April 9, 2025 • 19 mins
Hosts Ciaran O'Brien and Peter O'Malley unpack the global trade tensions rattling the Australian economy as Trump-era tariffs hit allies like Australia with a 10% sting—and China even harder. We explore how this “generational reset” in trade is stirring uncertainty across the property market and why the RBA may be forced into multiple emergency rate cuts.
From volatility in the prestige sector to weak auction results and market patchiness, we assess the current landscape and the smarter strategies agents and vendors should consider as economic pressures mount.
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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Transcript
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 (00:30):
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 and co-host, mrPeter O'Malley.
Hi, kieran, great to see you,great to see you, peter.
It's been two weeks since wespoke and, apologies to our
listeners, I was unable to makelast week, so we're going to get
through a fair bit on thisepisode, I think, and do a
little bit of catch up, but also, you know, try and in some ways
(00:53):
recap what's been a pretty wildcouple of weeks, I think.
Where I'd like to start, though,pete, is, I think in the last
episode we touched on a littlebit what was happening in the US
and some of the flow on of theelection and Trump's policies in
particular.
But since we spoke, there hasbeen a definitive position taken
(01:15):
by the United States,particularly on tariffs and
Australia, unfortunately notimmune to the tariff situation,
you know, much like the poorpenguins of the Turks and Caicos
.
There are some tariffs beingsent our way, and I wanted to
open up tonight's chat by, Iguess, getting a sense from you
of what those tariffs really arein a general sense, and then
(01:38):
what their likely impact isactually going to be for us down
under.
Speaker 1 (01:42):
Thanks, kieran.
Look, yeah, I don't pretend tobe an expert on the whole tariff
situation and I've listened toa lot of commentary that are
both pro-tariffs US tariffs andagainst Trump's policies.
But from there, by listening toboth sides of the argument, you
get a much more nuanced andbetter understanding of what's
(02:04):
going on, whereas if you tend totake a position that this is
good or bad on an issue such astariffs early in the equation,
you can then suffer fromconfirmation bias as you try to
assess what's happening.
So there's been some terrificmaterial put out to the general
which helps them follow fairlycomplicated matters.
(02:27):
I think probably the best onewas from Australia's perspective
was Christopher Joy'sdiscussion with Mark Burris on
the Straight Talk podcast.
Christopher Joy really brokethe issues down well and that
was actually recorded beforeLiberation Day, when Trump
announced what his tariffs werefor all of the countries that he
(02:49):
imposed them on Very quickly.
What has become evident is thetariffs that America has put on
what it would deem its alliesand its friends is about getting
them to bend the knee and kissthe ring.
It's just about getting a betterdeal um, to be your mate and to
be your backstop and to be yourprotector.
(03:10):
So it's really the bully on theplayground saying if you want
me to look after you, you got topay me a bit of money to do so.
That's what I take out of it.
Um, but the real purpose of thetariffs is America taking China
on?
Yeah, and America currently hasthe biggest consumer market in
the world on the globe, andChina is headed for that mantle,
(03:34):
and America is trying to breakChina.
China are no certainty tobecome the biggest consumer
market in the world becausedemographically, their
population is shrinking andpredicted to shrink quite
sharply in the next 30 to 50years.
So this is not about and you'llpick this up from the comments
that are being made by the USadministration this is not about
(03:57):
what the markets do in 2025.
This is an attempt at agenerational reset.
You can agree or disagree withit, but it's fascinating if you
understand what they're tryingto engineer here and what is at
stake it's a.
Speaker 3 (04:16):
It's certainly an interesting topic and I know,
following the discourse, as yousay, there are certainly some
you know well-respectedeconomists making rational
arguments around why, or why not, the tariffs are a good idea.
And certainly since they wereintroduced since liberation day,
as you say, until the day we'rerecording the china and us uh
(04:37):
escalation point is continuing.
You know, that's a, that's abattle of ping pong that's
continuing to kind of uh bubbleup and who knows exactly where
that will end.
I have to wonder, though, the Iget the sense, just kind of
reading between the economists,you know, listening to the
general public's consensus, notthat it's all that reliable,
necessarily.
Most people don't understandthe tariffs and they just view
(04:57):
this as a tax on themselves ortax on their country, or tax on
whatever they, and it'scertainly confusing to people
and, I guess, for our listenerswho aren't interested in
listening to a.
Speaker 1 (05:08):
Congress.
It's confusing to markets,because markets can't agree how
to price this.
It's confusing to everyone atthe moment.
Speaker 3 (05:14):
Oh, and it's so volatile.
I don't know.
I can't confirm the veracity ofthis, but I became aware
recently, in the last couple ofdays, of a tweet that went out
from from someone who had thesurname Bloomberg, and it
triggered a whole range ofbasically automatic ticker feeds
you know RSS feeds to feed out.
The Bloomberg was tweetingabout tariffs getting a pause
(05:35):
and there was a marketcorrection off the back of that
is my understanding, sevenminutes of mayhem yeah, which
you know.
To me that's insane, like themarket, you say, is so confused
about what's going on that evena tweet from someone with a
similar name can trigger aglobal financial response, which
is pretty wild.
So the question has to be, Iguess, for us here, regardless
(05:55):
of the fight with China or thegreater, you know, generational
reset or whatever the largerpurpose is, what is the impact
actually going to be for us inproperty in Australia when you
know we do face a little bit offinancial uncertainty in the
markets?
Certainly don't know whatthey're doing right now.
Speaker 1 (06:12):
Yeah, look, my early take on it is this, Kieran, that
if the stock market it's down14% at the time of recording
from its February highs, theAustralian stock market I've
always formed the view in my 25years in real estate is the
prestige end of the Australianproperty market performs best in
(06:33):
unison with the share market,performs best in unison with the
share market.
So the last time I saw PrestigeProperty having the sustained
run that it's enjoyed in thelast two to three years was back
in 2006, 2007, on the back of avery, very strong share market.
And what you see happening ispeople retail investors that
have done really, really well inthe share market, take those
(06:55):
gains out, lock in the profitsand put it into residential
property.
There's clearly coming out ofCOVID.
We've seen numerous exampleswhere properties that were
selling for $3 million to $4million now suddenly go for $6
million to $8 million post-COVID.
That is not people getting apay rise and investing that back
(07:16):
into residential real estate.
That is people takingmonumental share market gains
and locking it into residentialproperty and then it's created a
momentum of its own.
So if the share market inAustralia was to take a knock of
20% plus on a sustained basisdue to the global trade war,
(07:39):
tariff war, I think you'd see,prestige property would
seriously come off and therewill be examples, if that
happens, of people thatpurchased a property at the
height of the market for $8, $9,$10 million and resell it for
$5 or $6.
Speaker 3 (07:57):
Yeah.
Speaker 1 (07:58):
I can see those headlines already.
When it comes to interest rates, this will probably be an
accelerator for interest ratecuts, if the story is to be
believed, and that will protectthe middle to lower end of the
property market and actuallycould be quite good for a lot of
(08:18):
households who don't have aninternational view or an
international portfolio or a bigshare portfolio, and it will
help.
It will help some people,provided they can stay gainfully
employed.
Speaker 3 (08:32):
So we we will touch on in a minute the RBA's most
recent decision around the cashrate and what that likely means.
But on your point aboutaccelerating interest rates,
there's been quite a bit ofdiscussion in the last week or
two about the situation andwhether or not the RBA will be
proactive here, and a lot ofcommentators I've seen have
(08:52):
suggested that we might now seeup to four rate cuts before the
end of the year to try and getahead of this.
I mean as a mortgage holder inSydney, to me that sounds
outstanding.
But with your experience do youthink that that is a likely
scenario and I know it's alittle bit hard to predict.
But given what we've seen interms of the kind of pragmatism
(09:12):
and messaging from MichelleBullock you know as head of the
RBA, do you think she's likelyto drive that message and try
and drive that, I guess, thatfinancial productivity forward
to protect that middle and lowerincome brackets?
Speaker 1 (09:26):
If it's deemed in the best interest of the country to
do so.
Yes, yep, and that's not myopinion.
That's what Michelle Bullocksaid in her statement last
Tuesday on April Fool's Day,when she announced that rates
were on hold.
She said the RBA stand ready toprotect the Australian economy
from global events if necessary.
(09:48):
So why didn't they cut on April1?
In short, they kept theirpowder dry.
They kept their powder drybecause they wanted to see what
actually happened from trump'sposition on tariffs and clearly
didn't want to unnecessarilyinsert themselves into the
federal election that we'recurrently going through at the
(10:08):
moment, and they would havepreferred to have stayed on the
sidelines until May 17,.
I think May 17 or 18, the nextmeeting is.
There's many reasoned, pragmaticeconomists that say if this
trade war keeps up, there couldbe a Reserve Bank meeting where
(10:30):
they call an emergency meetingand cut before then.
That is an option that is opento the RBA, and Michelle Bullock
herself was called into anemergency meeting with Jim
Chalmers today.
I think it was being Wednesdayas we record this.
So there's much at play.
If Trump pushes on with thesetariffs on China, he is clearly
(10:56):
trying to cause his allies to,as I say, give him and America a
better deal.
But the full attack with thistrade war is directed at China,
and if it is reciprocal tariffs,where he puts one on them at a
higher rate and they hit backwith him and do so in return, it
(11:18):
will be a very wild period formarkets, very wild.
Speaker 3 (11:22):
Oh, look, certainly To put that into context.
I think the reciprocal tariffson Australia is 10.
Is 10 percent right?
And uh, I read today thatchina's beef yeah, uh, but I
read today china's was now 104percent uh, across the board.
Speaker 1 (11:35):
I'm fairly on everything.
Speaker 3 (11:36):
Yeah which is crazy to think about, uh, and it
certainly will be interesting tosee what happens.
And I know, uh, you mentionedthe prestige end and we have
certainly spoken before aboutyou know that that end of the
market faring quite well and, asyou rightly say, there's a lot
of realised share market gain inthere.
But we've also talked about thestrength of foreign currency
against the Australian dollarand the buying power of expats
(11:57):
or foreign internationals cominginto the market.
That's obviously now been putoff the table for a period of
time anyway, but we've also gotglobal collapse in or, you know,
temporary or otherwise, we havea global loss across the
financial markets.
So there is a likelihood reallythat Prestige Gen may take a
hit for a little while, becausethere's also no real benefit
(12:18):
necessarily to exchangingcurrency into the AUD at the
moment anyway, as we're falling.
So are they.
My question for you, then inthe last two weeks or so, since
the tariffs and the kind offluctuation in the markets, have
you had conversations ornoticed a shift with people that
you're talking to at propertiesor open homes or vendors
(12:39):
expressing concern or excitementone end or the other about
what's happening and what thatkind of means for them now as
people looking to exchange.
In short, no.
Speaker 1 (12:50):
Okay, and the reason being is the people that are
knocked out of the market due towhat's going on at the moment.
Don't turn up the open house totell you they're not interested
in the market anymore.
Speaker 3 (12:59):
Yep.
Speaker 1 (13:00):
So we've got some really good listings at the
moment that are drawing reallyreally good numbers and good
bids per property.
And then we've got some othergood, great listings too that no
one's kind of biting on themand it's like where's the buyers
on this?
This is well priced, it's agreat property.
So, um, hearing right acrossthe board from most agents that
it's patchy market, you've got alisting that, for whatever
(13:22):
reason, is really really hot.
Or um, you've got a listingthat you know the owners are not
unreasonable in their priceexpectations but the buyers are
just not turning up to playballs.
It's a very difficultenvironment for agents to guide
their clients on because it isso patchy at the moment.
That's the word.
Speaker 3 (13:40):
Yeah, it's a real shame.
I feel like we've, you know,kind of weathered some pretty
uncertain times and we've comethrough some difficult interest
rate settings and we've not thatwe're out of the woods there,
but we've certainly, you know,started to just ease off the
tension on the ratchet and thennow we've got some global
calamities occurring which arejust causing a bit of
instability, you know, acrossthe market, as you know broadly,
(14:00):
and it really is a bit of awild time, I think, for property
.
You touched on the fact that weare coming or we're in the
election cycle well and trulynow.
We're actually not that faraway from the election and we
have spoken previously about thedifferent policies that either
side of current or futuregovernment, potential future
government have.
Do you think, based on what'shappening at the moment, do you
(14:23):
think there's been much shift inwhere you think the election's
likely heading and, as a result,you know how that's going to
play out for property?
Speaker 1 (14:30):
Look, I think Australians are pretty
disengaged with this election.
Speaker 3 (14:35):
I have virtually heard nothing since the kind of
announcement and a few littleyou know soundbites.
Speaker 1 (14:43):
Really, it's been pretty quiet across the front,
in my opinion.
I think this is an electionthat Australians are largely
disengaged with to date.
Maybe as the decision getscloser, they'll take a deeper
look at it, but I don't thinkeither candidate has captured
the imagination of theelectorate at the moment.
And then whenever a campaign isrun that way, that's always
(15:05):
when both candidates majorcandidatesluster.
That will always favor theincumbent.
Yeah, and that's what'shappening if you believe betting
markets.
I think the last time we didcatch up.
Well, maybe the time beforethat, I said that at $2.60 Albo
was screaming value and heshould not be discounted from
this race.
And he's now into $1.33 thelast time I checked.
(15:28):
So so that's nearly saying thatAlbo is an unbackable favourite
to hold on to the PrimeMinistership.
Whether that's as a majoritygovernment or minority
government remains to be seen.
But look, elections can turnand turn decisively late and
(15:48):
there's still a slight chance.
That could happen for Duttonand the Liberals.
And the reason that it couldhappen is that people have not
engaged and not taken a seriouslook at the issues.
And if there is an event youknow, you go back to John Howard
(16:08):
and the Tampa crisis all thoseyears ago that broke very, very
late in Howard's favour when itlooked like he was on the rack.
So look it does.
Look like it's heading to aLabor Party victory.
Speaker 3 (16:18):
But maybe it breaks late, maybe it doesn't, but it
will take a major event to breakit the other way yeah, look,
who knows, the, uh, the, thefallout from the, the tariff or
the trade war could be acatalyst for a change.
Who knows?
We'll certainly find out in afew weeks time.
Uh, as we kind of wrap up onthis week's episode, pete, uh,
you mentioned that the market isexperiencing some difficult
(16:39):
times and, across the board,with others you've spoken to, uh
, it is challenging in allsectors.
So why don't we have a bit of alook through, or chat through
the numbers on our market wrapand get a sense of what's
actually happening out there onthe ground?
Speaker 1 (16:50):
Yeah, so for the week just gone, on SQM researchers
numbers, which is our preferreddata supplier, there were 1,403
auctions scheduled for the weekwith a clearance rate of 48.3%.
347 sold prior, 331 sold thatauction, 33 were withdrawn, 473
(17:14):
were re-advertised as privatetreaty and 178 were rescheduled,
so pushed down, kept as auctioncampaigns but pushed out to a
later date.
So not a massive deteriorationin the trend line.
But after breaking above 50%early in the year, after sort of
a lack of stock over the summer, the market has gone right back
(17:36):
to that point that it traded infrom August to Christmas 2024,
which it's basically sitting inthe high 40% as a clearance rate
.
So what that tells you certainproduct is is performing well,
as you'll see on a sunday,sunday morning when you open the
paper and you'll always hearabout the two or three auctions
that have done really well.
And there are always properties, even in a flat market or a
(17:58):
patchy market, as we'vedescribed it, that outperform
the market trend.
But at the end of the day, morepeople fail to sell at auction
last sat, saturday, than soldunder the auction hammer.
Speaker 3 (18:12):
Yeah, not overly surprising, and certainly, I
think, since we've been talkingheavily about the auction
clearance rate.
From August.
I think it's only come above50% maybe once, possibly two
weeks, and certainly holdingconsistently.
I know we have spoken at lengthin the past about the belief
that if the market sits below50% consistently we are facing a
(18:33):
downturn in the property market.
But, as you said, we've beenpropped up by that prestige end
for quite some time and theSydney market's held strong, so
it's going to be I think it'llcertainly be an interesting
couple of months ahead.
Speaker 1 (18:44):
Yeah, and look agents , as we've discussed last time,
so we won't labour the point,but they're putting too much
stock to the auction market thatshouldn't go to auction.
Yeah, if the product thatyou're putting to auction is not
going to naturally draw two orthree genuine bidders if not,
you know, three to five you'vegot to question whether doing a
(19:05):
public auction is in thevendor's best interest.
Speaker 2 (19:08):
Yeah.
Speaker 3 (19:09):
Yeah, chasing the headlines instead of being
practical.
Look, really great discussiontoday, Peter.
I think we are certainlygetting into some pretty heavy
topics at the moment, as youknow, necessitated by the market
conditions.
I personally am reallyinterested to see what happens
over the coming weeks and I knownext time we talk, no doubt
something pretty wild will havehappened, because that seems to
be par for the course at themoment.
(19:29):
So thank you for coming in,Pete, and thank you for chatting
with us this evening.
Speaker 1 (19:34):
All the best, thanks, kieran.
Speaker 3 (19:35):
And thanks to everyone for listening to
Current Market Insights.
We look forward to speakingwith you next time.
Speaker 2 (19:40):
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 (00:30):
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 and co-host, mrPeter O'Malley.
Hi, kieran, great to see you,great to see you, peter.
It's been two weeks since wespoke and, apologies to our
listeners, I was unable to makelast week, so we're going to get
through a fair bit on thisepisode, I think, and do a
little bit of catch up, but also, you know, try and in some ways
(00:53):
recap what's been a pretty wildcouple of weeks, I think.
Where I'd like to start, though,pete, is, I think in the last
episode we touched on a littlebit what was happening in the US
and some of the flow on of theelection and Trump's policies in
particular.
But since we spoke, there hasbeen a definitive position taken
(01:15):
by the United States,particularly on tariffs and
Australia, unfortunately notimmune to the tariff situation,
you know, much like the poorpenguins of the Turks and Caicos
.
There are some tariffs beingsent our way, and I wanted to
open up tonight's chat by, Iguess, getting a sense from you
of what those tariffs really arein a general sense, and then
(01:38):
what their likely impact isactually going to be for us down
under.
Speaker 1 (01:42):
Thanks, kieran.
Look, yeah, I don't pretend tobe an expert on the whole tariff
situation and I've listened toa lot of commentary that are
both pro-tariffs US tariffs andagainst Trump's policies.
But from there, by listening toboth sides of the argument, you
get a much more nuanced andbetter understanding of what's
(02:04):
going on, whereas if you tend totake a position that this is
good or bad on an issue such astariffs early in the equation,
you can then suffer fromconfirmation bias as you try to
assess what's happening.
So there's been some terrificmaterial put out to the general
which helps them follow fairlycomplicated matters.
(02:27):
I think probably the best onewas from Australia's perspective
was Christopher Joy'sdiscussion with Mark Burris on
the Straight Talk podcast.
Christopher Joy really brokethe issues down well and that
was actually recorded beforeLiberation Day, when Trump
announced what his tariffs werefor all of the countries that he
(02:49):
imposed them on Very quickly.
What has become evident is thetariffs that America has put on
what it would deem its alliesand its friends is about getting
them to bend the knee and kissthe ring.
It's just about getting a betterdeal um, to be your mate and to
be your backstop and to be yourprotector.
(03:10):
So it's really the bully on theplayground saying if you want
me to look after you, you got topay me a bit of money to do so.
That's what I take out of it.
Um, but the real purpose of thetariffs is America taking China
on?
Yeah, and America currently hasthe biggest consumer market in
the world on the globe, andChina is headed for that mantle,
(03:34):
and America is trying to breakChina.
China are no certainty tobecome the biggest consumer
market in the world becausedemographically, their
population is shrinking andpredicted to shrink quite
sharply in the next 30 to 50years.
So this is not about and you'llpick this up from the comments
that are being made by the USadministration this is not about
(03:57):
what the markets do in 2025.
This is an attempt at agenerational reset.
You can agree or disagree withit, but it's fascinating if you
understand what they're tryingto engineer here and what is at
stake it's a.
Speaker 3 (04:16):
It's certainly an interesting topic and I know,
following the discourse, as yousay, there are certainly some
you know well-respectedeconomists making rational
arguments around why, or why not, the tariffs are a good idea.
And certainly since they wereintroduced since liberation day,
as you say, until the day we'rerecording the china and us uh
(04:37):
escalation point is continuing.
You know, that's a, that's abattle of ping pong that's
continuing to kind of uh bubbleup and who knows exactly where
that will end.
I have to wonder, though, the Iget the sense, just kind of
reading between the economists,you know, listening to the
general public's consensus, notthat it's all that reliable,
necessarily.
Most people don't understandthe tariffs and they just view
(04:57):
this as a tax on themselves ortax on their country, or tax on
whatever they, and it'scertainly confusing to people
and, I guess, for our listenerswho aren't interested in
listening to a.
Speaker 1 (05:08):
Congress.
It's confusing to markets,because markets can't agree how
to price this.
It's confusing to everyone atthe moment.
Speaker 3 (05:14):
Oh, and it's so volatile.
I don't know.
I can't confirm the veracity ofthis, but I became aware
recently, in the last couple ofdays, of a tweet that went out
from from someone who had thesurname Bloomberg, and it
triggered a whole range ofbasically automatic ticker feeds
you know RSS feeds to feed out.
The Bloomberg was tweetingabout tariffs getting a pause
(05:35):
and there was a marketcorrection off the back of that
is my understanding, sevenminutes of mayhem yeah, which
you know.
To me that's insane, like themarket, you say, is so confused
about what's going on that evena tweet from someone with a
similar name can trigger aglobal financial response, which
is pretty wild.
So the question has to be, Iguess, for us here, regardless
(05:55):
of the fight with China or thegreater, you know, generational
reset or whatever the largerpurpose is, what is the impact
actually going to be for us inproperty in Australia when you
know we do face a little bit offinancial uncertainty in the
markets?
Certainly don't know whatthey're doing right now.
Speaker 1 (06:12):
Yeah, look, my early take on it is this, Kieran, that
if the stock market it's down14% at the time of recording
from its February highs, theAustralian stock market I've
always formed the view in my 25years in real estate is the
prestige end of the Australianproperty market performs best in
(06:33):
unison with the share market,performs best in unison with the
share market.
So the last time I saw PrestigeProperty having the sustained
run that it's enjoyed in thelast two to three years was back
in 2006, 2007, on the back of avery, very strong share market.
And what you see happening ispeople retail investors that
have done really, really well inthe share market, take those
(06:55):
gains out, lock in the profitsand put it into residential
property.
There's clearly coming out ofCOVID.
We've seen numerous exampleswhere properties that were
selling for $3 million to $4million now suddenly go for $6
million to $8 million post-COVID.
That is not people getting apay rise and investing that back
(07:16):
into residential real estate.
That is people takingmonumental share market gains
and locking it into residentialproperty and then it's created a
momentum of its own.
So if the share market inAustralia was to take a knock of
20% plus on a sustained basisdue to the global trade war,
(07:39):
tariff war, I think you'd see,prestige property would
seriously come off and therewill be examples, if that
happens, of people thatpurchased a property at the
height of the market for $8, $9,$10 million and resell it for
$5 or $6.
Speaker 3 (07:57):
Yeah.
Speaker 1 (07:58):
I can see those headlines already.
When it comes to interest rates, this will probably be an
accelerator for interest ratecuts, if the story is to be
believed, and that will protectthe middle to lower end of the
property market and actuallycould be quite good for a lot of
(08:18):
households who don't have aninternational view or an
international portfolio or a bigshare portfolio, and it will
help.
It will help some people,provided they can stay gainfully
employed.
Speaker 3 (08:32):
So we we will touch on in a minute the RBA's most
recent decision around the cashrate and what that likely means.
But on your point aboutaccelerating interest rates,
there's been quite a bit ofdiscussion in the last week or
two about the situation andwhether or not the RBA will be
proactive here, and a lot ofcommentators I've seen have
(08:52):
suggested that we might now seeup to four rate cuts before the
end of the year to try and getahead of this.
I mean as a mortgage holder inSydney, to me that sounds
outstanding.
But with your experience do youthink that that is a likely
scenario and I know it's alittle bit hard to predict.
But given what we've seen interms of the kind of pragmatism
(09:12):
and messaging from MichelleBullock you know as head of the
RBA, do you think she's likelyto drive that message and try
and drive that, I guess, thatfinancial productivity forward
to protect that middle and lowerincome brackets?
Speaker 1 (09:26):
If it's deemed in the best interest of the country to
do so.
Yes, yep, and that's not myopinion.
That's what Michelle Bullocksaid in her statement last
Tuesday on April Fool's Day,when she announced that rates
were on hold.
She said the RBA stand ready toprotect the Australian economy
from global events if necessary.
(09:48):
So why didn't they cut on April1?
In short, they kept theirpowder dry.
They kept their powder drybecause they wanted to see what
actually happened from trump'sposition on tariffs and clearly
didn't want to unnecessarilyinsert themselves into the
federal election that we'recurrently going through at the
(10:08):
moment, and they would havepreferred to have stayed on the
sidelines until May 17,.
I think May 17 or 18, the nextmeeting is.
There's many reasoned, pragmaticeconomists that say if this
trade war keeps up, there couldbe a Reserve Bank meeting where
(10:30):
they call an emergency meetingand cut before then.
That is an option that is opento the RBA, and Michelle Bullock
herself was called into anemergency meeting with Jim
Chalmers today.
I think it was being Wednesdayas we record this.
So there's much at play.
If Trump pushes on with thesetariffs on China, he is clearly
(10:56):
trying to cause his allies to,as I say, give him and America a
better deal.
But the full attack with thistrade war is directed at China,
and if it is reciprocal tariffs,where he puts one on them at a
higher rate and they hit backwith him and do so in return, it
(11:18):
will be a very wild period formarkets, very wild.
Speaker 3 (11:22):
Oh, look, certainly To put that into context.
I think the reciprocal tariffson Australia is 10.
Is 10 percent right?
And uh, I read today thatchina's beef yeah, uh, but I
read today china's was now 104percent uh, across the board.
Speaker 1 (11:35):
I'm fairly on everything.
Speaker 3 (11:36):
Yeah which is crazy to think about, uh, and it
certainly will be interesting tosee what happens.
And I know, uh, you mentionedthe prestige end and we have
certainly spoken before aboutyou know that that end of the
market faring quite well and, asyou rightly say, there's a lot
of realised share market gain inthere.
But we've also talked about thestrength of foreign currency
against the Australian dollarand the buying power of expats
(11:57):
or foreign internationals cominginto the market.
That's obviously now been putoff the table for a period of
time anyway, but we've also gotglobal collapse in or, you know,
temporary or otherwise, we havea global loss across the
financial markets.
So there is a likelihood reallythat Prestige Gen may take a
hit for a little while, becausethere's also no real benefit
(12:18):
necessarily to exchangingcurrency into the AUD at the
moment anyway, as we're falling.
So are they.
My question for you, then inthe last two weeks or so, since
the tariffs and the kind offluctuation in the markets, have
you had conversations ornoticed a shift with people that
you're talking to at propertiesor open homes or vendors
(12:39):
expressing concern or excitementone end or the other about
what's happening and what thatkind of means for them now as
people looking to exchange.
In short, no.
Speaker 1 (12:50):
Okay, and the reason being is the people that are
knocked out of the market due towhat's going on at the moment.
Don't turn up the open house totell you they're not interested
in the market anymore.
Speaker 3 (12:59):
Yep.
Speaker 1 (13:00):
So we've got some really good listings at the
moment that are drawing reallyreally good numbers and good
bids per property.
And then we've got some othergood, great listings too that no
one's kind of biting on themand it's like where's the buyers
on this?
This is well priced, it's agreat property.
So, um, hearing right acrossthe board from most agents that
it's patchy market, you've got alisting that, for whatever
(13:22):
reason, is really really hot.
Or um, you've got a listingthat you know the owners are not
unreasonable in their priceexpectations but the buyers are
just not turning up to playballs.
It's a very difficultenvironment for agents to guide
their clients on because it isso patchy at the moment.
That's the word.
Speaker 3 (13:40):
Yeah, it's a real shame.
I feel like we've, you know,kind of weathered some pretty
uncertain times and we've comethrough some difficult interest
rate settings and we've not thatwe're out of the woods there,
but we've certainly, you know,started to just ease off the
tension on the ratchet and thennow we've got some global
calamities occurring which arejust causing a bit of
instability, you know, acrossthe market, as you know broadly,
(14:00):
and it really is a bit of awild time, I think, for property
.
You touched on the fact that weare coming or we're in the
election cycle well and trulynow.
We're actually not that faraway from the election and we
have spoken previously about thedifferent policies that either
side of current or futuregovernment, potential future
government have.
Do you think, based on what'shappening at the moment, do you
(14:23):
think there's been much shift inwhere you think the election's
likely heading and, as a result,you know how that's going to
play out for property?
Speaker 1 (14:30):
Look, I think Australians are pretty
disengaged with this election.
Speaker 3 (14:35):
I have virtually heard nothing since the kind of
announcement and a few littleyou know soundbites.
Speaker 1 (14:43):
Really, it's been pretty quiet across the front,
in my opinion.
I think this is an electionthat Australians are largely
disengaged with to date.
Maybe as the decision getscloser, they'll take a deeper
look at it, but I don't thinkeither candidate has captured
the imagination of theelectorate at the moment.
And then whenever a campaign isrun that way, that's always
(15:05):
when both candidates majorcandidatesluster.
That will always favor theincumbent.
Yeah, and that's what'shappening if you believe betting
markets.
I think the last time we didcatch up.
Well, maybe the time beforethat, I said that at $2.60 Albo
was screaming value and heshould not be discounted from
this race.
And he's now into $1.33 thelast time I checked.
(15:28):
So so that's nearly saying thatAlbo is an unbackable favourite
to hold on to the PrimeMinistership.
Whether that's as a majoritygovernment or minority
government remains to be seen.
But look, elections can turnand turn decisively late and
(15:48):
there's still a slight chance.
That could happen for Duttonand the Liberals.
And the reason that it couldhappen is that people have not
engaged and not taken a seriouslook at the issues.
And if there is an event youknow, you go back to John Howard
(16:08):
and the Tampa crisis all thoseyears ago that broke very, very
late in Howard's favour when itlooked like he was on the rack.
So look it does.
Look like it's heading to aLabor Party victory.
Speaker 3 (16:18):
But maybe it breaks late, maybe it doesn't, but it
will take a major event to breakit the other way yeah, look,
who knows, the, uh, the, thefallout from the, the tariff or
the trade war could be acatalyst for a change.
Who knows?
We'll certainly find out in afew weeks time.
Uh, as we kind of wrap up onthis week's episode, pete, uh,
you mentioned that the market isexperiencing some difficult
(16:39):
times and, across the board,with others you've spoken to, uh
, it is challenging in allsectors.
So why don't we have a bit of alook through, or chat through
the numbers on our market wrapand get a sense of what's
actually happening out there onthe ground?
Speaker 1 (16:50):
Yeah, so for the week just gone, on SQM researchers
numbers, which is our preferreddata supplier, there were 1,403
auctions scheduled for the weekwith a clearance rate of 48.3%.
347 sold prior, 331 sold thatauction, 33 were withdrawn, 473
(17:14):
were re-advertised as privatetreaty and 178 were rescheduled,
so pushed down, kept as auctioncampaigns but pushed out to a
later date.
So not a massive deteriorationin the trend line.
But after breaking above 50%early in the year, after sort of
a lack of stock over the summer, the market has gone right back
(17:36):
to that point that it traded infrom August to Christmas 2024,
which it's basically sitting inthe high 40% as a clearance rate
.
So what that tells you certainproduct is is performing well,
as you'll see on a sunday,sunday morning when you open the
paper and you'll always hearabout the two or three auctions
that have done really well.
And there are always properties, even in a flat market or a
(17:58):
patchy market, as we'vedescribed it, that outperform
the market trend.
But at the end of the day, morepeople fail to sell at auction
last sat, saturday, than soldunder the auction hammer.
Speaker 3 (18:12):
Yeah, not overly surprising, and certainly, I
think, since we've been talkingheavily about the auction
clearance rate.
From August.
I think it's only come above50% maybe once, possibly two
weeks, and certainly holdingconsistently.
I know we have spoken at lengthin the past about the belief
that if the market sits below50% consistently we are facing a
(18:33):
downturn in the property market.
But, as you said, we've beenpropped up by that prestige end
for quite some time and theSydney market's held strong, so
it's going to be I think it'llcertainly be an interesting
couple of months ahead.
Speaker 1 (18:44):
Yeah, and look agents , as we've discussed last time,
so we won't labour the point,but they're putting too much
stock to the auction market thatshouldn't go to auction.
Yeah, if the product thatyou're putting to auction is not
going to naturally draw two orthree genuine bidders if not,
you know, three to five you'vegot to question whether doing a
(19:05):
public auction is in thevendor's best interest.
Speaker 2 (19:08):
Yeah.
Speaker 3 (19:09):
Yeah, chasing the headlines instead of being
practical.
Look, really great discussiontoday, Peter.
I think we are certainlygetting into some pretty heavy
topics at the moment, as youknow, necessitated by the market
conditions.
I personally am reallyinterested to see what happens
over the coming weeks and I knownext time we talk, no doubt
something pretty wild will havehappened, because that seems to
be par for the course at themoment.
(19:29):
So thank you for coming in,Pete, and thank you for chatting
with us this evening.
Speaker 1 (19:34):
All the best, thanks, kieran.
Speaker 3 (19:35):
And thanks to everyone for listening to
Current Market Insights.
We look forward to speakingwith you next time.
Speaker 2 (19:40):
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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