2GB Sydney Now with Luke Bona

Sydney's property market shows resilience with auction clearance rates of 76% despite winter conditions and the Reserve Bank holding interest rates. The market is experiencing "artificial strength" due to extremely low housing stock levels while buyer numbers remain consistent.

• Domain reports Sydney auction clearance rate at 76%, up from 62% during the same weekend last year
• Unit market continues to underperform houses due to ongoing concerns about building defects
• Rental crisis shows no signs of improving with queues at winter inspections, which is highly unusual
• Basic granny flat in Avalon commanding $690 per week
• Immigration policy contributing significantly to rental pressure
• Building industry hampered by high costs, labor shortages, and competition from government infrastructure projects
• Developers struggling to make projects financially viable due to increased material and labor costs
• Market expected to remain strong with little downside risk due to continued low supply and expected future interest rate cuts

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Episode Transcript

Speaker 1 (00:00):
Yeah, I had a funny conversation on air last Friday
with a very good mate of mine,charles Tarby, who rang in
because he was upset that I saiddrivers aged 70 and over should
have an S plate for seniors.
And he rang in because Charleshas just turned 70 and he gave
me a gob full.

(00:21):
It was very funny.
And then we got talking aboutthe Reserve Bank leaving
interest rates on hold and Isaid well, how about we have a
chat on Monday?
We look at the CoreLogic TimLawless CoreLogic figures over
the weekend, have a look at whatthe auction results are and see
if that's had any effectInterest rates staying where
they are.
And then he texts me onSaturday and says oh, mate, I'm

(00:42):
going to China.
I forgot.
But very, very generously,peter O'Malley from Harris
Partners Real Estate is joiningus because I really want to hear
these figures, peter, thank you.

Speaker 2 (00:52):
So much Pleasure, Luke.
How are you?
Yeah, bloody tarby.
Well, if you meet Charles, youwouldn't pick him for 70.
I'll say that I know him verywell.
I know him very well.

Speaker 1 (01:03):
I know him very well and his wife's 30.
And he's just had two youngchildren, two brand-new children
, that's right.

Speaker 2 (01:11):
No stopping, charles, rest assured.

Speaker 1 (01:13):
No stopping him, but Peter Harris Partners Real
Estate really appreciate this.
So look, I know wintertraditionally isn't a great time
for auctions People don't wantto stand in the driveway of a
house if it's raining and windyand cold.
But I just thought it'd beinteresting to have a look at
what happened last weekend, withthe Reserve Bank making that
decision.
What are your thoughts on?

Speaker 2 (01:33):
all of this, I thought it was a pretty decent
result for the weekend, luke,the Reserve Bank's decision did
disappoint, there's no doubtabout that, but I think there is
an expectation that we'll getthat rate cut on August 12.
The thing that's powering themarket at the moment or
supporting it, if you like, is acomplete lack of stock.
As you say, the weather has notbeen the best and winter is

(01:55):
traditionally a very low seasonfor stock levels, and in turn
that creates artificial strengthbecause there's the same amount
of buyers competing for lesshomes.
Artificial strength becausethere's the same amount of
buyers competing for less homes.
So Domain had their preliminaryclearance rate at 76% in Sydney
last weekend and on the sameweekend last year it was at 62%.

(02:15):
So I think it was a goodweekend overall.

Speaker 1 (02:18):
It was.
Have you got the figures there?
What about units?

Speaker 2 (02:24):
It doesn't give us a breakdown on units, but units,
generally speaking, areunderperforming houses.
The unit sector has beenbattered over the last few years
about many of the high-profilebuilding issues and strata
issues impacting the modernhigh-rises.
So you're always going to get alower reading in Sydney on

(02:45):
apartments than what you are onhousing.

Speaker 1 (02:48):
What's the rental Sydney market like at the moment
?
Is it still impossible?
I saw this is just.
For example, I saw on a websitejust on the weekend a rental
property at Avalon, Sydney'sNorthern Beaches.
Yes, A granny flat studio.
It wasn't anything flash.

(03:09):
It was furnished with a bed anda few things $690 a week.

Speaker 2 (03:15):
Yeah, I'd believe it $690 a week.
Look, there is no respite comingin the rental crisis.
Unfortunately, the immigrationpolicy is way too loose and
we're just not building.
We're not even close tobuilding the sort of supply in
this city that's required.
So, as hard as it, as hard asit is for tenants to hear, the

(03:35):
rental crisis will go on foryears yet.
Luke and that's characterizedby the rental market is usually
fairly soft in winter, and thiswinter has been very strong from
a seasonal perspective inwinter, as we're still getting
queues turning up to rental openhouses, which rarely happens in
winter.
The big queues that you see themedia often promoting is

(03:57):
usually at the beginning of thecalendar year, when people are
resetting themselves for theforthcoming year.
Winter's a dead spot for therental market, but this year has
been surprisingly strong.

Speaker 1 (04:07):
So you're saying, listen, just curb immigration
until we have housing undercontrol?
Because one of the first thingsyou said with me this afternoon
was there's a lack of stock.

Speaker 2 (04:19):
There's a lack of stock and you either need to
bring more product to marketquicker or curb immigration, as
you say.

Speaker 1 (04:25):
But also we have a lack of tradies.
Not enough young Australianswant to become apprentices and
building materials.
The cost has gone way high too.

Speaker 2 (04:35):
All of that is contributing to the lack of new
supply coming to market.
I've only had developerstelling me today building costs
are cruel.
In them they can get the trades, notwithstanding that major
government infrastructureprojects are absorbing a lot of
the trades in the marketplace.
They can get tradies that areprepared to do the work for them

(04:56):
, but labour costs and buildingcosts have skyrocketed, making
the projects unfeasible.
And until the government workout an incentive that makes
developers want to build andwe're going to continue to have
these issues.

Speaker 1 (05:10):
Luke, yeah, all right , so not a bad weekend,
continuing this winter.
It was sunny but, yeah, lack ofstock.

Speaker 2 (05:18):
I think you'll continue to see a very strong
market going forward from here.
I don't see any downside forthe property market from this
point because of the immigrationpolicy, the lack of stock and
the cost of money is coming down.
I think we need to have thequestion is the property market
and the prices of what it takesto buy a house in Sydney?
Is it too high for our own good?

Speaker 1 (05:39):
Yeah, interesting stuff.
Hey, listen, you've been great.
Thank you, peter O'Malley.
All the best, luke.
Thank you, peter O'Malley, fromHarris.