2GB Property with John Stanley

Harris Partners' Peter O'Malley joined 2GB's John Stanley this week to take an early look at the 2024 Sydney Property Market. #harrispartners #housing #rentalcrisis #rba #sold #home

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Episode Transcript

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Speaker 3 (00:41):
Yeah, we like a Monday Nice to check in with the
real estate market, and tonightwe've got Peter O'Malley,
principal with Paris Partners,so he's right at the cul-face.
Peter, good evening once again.
Yeah, good evening to you, John.
Now let's look at auction ratesand clearance rates.
How are they going?
Because the year, the year,really only gets going after the

(01:01):
Australia Day weekend.
So how are we looking at themoment?

Speaker 4 (01:06):
Look, there is more stock on the market at the
moment, john, than what theynormally is at this time of year
.
I've never seen so manylistings come to market as what
has come on the market beforeAustralia Day.
So that tells me that there's abit of nervousness amongst
vendors, rushing theirproperties to market at an
earlier point in the year thanthey normally would.
I expect the market to open upcautious.

(01:28):
If we compare this January withlast, there's more stock on the
market and there's slightlymore active buyers in the market
.

Speaker 3 (01:37):
So there's an obvious question flows from that If
people are listening to us rightnow, if they're considering
selling or considering buying, Iguess considering buying, you
can't afford to delay.
But if you're consideringselling, would you jump in now
or wait and see what would youdo?

Speaker 4 (01:54):
It's a tricky equation.
I think you've got to followevents.
John is the right answer.
The RBA obviously increasedinterest rates last November and
that is what caused the risingmarket of 2023 to turn.
The market is expecting ratecuts some stage in 2024, but it
is pin the tail on the donkey,if you like, trying to ascertain

(02:16):
the point in time when the RBAactually make that cut in
interest rates.
We must keep in mind that ifthe RBA take the view that they
need to cut rates, which is whatthe market's looking for
they're doing so to support theeconomy and the property market
because it has turned.
So I think as a vendor, youlook at the market early in the

(02:37):
year and say I'm comfortablewith where prices are at for my
home now, when you go straightaway, or you take a wait and see
approach to see how thisadditional stock compared to
last year's stock levels playsout.

Speaker 3 (02:52):
And then you've got the rental market, which is such
a hot issue, particularly amongyoung people.
We saw it the weekend more than100 people queuing up to view
one of two apartments, and thesewere both in the $800 to $900
range.
There's no sign of this ending,is there?

Speaker 4 (03:09):
There's not, john.
There's nothing on the horizonto suggest that tenants will
have an easier time of it in2024, or 2025 for that matter.
We've seen 60 people, 60parties turning up to inspect
one-bedroom units in the innercity ourselves this year.
So the rental crisis is realand I think we can only expect

(03:29):
rents to keep going up, giventhey're the numbers.
I would caution that January isthe peak time for leasing, so
this is when we do see the mosttenants activity, particularly
with international studentscoming into the city for the
forthcoming university year.
But nevertheless, we do havestructural issues in the rental
market.

Speaker 3 (03:50):
Yeah, what about investors, people who are
looking to invest at the momentin the market, if they think
it's the right time to do it andit becomes steeper and steeper?
In the cities, I'm guessing, inregional areas, because you can
invest anywhere in the country,can't you?
You don't have to actually livenear where you're investing.
Have you got any advice forthose people?

Speaker 4 (04:08):
Look, buy-and-hold investors are really not
interested in the inner citymarket at the moment.
They're probably the leastrepresented by a profile in the
market.
The one thing about going tothe regional markets at the
moment, john, is you still maybe paying a premium as a
overhang from what happenedduring COVID, as people left the

(04:29):
city and went and bought asecond residence or moved to
these regional towns.
So whilst you may get a betteryield in the regional markets at
the moment, the capital growthin the forthcoming years may not
be as strong.
One needs to be really carefulabout investing in regional
markets, because COVIDessentially caused a price
bubble in some of those markets,in many of those markets, as

(04:52):
people fled the cities to getaway from the COVID lockdowns.

Speaker 3 (04:56):
I guess the older generations look at the amount
of money being charged forhousing right now and wonder how
it's possible people can evencontemplate getting into the
market.
And then you look at the rental.
The amount of money being spenton rent makes it really hard,
doesn't it?

Speaker 4 (05:12):
It does.
And, john, I took the libertyto start the year to go out and
conduct a few rental open housesmyself.
I wanted to see what washappening on the ground and one
of the big takeouts that I tookfrom that there was a lot of
parents turning up to rentalopen houses with their children,
both to see what the kids areseeing on the ground, give them
some moral support and act as aguarantor for their rental

(05:34):
application if they wanted totake the subject property.
So the parents yes, they werethe bank of mum and dad in years
gone by, as we know, butparents are now actively getting
involved in helping theirchildren secure a rental
property because it's so toughout there.

Speaker 3 (05:50):
Yeah, and the leases for rental properties, like how
they is it?
What's the length of the lease,typically?

Speaker 4 (05:57):
It's negotiable.
A landlord would not probablywant to enter into a two-year
lease at the moment because themarket is rising and will
continue to rise.
Most landlords accept asix-month lease is too short, so
the happy medium tends to be a12-month lease, and that's what.
80% to 90% of all leases wouldbe written up as 12-month leases

(06:18):
.

Speaker 3 (06:18):
Are there many situations where you've got
someone who's been there foryears, a happy someone's very
happy.
They've got their tenants.
They're probably charging a bitless than the market would be
because they're happy thatthey're there and they look
after the places.
Is there much of that happening?

Speaker 4 (06:33):
There's not a great deal, but it does happen.
We are selling an apartment atthe moment in Balmain where the
tenant's been there for 23 yearsand I remember the property
being painted before she went inthere and she's had 23 great
years there and she's actuallyleased it directly or paid the
owner directly for the rent andthey enjoy a good relationship.
The owner's at a point nowwhere she's actually selling

(06:54):
that apartment and the tenant'smoving on.
But yeah, there are somegenerational tendencies, that's
for sure.

Speaker 3 (07:01):
In a situation like that, would there be the
prospect of saying well, we'reselling it If you want it as an
investment.
I've got a fantastic tenanthere.
Does that ever happen?

Speaker 4 (07:12):
It does happen, but not at this point in the market
Cycle, john, because, as I say,given what the value of that
apartment is and verse what therental return is, it's not going
to really appeal to a buy andhold investor.
The people there's about threeor four buys are on that one at
the moment and they all want tomove into it and renovate it.

Speaker 3 (07:29):
Yeah, okay, fenta.
And with auctions are theyactually going to auction?
Because when the market'sreally hot, you've got people
going in early, don't they?
They make an offer beforeauction to try and get it.

Speaker 4 (07:40):
Yeah, a pre-auction bid.
That's right, and the salesthat we've seen this year across
the marketplace are pre-auctionbids, where the buyer's
stepping out saying I don't wantto wait to the big day or I
don't want to buy under thepressure of an auction situation
.
Here's a strong offer, now takeit or leave it, and in some
cases the vendors are grabbingthem.
So what we saw late last year,john of the auction success

(08:03):
stories about half of them wereselling prior to the auction and
half were selling under thehammer on the day.

Speaker 3 (08:08):
All very interesting at the beginning of the year,
but, as you say, there's moreactivity now than there was 12
months ago.
Let's see how this pans out aswe move through 2024, peter, as
always, it's great to have youwith us and we'll try and keep
in touch during 2024.

Speaker 4 (08:22):
Yeah, look forward to it.
Thanks very much, John.

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