyers, forsure.
Speaker 1 (17:55):
Okay, well, look, I'm also going to say we've got a
lot of people, louis, here whoare not just, you know, vendors
and buyers.
I've noticed a few faces herewho are real estate agents.
So if you are an agent and youaren't registered on local agent
finder to meet potentialvendors, then they should
register a profile, as it'sabsolutely free and LAP has a
(18:19):
pay on success model.
That's right.
You only pay when you're makingmoney and you get the bulk of
it.
And, louis, it's been anabsolute pleasure.
I've never seen you as upbeatas this.
By the way, You're very upbeat.
I noticed it in your voice whenI spoke to you a few hours ago.
It's been an absolute pleasure.
I've never seen you as upbeatas this.
(18:39):
By the way, you're very upbeat.
I noticed it in your voice whenI spoke to you a few hours ago.
Speaker 2 (18:42):
You're pretty confident it's a good day for
the Australian real estatemarket.
Oh, that's just the vitamin Bpills I've been having, tom.
No, look, I am more confident,absolutely so.
Look, there's a lot of Xfactors that are still out there
, a lot of global factors.
I'm reasonably bullish on thoseglobal factors.
(19:03):
So I think you know the ducksare lining up and I'm pretty
sure we're going to see, asearly as this weekend, a rise in
option clearance rates inSydney and Melbourne.
I think the buyers will be outthere.
I think we'll see the fear ofmissing out starting to creep in
a little bit into the market.
And there is seasonality atthis time of year as well.
(19:24):
I think you see generally lessautumn listings compared to, say
, the spring selling season andyou see seasonally more home
buyers out there.
So, yeah, I'm pretty confidentthe market is going to turn and
we'll see some indicators ofthat fairly quickly.
Speaker 1 (19:44):
Yeah, and for those of you that are watching this, I
often find that homeownersthink to themselves you know
what?
Okay, this is a positive sign,maybe there'll be more rate cuts
, maybe I'll just ride it andput it on the market when prices
have gone up even more, andthat's not a bad strategy.
However, if you're aseller-buyer, that means that
(20:07):
you're buying and selling in thesame market.
I think you've got to take intoaccount if you're selling in
Newtown and moving to Lane Coveand you decide that you're going
to wait for six months forNewtown to keep going and milk
it as much as you can and thenyou're going to say to yourself
I'll buy in Lane Cove, lane Coveain't staying at today's prices
(20:28):
.
Lane Cove will also go up.
So I think trying to timethings like that is probably not
a great idea.
Thank you, susan, for puttingthat in the chat box.
Louis, it's been an absolutepleasure having you A webinar,
that you've come in and joinedus a couple of times.
Local Agent Finder has put thison.
(20:50):
The data has been sourced bySQM.
Louis hasn't changed his beat.
He gave us four scenarios.
He said if this happens, then Ithink this.
If this happens, I think this.
We now have a clear runway.
Those three scenarios have beencleared.
There's one left, and he hasshared it with us.
(21:11):
You can, by the way, follow himon Twitter or X or LinkedIn.
He has that data on there.
Speaker 2 (21:18):
I'll put up the website now for everyone.
Speaker 1 (21:20):
Yeah, so if you can put that there.
By the way, louis, I lovechecking your auction results
early in the week and the reasonis that I think there you go.
By the way, everyone it's there.
I use listen, since I've beenhaving you on both with Local
(21:41):
Agent Finder and before.
I've invested in some of theproducts that you've got.
They are good value products.
I look at there from your boombus reports.
There's a hell of a lot ofstuff there.
By the way, those of you thatdon't like to spend money,
there's a lot of free stuff onthere as well, I'd say.
Speaker 2 (21:59):
A lot of free stuff.
We've actually had quite a fewreal estate agents who, let's
just say, haven't been too happywith our peers.
Speaker 1 (22:05):
Yes.
Speaker 2 (22:11):
And they've been actually buying out what we call
our property explorer, which is, you know, let's just say, the
equivalent of what our largeappears often to real estate
agents.
So we've been having moreinterest with that by agents.
It's certainly a morecost-effective product.
One disclosure there it doesn'thave ownership details in it,
so we don't publish anyownership details, but it's got
(22:32):
all the property salestransactions you could ever want
.
Speaker 1 (22:36):
Okay, to all our real estate agents and gym members,
I suggest that you've heard theforecast from an analyst, you
use it in your own words and youmake sure you get on the phone
and you speak.
Who you've got to speak totomorrow buyers, sellers Let
them know.
It's all a good news story.
Good evening, louis.
Thank you so much.
Thank you to all that havetuned in.
(22:58):
Thank you and we'll see younext time.
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