March 12, 2025 • 20 mins
Hosts Ciaran O'Brien and Peter O'Malley analyse the impact of the recent RBA interest rate cut on Sydney’s property market, where premium properties are attracting intense buyer interest while generic listings struggle.
We break down shifting stock levels, auction clearance rates, and the rental market’s renewed tightening. With investment properties moving to owner-occupiers and immigration consuming housing supply, we examine whether another rate cut in April or May will be enough to stimulate demand. Tune in for insights on how market conditions are evolving and what it means for buyers and sellers alike.
As always if there is a specific topic you would like for us to cover, please reach out and let us know!
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
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 is my good friend
and co-host, mr Peter O'Malley.
Peter hello, hi, kieran, greatto see you.
Great to see you for anotherweek, peter.
I want to jump in today andjust really attack the current
market as we see it.
It's been a week or so since welast really got into the detail
(00:51):
and talked about what'sactually happening in Sydney
property, and it's been a coupleof weeks since the RBA's
announcement.
So I think it's really a goodchance for us to just have a
look at what is happening on theground and, if we can just
spend some time tonight talkingabout the market, what is the
current market situation andlet's really give an update for
our listeners.
Speaker 1 (01:11):
Yeah, thanks, kieran.
Look how I describe the impactof the rate cut is it has
created or exacerbated theflight to quality.
So, say, two Saturdays ago Ithink, I had six open houses
throughout the day, yep, and themost I saw at any of those open
houses was five parties.
It's pretty low, except for thefinal one which we had 33
(01:35):
parties through Right.
So it just really magnified theright listing at the right
price point in the rightlocation and the market's all
over it like a rash.
But agents will always spruikto forthcoming vendors.
Look what we've just achievedhere.
Look at what's just happenedwith this particular campaign.
The market's raging and you cantake that view, um, and and be
(01:59):
telling the facts of the matter,because that's what happened on
your property 33 parties camethrough on the first inspection.
It was sold within the week,unsurprisingly, but yeah, when
you do spread the numbers acrossall of the listings, there are
pockets of strength and there'spockets of weakness in the
market.
Speaker 3 (02:18):
there's no doubt that messaging is pretty consistent
really with what you've beensaying for quite a while, I
think.
Think in Sydney property.
Do you think that theexperience two weekends ago is
fundamentally different fromjust the general kind of flight
to quality, or do you thinkthere is actually just a little
bit more hunger perhaps, or somemore motivation with the idea
(02:39):
that rates should come down?
Speaker 1 (02:42):
What we've seen since the rate cut is buyers that
were in negotiations ordetermined to purchase make a
purchase are more confident ordecisive in doing so.
So the rate cut has helped.
I don't think anybody can saythe rate cut had no impact.
It did have an impact and itwas a positive impact for the
property market.
Is it a sugar hit that washesoff over the next little while?
(03:06):
Well, maybe.
I think Trump's tariffs and theglobal ramifications there are
starting to flood through thenews cycle and overtake people's
thought patterns and what thatreally means for Australia, now
that we've officially beenslapped with a tariff.
That's only happened today,essentially on the day of
(03:27):
recording, but as it stands, therate cut has been a positive
for the property market.
Speaker 3 (03:35):
I know we talked about a couple of weeks ago when
the cut was announced.
We, I guess, approached thetopic of whether or not it would
really have an impact on thosevendors that were, or potential
vendors that were, struggling alittle bit.
Do you think that it has beensubstantial enough to hold off
any mortgage stress for peoplethat have been struggling for a
long time, or do you think it'sthe numbers?
Speaker 1 (03:56):
would suggest so, kieran.
Great question, the numberswould suggest so because since
the rates were cut, stock levelshave actually gone down.
Yep, so there was a real.
Every agent, I think, came intothe new year with a big bag of
listings and it's like geez, I'mnot used to having this many
listings this early in the year.
Some sold, some didn't, but itwas a pretty good trading period
(04:17):
leading into the rate cut.
But there's no doubt that aswe've hit march, weather's
turned in sydney, as we know, alot of rain about over the last
few weeks, not as much asQueensland, of course, to our
friends and family up there.
We wish them well.
That's been a horrific periodto watch for those guys.
But the weather has turned herein Sydney and, yes, the rate of
(04:40):
listing flow has definitelyslowed, which again is another
factor that gives vendors just alittle advantage I know it's
only been a couple of weeks.
Speaker 3 (04:50):
Uh, you've talked about, though, those people that
were in the process of tryingto buy, or at least you know
working with brokers, and inthat kind of activity cycle
they've been more confident andpotentially have or, you know,
may now purchase.
Have you also seen a reflectionin the strength of prices over
the last couple of weeks, notjust through your own agency but
(05:10):
through others, and I?
I asked that question, I guess,off the back of already?
You know the media love to justspruik anything property
related.
That sounds over the top, andI've seen a couple of articles
you know I'm going to be verynon-pecific saying oh look, rate
cut sees massive, above reserve, all the usual kind of hype.
Is it a case that that's justthe typical media hype around
(05:32):
sales that don't necessarilydeserve it, or is there some
price confidence as well off theback of this?
Speaker 1 (05:38):
announcement.
Media know that if you spruikfailed campaigns, it doesn't
create the positive readingmatter that their audience wants
.
So they're always finding thatlisting or that sale that's
outperformed the market and gonereally, really well.
(05:58):
And in all markets, even flatmarkets, which this one's not
not but there is alwaysproperties that outperform and
create a good story.
So it's just the media is justan anecdote for what I described
about our scenario.
We had six open houses and fivewere pretty subdued, and then
the sixth one, for whateverreason, was absolutely off the
(06:19):
charts and sold inside nine daysfor a price that everyone was
ecstatic with.
Do we talk to the next vendor orprospective vendor about the
five open houses that were moresubdued than we would have liked
, or do we talk about the onethat had 33 parties through and
sold for a really high price inunder 10 days?
(06:40):
So it all comes down to what themedia chooses to look at.
If you do look at the market intotality and you look for key
performance indicators to giveyou an idea of how it's tracking
, there is no doubt that thepremium, the prestige end of the
market, is outperforming allothers still so.
A couple of weeks ago Isuggested that this will be
(07:02):
interesting to see how theseprestige properties trade in the
market, because a lot came tomarket at once and most of them
went on to sell and sell forpretty good prices.
So there is real confidence andserious money.
You know, above that fourmillion up to 10, 15 million
dollar mark around Sydney,that's where, when you do read
(07:24):
about a really strong result atthe moment that surprised
everyone's expectations, I daresay it'll be in that $4 to $15
million bracket.
Speaker 3 (07:34):
Yeah, look not unsurprising.
I don't think we, you know youhave been one of the proponents
of, you know, consistentlytalking about the upper end of
the market and that unique andlifestyle properties being the
stronger ones across Sydney,pretty consistently over the
last couple of years.
Before we get into some rawdata on the last you know week
or so, I guess my only otherquestion really for you around
(07:56):
what's happened over the lastcouple of weeks is we really
have quite officially enteredthe election cycle.
The messaging is coming onquite strong from both sides of
parliament now.
There's lots and lots ofannouncements across a whole
range of areas of interest tonot just our listeners but all
Australians, I think.
Do you believe in conversationsyou are having with your
clients and others around theplace that either side is having
(08:19):
a real impact in theirmessaging around housing
security, housing supply,affordability, etc.
Speaker 1 (08:26):
Etc no, I don't.
I think most people are acutelyaware that the rate of
immigration that we've currentlygot happening here is going to
absolutely consume any supplythat a state or a federal
government managed to push tomarket.
Speaker 3 (08:43):
Yeah.
Speaker 1 (08:44):
The numbers are extraordinary 1.4 million have
come in over the last threeyears, I think it is I heard
this morning.
They're just phenomenal numbersand that has consumed the
housing stock.
Any reprieve in the rentalmarket that has occurred will be
short-lived.
So the rental market, as we'vediscussed in the past, has taken
(09:05):
a bit of a consolidation phase.
It's not jumping at thedouble-digit percentage growth
that it has been over the lastfew years at the moment, but I
suspect that's likely to resume.
Speaker 3 (09:18):
Well interesting.
You say that I only saw on onReddit or social media the other
day actually, a post fromsomeone at a rental open in
Sydney and the first post I'veseen in quite a long time where
there was hundreds and hundredsof people lined up, all look
like international students.
And it just reminded me of that, that kind of rental boom
period when we last discussedthis, really, where certain
(09:40):
apartments around Ultima orDarling Square, like whatever it
might be, would just seehundreds and hundreds of people
overpaying to get into thesespaces, and I couldn't help but
think that actually now is thetime of year where all the
students are coming back.
There's no restrictions at themoment, it's just open slather,
and we really are potentiallyentering another period of
rental crisis, uh, which hasbeen waylaid slightly because of
(10:04):
, you know, market conditions orwhatever it may be, over the
last month or so, but I can'thelp but feel we're headed back
there I, I tend to agree, kieran.
Speaker 1 (10:11):
So just, uh, you know some anecdotal points here in
the office.
We haven't done any rentalopens for the last two weeks on
a saturday, right?
Because there's no stock toshow.
So the book is full, um again.
Uh, there's a massive trend, umof stock that is coming to
market.
It's investment properties thatare being sold off, and when
(10:32):
they're sold, they're purchasedby owner occup.
So the rental pool in thatregard is shrinking and the
properties that we are leasingare not actually making it to a
Saturday, they're leasingmidweek.
Yeah, yeah.
So all of that tells me thatthe rental market, as you've
just said, is gearing up foranother price spike in the next
(10:56):
nine months.
Speaker 3 (10:57):
Yeah, certainly tough , tough space ahead, I think if
you will.
We always say that if you'rerenting in Sydney, it's a real
tough market.
On that note, then, pete, youhave obviously mentioned
anecdotally some of theexperience you've had over the
last couple of weeks, referringto the numbers and how we see it
.
Last time we spoke about thiswas one of the first times, if
not the first in months, thatwe'd had an above 50% auction
(11:21):
clearance rate, and things werelooking a little bit healthy.
What's the data telling us atthe moment and where's the
market sort of headed?
Speaker 1 (11:27):
Oh, look, it's sitting right on 50% really.
So when you combine midweekauctions, the clearance rate
comes in at 49.3%.
On SQM researchers' numbers,the Saturday auction clearance
rate was 50.3% and the midweekauction clearance rate was 46.5%
(11:49):
.
If I can go to another numberthat I do think is interesting,
of the sales that were recordedin the last week by auction, 307
sold prior and 293 sold underthe hammer.
31 of the 1,217 scheduledauctions were withdrawn from the
(12:10):
marketplace and a whopping 388were re-advertised for private
treaty.
Speaker 3 (12:16):
So that's more re-advertised than sold prior
and certainly more than soldunder the hammer.
Speaker 1 (12:21):
Correct, that's right , yeah.
Speaker 3 (12:24):
That's a big amount and, interestingly, thinking
about the last time we went overthe auction numbers, that's
also an increase in the totalnumber of auctions, which again
ties to what you said.
The stock has been ramping upand we've reached a bit of a
critical point but we'restarting to see that clearance
rate come back a slightly again.
Speaker 1 (12:44):
Yeah, that's right, and can I say we've I think we
discussed this once last year in2024.
I look at the addresses.
Like you can see here, I've gotevery auction result for the
week here in front of me andwhen I look at the properties
that have failed to sell atauction, I think to myself what
were you doing?
Putting that property toauction anyway?
A generic apartment with strataissues in a high rise.
(13:05):
It was never going to sell withspirited bidding.
Speaker 3 (13:09):
Now see, I just always assume that these are the
people that read the paid adsin newscom.
You know where this apartment'sachieved an amazing.
The ones I talk about have gotto be, in my mind, paid for by
agents to just advertise thevirtue of this system, right?
Speaker 1 (13:24):
Yeah, we must keep in mind about the auction system
is that it relies on competition, it relies on multiple bidders,
and if you're selling something, it might be valuable, it might
mean a lot to you emotionally.
But if you're selling something,it might be valuable, it might
mean a lot to you emotionally,but if you are selling something
that doesn't have a deep poolof buyers and I'm referring here
to a 30 million dollar house aswell as a 350 000 apartment in
(13:46):
the suburbs that you know won'thave a deep pool of buyers
running an auction for certainproduct is just completely
incorrect because you're notgoing to have a deep pool of
buyers.
Running an auction for certainproduct is just completely
incorrect because you're notgoing to have a multitude of
buyers all trying to fight itout for that particular property
on that day.
And you'll notice, with thevery, very top end of the market
, it basically doesn't sell byauction because the buyer pool
(14:08):
is too skinny.
So the things that sell best atauction are the properties that
have a deep buyer pool for them, and one way to get the auction
clearance rate up is to stopputting so much stock to the
auction market.
That's never going to sell thatway.
Speaker 3 (14:24):
Yeah, the only people that benefit from this really
are the agencies that get paidfees to list auctions and then
know they're not going to sellthem.
Yeah, and.
Speaker 1 (14:32):
I think half of them are all juiced up on the
training they get, thinkingthey're on you know, million
dollar listing or whatever it isthat uh is, is is going at the
moment and they think you knowthey're going to create this
hyperbolic uh response to to allof their properties.
And uh, alas, that's just nothow real estate sales works.
Uh, in some markets you'll havemost of your listings that go
(14:53):
really well.
In some markets, you'll havemost of your listings that are
struggling and it's aboutpicking the eyes out of it.
And then markets like this areevenly balanced between buyers
and sellers and it's up to theagent to bring them together.
And trying to conjurehyper-competitive sales
scenarios on generic stockthat's flawed in a market where
(15:16):
buyers do have choice, is goingto end in tears for the vendor.
Speaker 3 (15:19):
Well, yeah, ultimately, the vendor was just
paying to bid against themselves, are they not?
You mentioned just a little bitearlier that one of the things
you are seeing actually isinvestors selling out and then
owner-occupiers purchasing, aswe sort of move toward the end
of the episode.
I just want to get yourthoughts on whether or not tying
the two, going back to the ratecut, whether you think that's
(15:40):
also been significant enough,especially with immigration and
students returning, et cetera,for those investors that were on
the fence about selling,holding whatever, pulling the
trigger and deciding one way orthe other that it may actually
be beneficial to hold and ifrates come down, it becomes
whatever pulling the trigger anddeciding one way or the other
that it may actually bebeneficial to hold and if rates
come down, it becomes a you know, yield improves and it becomes
a net positive investment.
Or do you think it's stillprobably not enough for that
(16:03):
space for the majority ofinvestors?
Speaker 1 (16:06):
No, when you look at what the cash rate did, we'll
keep it simple and talk aboutthe cash rate.
It simple and talk about thecash rate.
It's gone from 0.1 percent to4.35 percent and only pulled
back now to to being um, what isit?
4.1, 4.1 percent again.
Um, to have even the rba said intheir statement, even after
this rate cut, that we'redelivering on february 18.
(16:28):
We still believe the interestrate setting of the day is
restrictive for the economy andtherefore we essentially
paraphrasing, we essentiallythink it's safe to cut rates
because it's not going to createany any bounce in the inflation
, the economy and the propertymarket.
And and and I concur with that,whilst things have certainly got
(16:48):
a bit of an improvement aboutthem, we did discuss the point
when they did cut rates, kieran,that if they left rates on hold
, for many people that wouldhave been just as devastating as
a rate hike because theirfinances were under such duress.
So it's supported the market,but it's by no means stimulated
the market, that rate cut, andyou would need to see the RBA
(17:12):
slashing rates in order tocreate any sort of stimulus in
the property market, whichthey're not going to do.
I believe there's a rate cutcoming sooner than a lot of
people do.
I just think the numbers aregoing to support another rate
cut very soon, but that's that's.
That's debatable at the moment.
And but I do concede on onepoint the RBA will not be
(17:35):
cutting rates to the degree thatthey stimulate inflation, the
economy and the property market.
Speaker 3 (17:41):
No very fair assessment, peter.
Final question for you, then.
We did talk about this.
You suggested one of the thingsthat may indicate the
likelihood of the election iswhen the next rate cut was.
Given that, you think there isanother rate cut potentially on
the horizon.
Listening to some commentaryonly this morning myself, peter
Switzer was talking economicsand market reactions to Trump
(18:04):
and the tariffs, etc.
His outlook was a little morepessimistic perhaps, which you
know, maybe not outside theordinary, but I wonder you
initially had suggested youthought the next rate cut might
be April or May.
Based on how you've seen justthe response to this cut and
people's sentiment, do you thinkthat we're still likely to see
(18:26):
one that early?
Speaker 1 (18:26):
Yes.
Speaker 3 (18:27):
Okay.
Speaker 1 (18:28):
Yeah, I do yeah, and I think it formed, formed in my
view, the decision to hold theelection date in May.
I know the cyclone precludedAnthony Albanese from calling it
last Sunday, when basicallyevery pundit in town had
predicted him to do so on thatday.
(18:49):
But yes, I think there will bea rate cut in April or May and
the election date will be afterthat and he will be looking to
trade on it.
Speaker 3 (19:01):
Not a silly move, as we've suggested before.
Speaker 1 (19:05):
Oh look, he's copping enormous heat, anthony Albanese
.
The one thing Anthony Albaneseis not is silly.
He's a political warrior.
Regardless of what side ofpolitics one stands on, he's a
political warrior and, um, letme say this, that the value last
time I checked on sports bet,the value that labor are showing
(19:28):
um in the betting to win thiselection, is value that should
be looked at yeah, I think.
Speaker 3 (19:34):
I think the race is going to be closer than expected
and I suspect, maybe more sonow than ever.
Trump and his action is goingto heavily dictate how people
think here because of theLiberal Party alliance or
perceived alliance Conservative.
Well, yeah, I think some of themessaging is aligning, and it's
whether you support it or youdon't.
I think it's going to be aninteresting period ahead, that's
for sure.
Yeah, yeah, I think some of themessaging is aligning, and it's
whether you support it or youdon't.
I think it's going to be aninteresting period ahead, that's
(19:56):
for sure.
Speaker 1 (19:56):
Yeah, indeed, it'll be a tight election, there's no
doubt.
Anyone who thinks that Liberalsare across the line is not
following the playbook.
Speaker 3 (20:03):
Yeah, certainly Look, pete.
Really great chat today.
Good to get back into thenumbers and have a bit of an
analytical discussion, which youknow I certainly enjoy.
Thanks a lot for coming in andhaving a chat with us.
Thanks, kieran, all the best.
Thank you, and thanks toeveryone for listening to
Current Market Insights.
We look forward to speakingwith you next time.
Speaker 2 (20:19):
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 is my good friend
and co-host, mr Peter O'Malley.
Peter hello, hi, kieran, greatto see you.
Great to see you for anotherweek, peter.
I want to jump in today andjust really attack the current
market as we see it.
It's been a week or so since welast really got into the detail
(00:51):
and talked about what'sactually happening in Sydney
property, and it's been a coupleof weeks since the RBA's
announcement.
So I think it's really a goodchance for us to just have a
look at what is happening on theground and, if we can just
spend some time tonight talkingabout the market, what is the
current market situation andlet's really give an update for
our listeners.
Speaker 1 (01:11):
Yeah, thanks, kieran.
Look how I describe the impactof the rate cut is it has
created or exacerbated theflight to quality.
So, say, two Saturdays ago Ithink, I had six open houses
throughout the day, yep, and themost I saw at any of those open
houses was five parties.
It's pretty low, except for thefinal one which we had 33
(01:35):
parties through Right.
So it just really magnified theright listing at the right
price point in the rightlocation and the market's all
over it like a rash.
But agents will always spruikto forthcoming vendors.
Look what we've just achievedhere.
Look at what's just happenedwith this particular campaign.
The market's raging and you cantake that view, um, and and be
(01:59):
telling the facts of the matter,because that's what happened on
your property 33 parties camethrough on the first inspection.
It was sold within the week,unsurprisingly, but yeah, when
you do spread the numbers acrossall of the listings, there are
pockets of strength and there'spockets of weakness in the
market.
Speaker 3 (02:18):
there's no doubt that messaging is pretty consistent
really with what you've beensaying for quite a while, I
think.
Think in Sydney property.
Do you think that theexperience two weekends ago is
fundamentally different fromjust the general kind of flight
to quality, or do you thinkthere is actually just a little
bit more hunger perhaps, or somemore motivation with the idea
(02:39):
that rates should come down?
Speaker 1 (02:42):
What we've seen since the rate cut is buyers that
were in negotiations ordetermined to purchase make a
purchase are more confident ordecisive in doing so.
So the rate cut has helped.
I don't think anybody can saythe rate cut had no impact.
It did have an impact and itwas a positive impact for the
property market.
Is it a sugar hit that washesoff over the next little while?
(03:06):
Well, maybe.
I think Trump's tariffs and theglobal ramifications there are
starting to flood through thenews cycle and overtake people's
thought patterns and what thatreally means for Australia, now
that we've officially beenslapped with a tariff.
That's only happened today,essentially on the day of
(03:27):
recording, but as it stands, therate cut has been a positive
for the property market.
Speaker 3 (03:35):
I know we talked about a couple of weeks ago when
the cut was announced.
We, I guess, approached thetopic of whether or not it would
really have an impact on thosevendors that were, or potential
vendors that were, struggling alittle bit.
Do you think that it has beensubstantial enough to hold off
any mortgage stress for peoplethat have been struggling for a
long time, or do you think it'sthe numbers?
Speaker 1 (03:56):
would suggest so, kieran.
Great question, the numberswould suggest so because since
the rates were cut, stock levelshave actually gone down.
Yep, so there was a real.
Every agent, I think, came intothe new year with a big bag of
listings and it's like geez, I'mnot used to having this many
listings this early in the year.
Some sold, some didn't, but itwas a pretty good trading period
(04:17):
leading into the rate cut.
But there's no doubt that aswe've hit march, weather's
turned in sydney, as we know, alot of rain about over the last
few weeks, not as much asQueensland, of course, to our
friends and family up there.
We wish them well.
That's been a horrific periodto watch for those guys.
But the weather has turned herein Sydney and, yes, the rate of
(04:40):
listing flow has definitelyslowed, which again is another
factor that gives vendors just alittle advantage I know it's
only been a couple of weeks.
Speaker 3 (04:50):
Uh, you've talked about, though, those people that
were in the process of tryingto buy, or at least you know
working with brokers, and inthat kind of activity cycle
they've been more confident andpotentially have or, you know,
may now purchase.
Have you also seen a reflectionin the strength of prices over
the last couple of weeks, notjust through your own agency but
(05:10):
through others, and I?
I asked that question, I guess,off the back of already?
You know the media love to justspruik anything property
related.
That sounds over the top, andI've seen a couple of articles
you know I'm going to be verynon-pecific saying oh look, rate
cut sees massive, above reserve, all the usual kind of hype.
Is it a case that that's justthe typical media hype around
(05:32):
sales that don't necessarilydeserve it, or is there some
price confidence as well off theback of this?
Speaker 1 (05:38):
announcement.
Media know that if you spruikfailed campaigns, it doesn't
create the positive readingmatter that their audience wants
.
So they're always finding thatlisting or that sale that's
outperformed the market and gonereally, really well.
(05:58):
And in all markets, even flatmarkets, which this one's not
not but there is alwaysproperties that outperform and
create a good story.
So it's just the media is justan anecdote for what I described
about our scenario.
We had six open houses and fivewere pretty subdued, and then
the sixth one, for whateverreason, was absolutely off the
(06:19):
charts and sold inside nine daysfor a price that everyone was
ecstatic with.
Do we talk to the next vendor orprospective vendor about the
five open houses that were moresubdued than we would have liked
, or do we talk about the onethat had 33 parties through and
sold for a really high price inunder 10 days?
(06:40):
So it all comes down to what themedia chooses to look at.
If you do look at the market intotality and you look for key
performance indicators to giveyou an idea of how it's tracking
, there is no doubt that thepremium, the prestige end of the
market, is outperforming allothers still so.
A couple of weeks ago Isuggested that this will be
(07:02):
interesting to see how theseprestige properties trade in the
market, because a lot came tomarket at once and most of them
went on to sell and sell forpretty good prices.
So there is real confidence andserious money.
You know, above that fourmillion up to 10, 15 million
dollar mark around Sydney,that's where, when you do read
(07:24):
about a really strong result atthe moment that surprised
everyone's expectations, I daresay it'll be in that $4 to $15
million bracket.
Speaker 3 (07:34):
Yeah, look not unsurprising.
I don't think we, you know youhave been one of the proponents
of, you know, consistentlytalking about the upper end of
the market and that unique andlifestyle properties being the
stronger ones across Sydney,pretty consistently over the
last couple of years.
Before we get into some rawdata on the last you know week
or so, I guess my only otherquestion really for you around
(07:56):
what's happened over the lastcouple of weeks is we really
have quite officially enteredthe election cycle.
The messaging is coming onquite strong from both sides of
parliament now.
There's lots and lots ofannouncements across a whole
range of areas of interest tonot just our listeners but all
Australians, I think.
Do you believe in conversationsyou are having with your
clients and others around theplace that either side is having
(08:19):
a real impact in theirmessaging around housing
security, housing supply,affordability, etc.
Speaker 1 (08:26):
Etc no, I don't.
I think most people are acutelyaware that the rate of
immigration that we've currentlygot happening here is going to
absolutely consume any supplythat a state or a federal
government managed to push tomarket.
Speaker 3 (08:43):
Yeah.
Speaker 1 (08:44):
The numbers are extraordinary 1.4 million have
come in over the last threeyears, I think it is I heard
this morning.
They're just phenomenal numbersand that has consumed the
housing stock.
Any reprieve in the rentalmarket that has occurred will be
short-lived.
So the rental market, as we'vediscussed in the past, has taken
(09:05):
a bit of a consolidation phase.
It's not jumping at thedouble-digit percentage growth
that it has been over the lastfew years at the moment, but I
suspect that's likely to resume.
Speaker 3 (09:18):
Well interesting.
You say that I only saw on onReddit or social media the other
day actually, a post fromsomeone at a rental open in
Sydney and the first post I'veseen in quite a long time where
there was hundreds and hundredsof people lined up, all look
like international students.
And it just reminded me of that, that kind of rental boom
period when we last discussedthis, really, where certain
(09:40):
apartments around Ultima orDarling Square, like whatever it
might be, would just seehundreds and hundreds of people
overpaying to get into thesespaces, and I couldn't help but
think that actually now is thetime of year where all the
students are coming back.
There's no restrictions at themoment, it's just open slather,
and we really are potentiallyentering another period of
rental crisis, uh, which hasbeen waylaid slightly because of
(10:04):
, you know, market conditions orwhatever it may be, over the
last month or so, but I can'thelp but feel we're headed back
there I, I tend to agree, kieran.
Speaker 1 (10:11):
So just, uh, you know some anecdotal points here in
the office.
We haven't done any rentalopens for the last two weeks on
a saturday, right?
Because there's no stock toshow.
So the book is full, um again.
Uh, there's a massive trend, umof stock that is coming to
market.
It's investment properties thatare being sold off, and when
(10:32):
they're sold, they're purchasedby owner occup.
So the rental pool in thatregard is shrinking and the
properties that we are leasingare not actually making it to a
Saturday, they're leasingmidweek.
Yeah, yeah.
So all of that tells me thatthe rental market, as you've
just said, is gearing up foranother price spike in the next
(10:56):
nine months.
Speaker 3 (10:57):
Yeah, certainly tough , tough space ahead, I think if
you will.
We always say that if you'rerenting in Sydney, it's a real
tough market.
On that note, then, pete, youhave obviously mentioned
anecdotally some of theexperience you've had over the
last couple of weeks, referringto the numbers and how we see it
.
Last time we spoke about thiswas one of the first times, if
not the first in months, thatwe'd had an above 50% auction
(11:21):
clearance rate, and things werelooking a little bit healthy.
What's the data telling us atthe moment and where's the
market sort of headed?
Speaker 1 (11:27):
Oh, look, it's sitting right on 50% really.
So when you combine midweekauctions, the clearance rate
comes in at 49.3%.
On SQM researchers' numbers,the Saturday auction clearance
rate was 50.3% and the midweekauction clearance rate was 46.5%
(11:49):
.
If I can go to another numberthat I do think is interesting,
of the sales that were recordedin the last week by auction, 307
sold prior and 293 sold underthe hammer.
31 of the 1,217 scheduledauctions were withdrawn from the
(12:10):
marketplace and a whopping 388were re-advertised for private
treaty.
Speaker 3 (12:16):
So that's more re-advertised than sold prior
and certainly more than soldunder the hammer.
Speaker 1 (12:21):
Correct, that's right , yeah.
Speaker 3 (12:24):
That's a big amount and, interestingly, thinking
about the last time we went overthe auction numbers, that's
also an increase in the totalnumber of auctions, which again
ties to what you said.
The stock has been ramping upand we've reached a bit of a
critical point but we'restarting to see that clearance
rate come back a slightly again.
Speaker 1 (12:44):
Yeah, that's right, and can I say we've I think we
discussed this once last year in2024.
I look at the addresses.
Like you can see here, I've gotevery auction result for the
week here in front of me andwhen I look at the properties
that have failed to sell atauction, I think to myself what
were you doing?
Putting that property toauction anyway?
A generic apartment with strataissues in a high rise.
(13:05):
It was never going to sell withspirited bidding.
Speaker 3 (13:09):
Now see, I just always assume that these are the
people that read the paid adsin newscom.
You know where this apartment'sachieved an amazing.
The ones I talk about have gotto be, in my mind, paid for by
agents to just advertise thevirtue of this system, right?
Speaker 1 (13:24):
Yeah, we must keep in mind about the auction system
is that it relies on competition, it relies on multiple bidders,
and if you're selling something, it might be valuable, it might
mean a lot to you emotionally.
But if you're selling something,it might be valuable, it might
mean a lot to you emotionally,but if you are selling something
that doesn't have a deep poolof buyers and I'm referring here
to a 30 million dollar house aswell as a 350 000 apartment in
(13:46):
the suburbs that you know won'thave a deep pool of buyers
running an auction for certainproduct is just completely
incorrect because you're notgoing to have a deep pool of
buyers.
Running an auction for certainproduct is just completely
incorrect because you're notgoing to have a multitude of
buyers all trying to fight itout for that particular property
on that day.
And you'll notice, with thevery, very top end of the market
, it basically doesn't sell byauction because the buyer pool
(14:08):
is too skinny.
So the things that sell best atauction are the properties that
have a deep buyer pool for them, and one way to get the auction
clearance rate up is to stopputting so much stock to the
auction market.
That's never going to sell thatway.
Speaker 3 (14:24):
Yeah, the only people that benefit from this really
are the agencies that get paidfees to list auctions and then
know they're not going to sellthem.
Yeah, and.
Speaker 1 (14:32):
I think half of them are all juiced up on the
training they get, thinkingthey're on you know, million
dollar listing or whatever it isthat uh is, is is going at the
moment and they think you knowthey're going to create this
hyperbolic uh response to to allof their properties.
And uh, alas, that's just nothow real estate sales works.
Uh, in some markets you'll havemost of your listings that go
(14:53):
really well.
In some markets, you'll havemost of your listings that are
struggling and it's aboutpicking the eyes out of it.
And then markets like this areevenly balanced between buyers
and sellers and it's up to theagent to bring them together.
And trying to conjurehyper-competitive sales
scenarios on generic stockthat's flawed in a market where
(15:16):
buyers do have choice, is goingto end in tears for the vendor.
Speaker 3 (15:19):
Well, yeah, ultimately, the vendor was just
paying to bid against themselves, are they not?
You mentioned just a little bitearlier that one of the things
you are seeing actually isinvestors selling out and then
owner-occupiers purchasing, aswe sort of move toward the end
of the episode.
I just want to get yourthoughts on whether or not tying
the two, going back to the ratecut, whether you think that's
(15:40):
also been significant enough,especially with immigration and
students returning, et cetera,for those investors that were on
the fence about selling,holding whatever, pulling the
trigger and deciding one way orthe other that it may actually
be beneficial to hold and ifrates come down, it becomes
whatever pulling the trigger anddeciding one way or the other
that it may actually bebeneficial to hold and if rates
come down, it becomes a you know, yield improves and it becomes
a net positive investment.
Or do you think it's stillprobably not enough for that
(16:03):
space for the majority ofinvestors?
Speaker 1 (16:06):
No, when you look at what the cash rate did, we'll
keep it simple and talk aboutthe cash rate.
It simple and talk about thecash rate.
It's gone from 0.1 percent to4.35 percent and only pulled
back now to to being um, what isit?
4.1, 4.1 percent again.
Um, to have even the rba said intheir statement, even after
this rate cut, that we'redelivering on february 18.
(16:28):
We still believe the interestrate setting of the day is
restrictive for the economy andtherefore we essentially
paraphrasing, we essentiallythink it's safe to cut rates
because it's not going to createany any bounce in the inflation
, the economy and the propertymarket.
And and and I concur with that,whilst things have certainly got
(16:48):
a bit of an improvement aboutthem, we did discuss the point
when they did cut rates, kieran,that if they left rates on hold
, for many people that wouldhave been just as devastating as
a rate hike because theirfinances were under such duress.
So it's supported the market,but it's by no means stimulated
the market, that rate cut, andyou would need to see the RBA
(17:12):
slashing rates in order tocreate any sort of stimulus in
the property market, whichthey're not going to do.
I believe there's a rate cutcoming sooner than a lot of
people do.
I just think the numbers aregoing to support another rate
cut very soon, but that's that's.
That's debatable at the moment.
And but I do concede on onepoint the RBA will not be
(17:35):
cutting rates to the degree thatthey stimulate inflation, the
economy and the property market.
Speaker 3 (17:41):
No very fair assessment, peter.
Final question for you, then.
We did talk about this.
You suggested one of the thingsthat may indicate the
likelihood of the election iswhen the next rate cut was.
Given that, you think there isanother rate cut potentially on
the horizon.
Listening to some commentaryonly this morning myself, peter
Switzer was talking economicsand market reactions to Trump
(18:04):
and the tariffs, etc.
His outlook was a little morepessimistic perhaps, which you
know, maybe not outside theordinary, but I wonder you
initially had suggested youthought the next rate cut might
be April or May.
Based on how you've seen justthe response to this cut and
people's sentiment, do you thinkthat we're still likely to see
(18:26):
one that early?
Speaker 1 (18:26):
Yes.
Speaker 3 (18:27):
Okay.
Speaker 1 (18:28):
Yeah, I do yeah, and I think it formed, formed in my
view, the decision to hold theelection date in May.
I know the cyclone precludedAnthony Albanese from calling it
last Sunday, when basicallyevery pundit in town had
predicted him to do so on thatday.
(18:49):
But yes, I think there will bea rate cut in April or May and
the election date will be afterthat and he will be looking to
trade on it.
Speaker 3 (19:01):
Not a silly move, as we've suggested before.
Speaker 1 (19:05):
Oh look, he's copping enormous heat, anthony Albanese
.
The one thing Anthony Albaneseis not is silly.
He's a political warrior.
Regardless of what side ofpolitics one stands on, he's a
political warrior and, um, letme say this, that the value last
time I checked on sports bet,the value that labor are showing
(19:28):
um in the betting to win thiselection, is value that should
be looked at yeah, I think.
Speaker 3 (19:34):
I think the race is going to be closer than expected
and I suspect, maybe more sonow than ever.
Trump and his action is goingto heavily dictate how people
think here because of theLiberal Party alliance or
perceived alliance Conservative.
Well, yeah, I think some of themessaging is aligning, and it's
whether you support it or youdon't.
I think it's going to be aninteresting period ahead, that's
for sure.
Yeah, yeah, I think some of themessaging is aligning, and it's
whether you support it or youdon't.
I think it's going to be aninteresting period ahead, that's
(19:56):
for sure.
Speaker 1 (19:56):
Yeah, indeed, it'll be a tight election, there's no
doubt.
Anyone who thinks that Liberalsare across the line is not
following the playbook.
Speaker 3 (20:03):
Yeah, certainly Look, pete.
Really great chat today.
Good to get back into thenumbers and have a bit of an
analytical discussion, which youknow I certainly enjoy.
Thanks a lot for coming in andhaving a chat with us.
Thanks, kieran, all the best.
Thank you, and thanks toeveryone for listening to
Current Market Insights.
We look forward to speakingwith you next time.
Speaker 2 (20:19):
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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