March 27, 2024 • 21 mins
Welcome to another episode of Current Market Insights, as we tackle the complexity of importing tradespeople to alleviate housing shortages, it becomes evident that this quick fix might just be fanning the flames of the crisis. The dialogue unveils the stark contrast between political promises and the growing influx of newcomers, stirring up the political scene as elections approach. Could investing in local talent be the true solution to a stable property market future? The conversation with Peter probes deep into this pressing issue, scrutinizing government strategies and the potential for more sustainable practices.
Navigate the tricky tides of post-pandemic lifestyle market pricing with us as we shed light on the deceptive practice of over-quoting in regional areas. With tactics straight from the insiders, we will guide you through the maze of property valuation, equipping you with strategies to avoid overpaying for your dream home. Plus, don’t miss our latest insights into the Sydney property market's surprising upsurge in auction clearance rates and how seasonal shifts might influence your property decisions. Join us for a robust exploration of these real estate dynamics, where knowledge isn't just power—it's your ticket to making savvy, informed investments in a challenging market.
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Episode Transcript
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Speaker 1 (00:00):
All down, all silent, going, going, going, go on son
Congratulations.
Speaker 2 (00:07):
Welcome to the Current Market Insights podcast
brought to you by HarrisPartners Real Estate.
Each episode we chat with realestate author and industry
leader, peter O'Malley, todiscuss the current property
market conditions and provideinsights to assist you on your
property journey.
Speaker 3 (00:29):
Hello and welcome to another edition of Current
Market Insights.
I'm your host, kieran O'Brien,and with me, as always, is my
good friend, mr Peter O'Malley.
Peter, hello G'day, kieran.
Great to be with you, great tosee you, peter.
I want to jump straight in thisweek and talk about a pretty
hot topic, that is, migration,particularly skilled migration.
It is something the governmenthas spoken about at length over
the last, say, six to 12 months.
(00:51):
It's something that we'vetouched on on the podcast in
regards to how it relates tosupply and demand in housing,
but I'm interested to get yourthoughts on what's the current
situation with the skilledmigration list.
What is the government doing tohouse these people and what
proposals do they have in place?
Speaker 1 (01:07):
Kieran.
This ticked off again this week, this topic because a report
came out saying that the countryneeds to import tens of
thousands of tradies to help usovercome the housing shortage
that we're experiencing in ourcapital cities.
The thing about bringing tensof thousands of new tradies into
the country is they add to thehousing shortage before they fix
(01:29):
it.
And if you go back to COVID andwhat happened to the
construction industry and howpeople plan to get themselves
through the constructionindustry plan to get itself
through COVID.
A lot of new projects stopped.
Plan to get itself throughCOVID.
A lot of new projects stoppedand very few particularly
massive scale projects occurredduring COVID.
(01:50):
Now, that's fine if thepopulation numbers were going to
remain steady, but coming outof COVID, we had all-time lows
in terms of new dwelling starts,with the government clearly
having an agenda in their ownmind to flood the country with
high immigration to createeconomic activity and break the
(02:11):
labour shortages that are beingexperienced in the market.
So the supply side has beenstarved at a time that it's
copped a demand shock between2022 and where we are today.
So we're now in this ridiculoussituation where demand is
clearly outstripping supply andto get more supply, the
(02:32):
government is saying we need toadd to housing demand by housing
tens of thousands of newbuilders and tradies into the
economy, and people sitting athome listening to all of this
are up in arms saying how did weget in this situation where
we've got to make the housingcrisis work worse?
I should say, before we make itbetter.
Speaker 3 (02:52):
So what does the government have in mind here?
Are they just envisioning thata, let's say, a carpenter from
somewhere afar comes in with hisfamily and says okay, we're
here now, myself, my wife and my, let's say, three kids?
Argument's sake, we're here tosolve the housing crisis in
Sydney, but hang on, we can'teven get started on me finding a
(03:13):
job or getting to work, orfinding a sponsor or whatever it
may be, because at the momentwe actually can't find a house
to live in ourselves.
So what do these people do whenthey land in Australia to solve
this crisis that, unfortunately, they are an unwilling part of?
Speaker 1 (03:26):
I can't be certain, but I'd imagine that the
government are probably trading,you know, targeting a younger
demographic than establishedfamilies from overseas.
Moving an established family toanother country is a far
greater decision than enticing a, you know, a working age, 25
year old whoold who's fullyqualified as a carpenter,
(03:48):
electrician, builder, whateverit may be, into the country.
So the government didn't comeout this week and talk about the
needs that the economy needstens of thousands of new tradies
.
That was a report by theHousing Industry Association.
Where the government do need tocop some blame here is the
Prime Minister.
Anthony Albanese did tell thecountry over Christmas that he
(04:12):
was listening on migration andthat they were going to tone
back the numbers.
And clearly the numbers arecoming out now, suggesting that
the number of new entrants intothe country is accelerating, not
decreasing as promised by thePrime Minister.
So that's a big problem for himthere, because he's got major
industries telling him that weneed to maintain high
(04:33):
immigration into the country toalleviate employment challenges.
But the more people that theyinvite into the country, the
worse the housing crisis gets,even if some of those workers
are here to try and alleviatethe housing crisis.
And it all goes back to thefact, as I say, that the housing
demand is now in front ofhousing supply because of what
happened with the lack of newsupply coming out of COVID, and
(04:57):
it's just been badly puttogether.
Speaker 3 (05:00):
Okay, so we agree there is a housing crisis and
the government for good or bad,let's assume they're trying to
do something about it.
Flipping over, though, to theskills shortage does it not make
more sense for the government,albanese or otherwise, to invest
in training young Aussie kidsto become tradies, to become
builders?
Speaker 1 (05:19):
to become sparkies Too long.
There's an immediate need, hereand now.
Yes, in a perfect world, whatyou've just outlined is correct,
but we need new housing nextweek.
A trade takes four yearsconsistently throwing band-aids
on problems.
Speaker 3 (05:32):
It's like trying to I envisage trying to use some, uh
, some tape, some duct tape, tostop a leak in a pipe and as you
plug one bit, another bit popsopen and away you go uh, look,
(05:53):
that's a noble view that you'vejust outlined there, kieran, but
the electoral cycle is muchshorter than what you've just
put forward.
Speaker 1 (06:00):
So in 18 months, anthony albanese he needs to go
back to the people and then, onthe current housing crisis that
we're experiencing with thesurge in immigration, he's going
to face enormous electoralissues if he doesn't fix this.
So we're at a political crisisstage now, where Australians are
struggling to house themselvesand feed themselves, with the
(06:22):
cost of living crisis combinedwith the housing crisis, and it
all comes back to, as I say, theorigins of it.
They've allowed demand to getin front of supply and if you're
only a solution to increasingthe supplies to invite more
people in, you're making theproblem worse before you make it
better.
Speaker 3 (06:41):
So the government's got a big issue there yeah,
they've certainly got some soulsearching to do and they have a
lot of work to do in the next 18months.
I think it's a perfectopportunity, pete, to segue.
The migration numbers haveincreased demand for the limited
supply and, as we talked aboutpreviously, have put pressure on
the rental market.
We haven't touched on it for alittle while, but I'm wondering
(07:01):
if you have a bit of a sense ofwhat's happening in the rental
market at the moment and have weseen a shift in that heat that
was in the market, say, three,four weeks ago when we last
spoke about it?
Speaker 1 (07:10):
Yeah, look a good time to take another look at the
rental market, kieran.
The peak months for the rentalmarket are January February, as
people reset themselves for theforthcoming calendar year, and
this year was no different toany other calendar year, where
the rental market was verystrong through January and
February.
As we start heading towardEaster and winter is within
(07:31):
sight you do notice that theactivity in the rental market
does settle down, and that woulddescribe what is happening at
the moment.
So the sheer weight of numbersthat were being experienced at
rental open houses throughJanuary and February has now
subsided and we're seeing moreorderly numbers and I think
after Easter you may even seethat tail off a bit further as
(07:54):
we head towards the cooler month, which is traditionally the
slowest part of the year for therental market.
Speaker 3 (08:01):
One thing I've noticed doing rental opens on
the weekends, Pete is that whenI look at the number of
registered people to attend anopen home, it's quite sizable on
some properties, but the numberthat actually show up at the
house are either completelydifferent people or the number's
not quite as high.
Do you think that that is areflection of people when
they're browsing the real estateportals just blanket, you know,
(08:24):
know, putting everything intheir calendar and getting an
opportunity to go see it all andthen deciding on those they
really like?
Or are people getting a betteropportunity to actually lease a
property at the moment so theyno longer need to go and look at
them all?
Speaker 1 (08:36):
I'm not quite sure we're at a point where tenants
could say they're getting abetter opportunity.
I think it's much easier toclick a property online and make
it one of your favorites or oneof your target properties.
It's much easier to click aproperty online and make it one
of your favourites or one ofyour target properties.
It's much easier to do thatthan it is actually to attend
the inspection in person.
On the following Saturday,events happen, et cetera.
As a realtor, they're a looseindicator the amount of people
(08:59):
that are pre-registered toattend an open house versus the
attendees.
It's interesting to see thatyou're getting good numbers, but
the numbers don't necessarilycorrelate with the people who
are pre-registered.
There's probably a bit oftenancy fatigue out there where
if you have applied because it'snot straightforward applying
for a property there's a bit ofeffort involved, and if you're
(09:19):
applying for four or fiveproperties a week and missing
out on them, it's understandablethat every couple of weeks or
so you might take a break fromthat.
Speaker 3 (09:27):
Yeah, interesting thoughts.
I've also noticed that a lot ofthe properties I go to there
are already people who haveapplied and it may be the first
open home, but that just says tome that there are people out
there just throwing their hatinto all of these rings hoping
that they can land one on theother side.
Speaker 1 (09:43):
Yeah.
So whilst we say this istraditionally a time of year
where the rental market beginsto cool down, there's no doubt
that the rental market isprobably slightly stronger this
March than what it was lastMarch, and I think that this
April will be stronger than whatit was last April.
So how we describe that is thatwe're getting higher lows, or
(10:05):
higher dips in the rental marketand higher highs.
So make no mistake, overall,the Sydney rental market is in
an upward trend.
No market moves in anydirection in a straight line.
It always has periods ofconsolidation, as discussed.
That tends to be in winter inSydney, tends to be in winter in
(10:27):
Sydney, but absolutely we'regetting higher lows, which
suggests that the underlyingdemand for Sydney housing is
still very high, and that'sunsurprising because the
government have exceeded theirown targets, if you like, in
terms of new migrants cominginto the country.
Speaker 3 (10:40):
Yeah, interesting thoughts as we wrap up the
rental discussion.
I wonder, given we've talkedabout the really strong growth
in the market over the last 12to 18 months the post-COVID
growth do you think we've nowreached a period where, as you
say, it gets a little bitquieter?
Should we expect that rentswill hold relatively stable now
until we get towards the busytime at the end of the year, or
do you think there'll still besome gradual increase as some of
(11:02):
those leases come off?
The rate of growth willdefinitely settle down.
Speaker 1 (11:05):
It's a bit hard to tell whether we will flatline in
terms of rents here or continuerising, and that does really
come down to how many newentrants enter the country.
What we must keep in mind aboutthe migrants that are being
invited into the country at themoment is they're coming in with
very strong currencies relativeto the Australian dollar, so
(11:28):
when they get here whilst we'reexperiencing a cost of living
crisis, they're actually findingAustralia relatively cheap
because of where the Australiandollar is sitting.
So they're pretty formidableopponents out there looking for
rental properties, given wherethe Australian currency is at at
the moment.
Speaker 3 (11:45):
Great insights into the rental market there, peter,
thank you.
I wanted to pivot, if I can,into more of a sales focus now
and talk about lifestyle markets.
It's something you have touchedon as a strongest segment of
the market in previous podcasts,but I'm interested to get your
insights into what's actuallyhappening in lifestyle markets
at the moment, and is there adefinite change or a shift in
(12:08):
the market conditions that mayindicate that it's a better or a
worse opportunity for somepeople?
Speaker 1 (12:13):
Yeah, coming out of COVID, when return to office
commenced in earnest, theregional markets the lifestyle
markets had a bit of a dip asmoney and population pressure
headed back towards the city.
Now that that's settled down andthere are some people that are
still able and wanting to workfrom home lifestyle markets
(12:35):
they're performing solidly,without being spectacular.
I was speaking to some peoplewho are looking at moving to
lifestyle markets from the innercity of Sydney in the last week
and they all explained onephenomenon to me that happens in
lifestyle markets, which is theexact opposite of what tends to
happen in the city markets, andthat's over quoting.
(12:56):
So in the city markets, as weknow, under quoting is just
endemic.
It's just in agents DNA tounder quote the value of the
property, create a bidding warand then let the best buyer win
on the day where you see theexact opposite in lifestyle
markets, where the vendors quiteoften will overprice without
any deadline on the sale andessentially what they're looking
(13:18):
for is a sucker from Sydneywho's cashed up, who comes in,
who doesn't understand thenatural lay of the landscape and
inadvertently overpays for aproperty.
So I think if you are going tosell in Sydney and move to a
lifestyle market, you need to bereally, really careful of not
taking asking prices tooliterally, because just as it's
(13:39):
common in the city for agents tounderprice the value of
properties by 10 or 20% toattract buyers, it's also
equally common in lifestylemarkets for vendors to overprice
the value of properties by 10or 20% to attract buyers.
It's also equally common inlifestyle markets for vendors to
overprice by 10 or 20%.
Hanging out for a Sydney suckerwho doesn't do their research.
Speaker 3 (13:55):
Do you think there might also be a little bit of
psychology at play there, otherthan hoping there's a Sydney
sucker out there?
But by over-quoting theseproperties by, say, 10 or 20%?
When someone a slick citydweller comes down and tries to
negotiate on a property and theyyou know they badger that
vendor down by 10%.
They feel fantastic because ofthe bargain they've achieved and
(14:16):
in fact that vendor's thinkinggreat, we just got 10% more than
we would have got to a localbuyer.
Do you think that's a genuinetactic to to try and keep them
at a still relatively elevatedprice?
Speaker 1 (14:26):
yeah, I have little doubt that's.
That's the full intention of itand that's why you should
always judge your offer based onrecent comparable sales and you
should never judge your offerbased on what the vendor is
asking or what another vendor inthe marketplace is asking for a
similar property to the oneyou're interested in.
So as I explained it today tothe people I was with is you
(14:48):
might go into a lifestyle marketthese people were looking up
the mountains, for example, youmight find three properties that
you like.
Two are wildly overpriced andone's modestly overpriced.
But make no mistake, relativeto the recent sales in that
suburb, all three properties areoverpriced, just to varying
degrees.
So you should never make youroffer based on what a vendor's
(15:09):
asking price is in theselifestyle markets.
You must get hold of a list ofcomparable sales so you know
exactly what properties havebeen trading for and make your
offer accordingly.
Speaker 3 (15:21):
Well, once again, this comes back to ensuring you
do your research, which issomething we hammer on every
single time we talk, no matterwhat that research is.
As we wrap up, then, aboutlifestyle, I'm interested to
just get your sense of whethersomeone moving from, say, sydney
to the mountains or down thecoast or whatever it might be,
do you think it's worth theirwhile engaging with, say, a
buyer's agent or a local agentto try and assist them to get
(15:43):
into the local market.
Speaker 1 (15:45):
What I encourage these people to do today is, I
said go and ask a competing realestate agent what they think
about the property that you'regoing to buy.
And that's where you get freebuyer's agency advice.
That's a great idea.
So what you do is, if you'regoing to buy a property from ABC
(16:05):
Real Estate, go to XYZ RealEstate and say, look, I like
your property at 10 Smith Street, but I'm also comparing it to
the one at 2 Evans Street withXYZ Real Estate.
Could you tell me where youthink the differences are
between the two properties?
In your opinion, and in 80% ofinstances, the agent will
(16:25):
absolutely talk their ownlisting up.
That's fair enough, but they'llalso fall for the sucker punch,
which is telling you what theflaws are in the other property
and how much it's overpriced byyeah, that's a really clever
idea, peter.
Speaker 3 (16:38):
I guess the only risk there is that you ring up good
guy Gary, who doesn't want todisparage his opponent's
listings, and says no, no, no,that's a wonderful property with
an excellent price as well.
Speaker 1 (16:47):
And the smaller the township, the more likely that
is to happen.
You're absolutely right, kieran.
I'm not saying it's a foolproofstrategy, but if I were buying
in a regional town I'd speak toall the agents.
I wouldn't be obvious about thetactic that I'm adopting where
I want one agent to tell me thedownside of another agent's
listing.
But that's what I would beworking toward.
Speaker 3 (17:07):
Yeah, really great advice, and I'm sure that one of
our listeners out there will beable to utilise that sometime
in the future.
Shifting then to the Sydneymarket, which is our bread and
butter, peter, let's get a bitof a market wrap on what's been
happening this week,particularly our favourite.
What's the auction clearancerate done since we last spoke?
Speaker 1 (17:23):
Look, had a pretty good week actually.
It had slipped from the sort of53, 54s Kieran, down to an even
Steve and 50% in the last fewweeks.
Last weekend was the highestauction volumes that we'd seen
all year, so it was a big test.
Oh this was the Super Saturday,right Of sorts, yeah, but it was
(17:47):
the highest volume of auctionsthat we'd seen on one day all
year, and for quite some time, Imight add and it came in at a
very healthy 57.1%.
So there was some suggestionthat the market might have been
starting to slide or cool thereto some degree.
Keeping in mind these are notauction clearance rates as per
the industry wants us to believethem.
This is SQM Research's auctionclearance rate here, where they
(18:10):
have collated the results ofevery property that was
scheduled for auction, whetherthe agent wants the community to
know or not, that it did ordidn't sell.
So that's a very real 57, veryhard number there and that's
solid.
Equally interesting, 10% moreproperties sold under the hammer
than they did prior.
As we know, in recent timesthere'd been a trend for more
(18:33):
properties to sell prior toauction than there had been
selling actually at auctionunder the hammer.
I spoke to a couple of people atboard on the weekend, one
particular friend and client.
He went to bid at an auctionwith a guide of 1.9,
subsequently found out thevendor's reserve was 2.4.
When the auctioneer called fora bid, he attempted to offer 1.9
(18:58):
and the auctioneer said we'renot taking any bids under 2
million, even though the auctionguide for four weeks had been
1.9 million.
So he went on to secure thatproperty.
It was a good piece of realestate.
Speaker 3 (19:11):
but yeah, the underquoting is a big part of
what's going on out there in theauction market at the moment
really interesting anecdote andI'm glad you brought that up
because I was going to ask thehigher clearance rate on a
higher volume does it indicatethat maybe the other agents are
starting to learn and they'rebringing their prices back into
line with where they should be?
Or is it an indicator thatperhaps some more quality real
(19:34):
estate is coming to market?
Or is it just the fact thatthere are still plenty of buyers
out there and there's so muchproperty available that people
are just committing and sayingyou know what?
I've had enough of this game,this charade.
I just want a house for myfamily and I.
Speaker 1 (19:47):
Yeah, look, there's a sense that we're on the
doorstep of winter.
Now what are we coming up to?
Sort of first month of autumnis nearly done.
Stock will tighten duringwinter.
People that haven't secured theright property during the
summer and they see that, uh,you know, the right property is
now available, um, in earlyautumn.
And let's grab this once wecome out of uh, come out of
(20:08):
easter.
I assume daylight saving willfinish over easter, will it?
Speaker 3 (20:11):
yeah, it will yeah.
Speaker 1 (20:12):
So we'll come out with a sort of a more of a you
know, late autumn wintry feelafter the next weekend or two
school holidays during April.
You'd think, in terms of familyhomes, that any family that did
want to sell prior to thespring has probably just about
got the property on the marketas such.
So I think buyers just didn'tmuck around.
(20:33):
Last week, if I can speak to toto my client who was at that
auction the competition was notreally there for him to pay the
price that he ended up payingfor the property.
But he didn't want to muckaround, he just wanted to buy
the property and get on with therest of his life.
And I think that attitude tookhold last Saturday as people
were sick of playing games withagents and frustrated by the
(20:56):
whole pricing nonsense, knowingnobody believed the property
would sell for $1.9 or $2 oreven $2.1.
So they got together and gotthe deal done.
But why you would try and tellthe marketplace they can buy a
property for $1.9 when thevendor's reserve is $2.4 is
beyond me.
Speaker 3 (21:14):
Yeah, it's a heartless tactic, Peter, and one
that I certainly don't agreewith.
I think really reallyinteresting results in the
market wrap this week and I'mcertainly intrigued to see what
happens next week as we have alook through the Sydney property
market again.
So, Peter, thanks for joiningme again this week.
Speaker 1 (21:30):
Yeah, thanks, kieran, all the best.
Speaker 3 (21:31):
And thanks to everyone for listening, as
always.
If you have any questions oranything you'd like us to talk
about, please do reach out hereto us at Current Market Insights
.
But until next time, thanks forlistening.
Speaker 2 (21:41):
Thanks for joining us on the Current Market Insights
podcast Brought to you by HarrisPartners Real Estate, the
podcast providing real estateinsights you won't find anywhere
else.
All down, all silent, going, going, going, go on son
Congratulations.
Speaker 2 (00:07):
Welcome to the Current Market Insights podcast
brought to you by HarrisPartners Real Estate.
Each episode we chat with realestate author and industry
leader, peter O'Malley, todiscuss the current property
market conditions and provideinsights to assist you on your
property journey.
Speaker 3 (00:29):
Hello and welcome to another edition of Current
Market Insights.
I'm your host, kieran O'Brien,and with me, as always, is my
good friend, mr Peter O'Malley.
Peter, hello G'day, kieran.
Great to be with you, great tosee you, peter.
I want to jump straight in thisweek and talk about a pretty
hot topic, that is, migration,particularly skilled migration.
It is something the governmenthas spoken about at length over
the last, say, six to 12 months.
(00:51):
It's something that we'vetouched on on the podcast in
regards to how it relates tosupply and demand in housing,
but I'm interested to get yourthoughts on what's the current
situation with the skilledmigration list.
What is the government doing tohouse these people and what
proposals do they have in place?
Speaker 1 (01:07):
Kieran.
This ticked off again this week, this topic because a report
came out saying that the countryneeds to import tens of
thousands of tradies to help usovercome the housing shortage
that we're experiencing in ourcapital cities.
The thing about bringing tensof thousands of new tradies into
the country is they add to thehousing shortage before they fix
(01:29):
it.
And if you go back to COVID andwhat happened to the
construction industry and howpeople plan to get themselves
through the constructionindustry plan to get itself
through COVID.
A lot of new projects stopped.
Plan to get itself throughCOVID.
A lot of new projects stoppedand very few particularly
massive scale projects occurredduring COVID.
(01:50):
Now, that's fine if thepopulation numbers were going to
remain steady, but coming outof COVID, we had all-time lows
in terms of new dwelling starts,with the government clearly
having an agenda in their ownmind to flood the country with
high immigration to createeconomic activity and break the
(02:11):
labour shortages that are beingexperienced in the market.
So the supply side has beenstarved at a time that it's
copped a demand shock between2022 and where we are today.
So we're now in this ridiculoussituation where demand is
clearly outstripping supply andto get more supply, the
(02:32):
government is saying we need toadd to housing demand by housing
tens of thousands of newbuilders and tradies into the
economy, and people sitting athome listening to all of this
are up in arms saying how did weget in this situation where
we've got to make the housingcrisis work worse?
I should say, before we make itbetter.
Speaker 3 (02:52):
So what does the government have in mind here?
Are they just envisioning thata, let's say, a carpenter from
somewhere afar comes in with hisfamily and says okay, we're
here now, myself, my wife and my, let's say, three kids?
Argument's sake, we're here tosolve the housing crisis in
Sydney, but hang on, we can'teven get started on me finding a
(03:13):
job or getting to work, orfinding a sponsor or whatever it
may be, because at the momentwe actually can't find a house
to live in ourselves.
So what do these people do whenthey land in Australia to solve
this crisis that, unfortunately, they are an unwilling part of?
Speaker 1 (03:26):
I can't be certain, but I'd imagine that the
government are probably trading,you know, targeting a younger
demographic than establishedfamilies from overseas.
Moving an established family toanother country is a far
greater decision than enticing a, you know, a working age, 25
year old whoold who's fullyqualified as a carpenter,
(03:48):
electrician, builder, whateverit may be, into the country.
So the government didn't comeout this week and talk about the
needs that the economy needstens of thousands of new tradies
.
That was a report by theHousing Industry Association.
Where the government do need tocop some blame here is the
Prime Minister.
Anthony Albanese did tell thecountry over Christmas that he
(04:12):
was listening on migration andthat they were going to tone
back the numbers.
And clearly the numbers arecoming out now, suggesting that
the number of new entrants intothe country is accelerating, not
decreasing as promised by thePrime Minister.
So that's a big problem for himthere, because he's got major
industries telling him that weneed to maintain high
(04:33):
immigration into the country toalleviate employment challenges.
But the more people that theyinvite into the country, the
worse the housing crisis gets,even if some of those workers
are here to try and alleviatethe housing crisis.
And it all goes back to thefact, as I say, that the housing
demand is now in front ofhousing supply because of what
happened with the lack of newsupply coming out of COVID, and
(04:57):
it's just been badly puttogether.
Speaker 3 (05:00):
Okay, so we agree there is a housing crisis and
the government for good or bad,let's assume they're trying to
do something about it.
Flipping over, though, to theskills shortage does it not make
more sense for the government,albanese or otherwise, to invest
in training young Aussie kidsto become tradies, to become
builders?
Speaker 1 (05:19):
to become sparkies Too long.
There's an immediate need, hereand now.
Yes, in a perfect world, whatyou've just outlined is correct,
but we need new housing nextweek.
A trade takes four yearsconsistently throwing band-aids
on problems.
Speaker 3 (05:32):
It's like trying to I envisage trying to use some, uh
, some tape, some duct tape, tostop a leak in a pipe and as you
plug one bit, another bit popsopen and away you go uh, look,
(05:53):
that's a noble view that you'vejust outlined there, kieran, but
the electoral cycle is muchshorter than what you've just
put forward.
Speaker 1 (06:00):
So in 18 months, anthony albanese he needs to go
back to the people and then, onthe current housing crisis that
we're experiencing with thesurge in immigration, he's going
to face enormous electoralissues if he doesn't fix this.
So we're at a political crisisstage now, where Australians are
struggling to house themselvesand feed themselves, with the
(06:22):
cost of living crisis combinedwith the housing crisis, and it
all comes back to, as I say, theorigins of it.
They've allowed demand to getin front of supply and if you're
only a solution to increasingthe supplies to invite more
people in, you're making theproblem worse before you make it
better.
Speaker 3 (06:41):
So the government's got a big issue there yeah,
they've certainly got some soulsearching to do and they have a
lot of work to do in the next 18months.
I think it's a perfectopportunity, pete, to segue.
The migration numbers haveincreased demand for the limited
supply and, as we talked aboutpreviously, have put pressure on
the rental market.
We haven't touched on it for alittle while, but I'm wondering
(07:01):
if you have a bit of a sense ofwhat's happening in the rental
market at the moment and have weseen a shift in that heat that
was in the market, say, three,four weeks ago when we last
spoke about it?
Speaker 1 (07:10):
Yeah, look a good time to take another look at the
rental market, kieran.
The peak months for the rentalmarket are January February, as
people reset themselves for theforthcoming calendar year, and
this year was no different toany other calendar year, where
the rental market was verystrong through January and
February.
As we start heading towardEaster and winter is within
(07:31):
sight you do notice that theactivity in the rental market
does settle down, and that woulddescribe what is happening at
the moment.
So the sheer weight of numbersthat were being experienced at
rental open houses throughJanuary and February has now
subsided and we're seeing moreorderly numbers and I think
after Easter you may even seethat tail off a bit further as
(07:54):
we head towards the cooler month, which is traditionally the
slowest part of the year for therental market.
Speaker 3 (08:01):
One thing I've noticed doing rental opens on
the weekends, Pete is that whenI look at the number of
registered people to attend anopen home, it's quite sizable on
some properties, but the numberthat actually show up at the
house are either completelydifferent people or the number's
not quite as high.
Do you think that that is areflection of people when
they're browsing the real estateportals just blanket, you know,
(08:24):
know, putting everything intheir calendar and getting an
opportunity to go see it all andthen deciding on those they
really like?
Or are people getting a betteropportunity to actually lease a
property at the moment so theyno longer need to go and look at
them all?
Speaker 1 (08:36):
I'm not quite sure we're at a point where tenants
could say they're getting abetter opportunity.
I think it's much easier toclick a property online and make
it one of your favorites or oneof your target properties.
It's much easier to click aproperty online and make it one
of your favourites or one ofyour target properties.
It's much easier to do thatthan it is actually to attend
the inspection in person.
On the following Saturday,events happen, et cetera.
As a realtor, they're a looseindicator the amount of people
(08:59):
that are pre-registered toattend an open house versus the
attendees.
It's interesting to see thatyou're getting good numbers, but
the numbers don't necessarilycorrelate with the people who
are pre-registered.
There's probably a bit oftenancy fatigue out there where
if you have applied because it'snot straightforward applying
for a property there's a bit ofeffort involved, and if you're
(09:19):
applying for four or fiveproperties a week and missing
out on them, it's understandablethat every couple of weeks or
so you might take a break fromthat.
Speaker 3 (09:27):
Yeah, interesting thoughts.
I've also noticed that a lot ofthe properties I go to there
are already people who haveapplied and it may be the first
open home, but that just says tome that there are people out
there just throwing their hatinto all of these rings hoping
that they can land one on theother side.
Speaker 1 (09:43):
Yeah.
So whilst we say this istraditionally a time of year
where the rental market beginsto cool down, there's no doubt
that the rental market isprobably slightly stronger this
March than what it was lastMarch, and I think that this
April will be stronger than whatit was last April.
So how we describe that is thatwe're getting higher lows, or
(10:05):
higher dips in the rental marketand higher highs.
So make no mistake, overall,the Sydney rental market is in
an upward trend.
No market moves in anydirection in a straight line.
It always has periods ofconsolidation, as discussed.
That tends to be in winter inSydney, tends to be in winter in
(10:27):
Sydney, but absolutely we'regetting higher lows, which
suggests that the underlyingdemand for Sydney housing is
still very high, and that'sunsurprising because the
government have exceeded theirown targets, if you like, in
terms of new migrants cominginto the country.
Speaker 3 (10:40):
Yeah, interesting thoughts as we wrap up the
rental discussion.
I wonder, given we've talkedabout the really strong growth
in the market over the last 12to 18 months the post-COVID
growth do you think we've nowreached a period where, as you
say, it gets a little bitquieter?
Should we expect that rentswill hold relatively stable now
until we get towards the busytime at the end of the year, or
do you think there'll still besome gradual increase as some of
(11:02):
those leases come off?
The rate of growth willdefinitely settle down.
Speaker 1 (11:05):
It's a bit hard to tell whether we will flatline in
terms of rents here or continuerising, and that does really
come down to how many newentrants enter the country.
What we must keep in mind aboutthe migrants that are being
invited into the country at themoment is they're coming in with
very strong currencies relativeto the Australian dollar, so
(11:28):
when they get here whilst we'reexperiencing a cost of living
crisis, they're actually findingAustralia relatively cheap
because of where the Australiandollar is sitting.
So they're pretty formidableopponents out there looking for
rental properties, given wherethe Australian currency is at at
the moment.
Speaker 3 (11:45):
Great insights into the rental market there, peter,
thank you.
I wanted to pivot, if I can,into more of a sales focus now
and talk about lifestyle markets.
It's something you have touchedon as a strongest segment of
the market in previous podcasts,but I'm interested to get your
insights into what's actuallyhappening in lifestyle markets
at the moment, and is there adefinite change or a shift in
(12:08):
the market conditions that mayindicate that it's a better or a
worse opportunity for somepeople?
Speaker 1 (12:13):
Yeah, coming out of COVID, when return to office
commenced in earnest, theregional markets the lifestyle
markets had a bit of a dip asmoney and population pressure
headed back towards the city.
Now that that's settled down andthere are some people that are
still able and wanting to workfrom home lifestyle markets
(12:35):
they're performing solidly,without being spectacular.
I was speaking to some peoplewho are looking at moving to
lifestyle markets from the innercity of Sydney in the last week
and they all explained onephenomenon to me that happens in
lifestyle markets, which is theexact opposite of what tends to
happen in the city markets, andthat's over quoting.
(12:56):
So in the city markets, as weknow, under quoting is just
endemic.
It's just in agents DNA tounder quote the value of the
property, create a bidding warand then let the best buyer win
on the day where you see theexact opposite in lifestyle
markets, where the vendors quiteoften will overprice without
any deadline on the sale andessentially what they're looking
(13:18):
for is a sucker from Sydneywho's cashed up, who comes in,
who doesn't understand thenatural lay of the landscape and
inadvertently overpays for aproperty.
So I think if you are going tosell in Sydney and move to a
lifestyle market, you need to bereally, really careful of not
taking asking prices tooliterally, because just as it's
(13:39):
common in the city for agents tounderprice the value of
properties by 10 or 20% toattract buyers, it's also
equally common in lifestylemarkets for vendors to overprice
the value of properties by 10or 20% to attract buyers.
It's also equally common inlifestyle markets for vendors to
overprice by 10 or 20%.
Hanging out for a Sydney suckerwho doesn't do their research.
Speaker 3 (13:55):
Do you think there might also be a little bit of
psychology at play there, otherthan hoping there's a Sydney
sucker out there?
But by over-quoting theseproperties by, say, 10 or 20%?
When someone a slick citydweller comes down and tries to
negotiate on a property and theyyou know they badger that
vendor down by 10%.
They feel fantastic because ofthe bargain they've achieved and
(14:16):
in fact that vendor's thinkinggreat, we just got 10% more than
we would have got to a localbuyer.
Do you think that's a genuinetactic to to try and keep them
at a still relatively elevatedprice?
Speaker 1 (14:26):
yeah, I have little doubt that's.
That's the full intention of itand that's why you should
always judge your offer based onrecent comparable sales and you
should never judge your offerbased on what the vendor is
asking or what another vendor inthe marketplace is asking for a
similar property to the oneyou're interested in.
So as I explained it today tothe people I was with is you
(14:48):
might go into a lifestyle marketthese people were looking up
the mountains, for example, youmight find three properties that
you like.
Two are wildly overpriced andone's modestly overpriced.
But make no mistake, relativeto the recent sales in that
suburb, all three properties areoverpriced, just to varying
degrees.
So you should never make youroffer based on what a vendor's
(15:09):
asking price is in theselifestyle markets.
You must get hold of a list ofcomparable sales so you know
exactly what properties havebeen trading for and make your
offer accordingly.
Speaker 3 (15:21):
Well, once again, this comes back to ensuring you
do your research, which issomething we hammer on every
single time we talk, no matterwhat that research is.
As we wrap up, then, aboutlifestyle, I'm interested to
just get your sense of whethersomeone moving from, say, sydney
to the mountains or down thecoast or whatever it might be,
do you think it's worth theirwhile engaging with, say, a
buyer's agent or a local agentto try and assist them to get
(15:43):
into the local market.
Speaker 1 (15:45):
What I encourage these people to do today is, I
said go and ask a competing realestate agent what they think
about the property that you'regoing to buy.
And that's where you get freebuyer's agency advice.
That's a great idea.
So what you do is, if you'regoing to buy a property from ABC
(16:05):
Real Estate, go to XYZ RealEstate and say, look, I like
your property at 10 Smith Street, but I'm also comparing it to
the one at 2 Evans Street withXYZ Real Estate.
Could you tell me where youthink the differences are
between the two properties?
In your opinion, and in 80% ofinstances, the agent will
(16:25):
absolutely talk their ownlisting up.
That's fair enough, but they'llalso fall for the sucker punch,
which is telling you what theflaws are in the other property
and how much it's overpriced byyeah, that's a really clever
idea, peter.
Speaker 3 (16:38):
I guess the only risk there is that you ring up good
guy Gary, who doesn't want todisparage his opponent's
listings, and says no, no, no,that's a wonderful property with
an excellent price as well.
Speaker 1 (16:47):
And the smaller the township, the more likely that
is to happen.
You're absolutely right, kieran.
I'm not saying it's a foolproofstrategy, but if I were buying
in a regional town I'd speak toall the agents.
I wouldn't be obvious about thetactic that I'm adopting where
I want one agent to tell me thedownside of another agent's
listing.
But that's what I would beworking toward.
Speaker 3 (17:07):
Yeah, really great advice, and I'm sure that one of
our listeners out there will beable to utilise that sometime
in the future.
Shifting then to the Sydneymarket, which is our bread and
butter, peter, let's get a bitof a market wrap on what's been
happening this week,particularly our favourite.
What's the auction clearancerate done since we last spoke?
Speaker 1 (17:23):
Look, had a pretty good week actually.
It had slipped from the sort of53, 54s Kieran, down to an even
Steve and 50% in the last fewweeks.
Last weekend was the highestauction volumes that we'd seen
all year, so it was a big test.
Oh this was the Super Saturday,right Of sorts, yeah, but it was
(17:47):
the highest volume of auctionsthat we'd seen on one day all
year, and for quite some time, Imight add and it came in at a
very healthy 57.1%.
So there was some suggestionthat the market might have been
starting to slide or cool thereto some degree.
Keeping in mind these are notauction clearance rates as per
the industry wants us to believethem.
This is SQM Research's auctionclearance rate here, where they
(18:10):
have collated the results ofevery property that was
scheduled for auction, whetherthe agent wants the community to
know or not, that it did ordidn't sell.
So that's a very real 57, veryhard number there and that's
solid.
Equally interesting, 10% moreproperties sold under the hammer
than they did prior.
As we know, in recent timesthere'd been a trend for more
(18:33):
properties to sell prior toauction than there had been
selling actually at auctionunder the hammer.
I spoke to a couple of people atboard on the weekend, one
particular friend and client.
He went to bid at an auctionwith a guide of 1.9,
subsequently found out thevendor's reserve was 2.4.
When the auctioneer called fora bid, he attempted to offer 1.9
(18:58):
and the auctioneer said we'renot taking any bids under 2
million, even though the auctionguide for four weeks had been
1.9 million.
So he went on to secure thatproperty.
It was a good piece of realestate.
Speaker 3 (19:11):
but yeah, the underquoting is a big part of
what's going on out there in theauction market at the moment
really interesting anecdote andI'm glad you brought that up
because I was going to ask thehigher clearance rate on a
higher volume does it indicatethat maybe the other agents are
starting to learn and they'rebringing their prices back into
line with where they should be?
Or is it an indicator thatperhaps some more quality real
(19:34):
estate is coming to market?
Or is it just the fact thatthere are still plenty of buyers
out there and there's so muchproperty available that people
are just committing and sayingyou know what?
I've had enough of this game,this charade.
I just want a house for myfamily and I.
Speaker 1 (19:47):
Yeah, look, there's a sense that we're on the
doorstep of winter.
Now what are we coming up to?
Sort of first month of autumnis nearly done.
Stock will tighten duringwinter.
People that haven't secured theright property during the
summer and they see that, uh,you know, the right property is
now available, um, in earlyautumn.
And let's grab this once wecome out of uh, come out of
(20:08):
easter.
I assume daylight saving willfinish over easter, will it?
Speaker 3 (20:11):
yeah, it will yeah.
Speaker 1 (20:12):
So we'll come out with a sort of a more of a you
know, late autumn wintry feelafter the next weekend or two
school holidays during April.
You'd think, in terms of familyhomes, that any family that did
want to sell prior to thespring has probably just about
got the property on the marketas such.
So I think buyers just didn'tmuck around.
(20:33):
Last week, if I can speak to toto my client who was at that
auction the competition was notreally there for him to pay the
price that he ended up payingfor the property.
But he didn't want to muckaround, he just wanted to buy
the property and get on with therest of his life.
And I think that attitude tookhold last Saturday as people
were sick of playing games withagents and frustrated by the
(20:56):
whole pricing nonsense, knowingnobody believed the property
would sell for $1.9 or $2 oreven $2.1.
So they got together and gotthe deal done.
But why you would try and tellthe marketplace they can buy a
property for $1.9 when thevendor's reserve is $2.4 is
beyond me.
Speaker 3 (21:14):
Yeah, it's a heartless tactic, Peter, and one
that I certainly don't agreewith.
I think really reallyinteresting results in the
market wrap this week and I'mcertainly intrigued to see what
happens next week as we have alook through the Sydney property
market again.
So, Peter, thanks for joiningme again this week.
Speaker 1 (21:30):
Yeah, thanks, kieran, all the best.
Speaker 3 (21:31):
And thanks to everyone for listening, as
always.
If you have any questions oranything you'd like us to talk
about, please do reach out hereto us at Current Market Insights
.
But until next time, thanks forlistening.
Speaker 2 (21:41):
Thanks for joining us on the Current Market Insights
podcast Brought to you by HarrisPartners Real Estate, the
podcast providing real estateinsights you won't find anywhere
else.
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