May 7, 2025 • 41 mins
Hosts Ciaran O'Brien and Peter O'Malley dissect the RBA’s controversial decision to hold rates during the federal election—despite inflation now sitting comfortably within target bands and business conditions described as “putrid” across multiple sectors.
With Sydney auction clearance rates collapsing to 44%, high vendor withdrawals, and predictions of a 0.5% cut in May, we explore whether the RBA’s delay will cost households and the broader property market. We also analyse how the Labor government’s decisive win and immigration policy will affect housing supply and rental pressure moving forward.
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
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Speaker 1 (00:00):
All down.
All silent, going, going, going, go on son Congratulations.
Speaker 3 (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 4 (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 Mr
Peter O'Malley.
Peter, hello, hi, kieran, greatto see you.
Great to see you again, peter.
It's been a couple of weeks andwe've taken some time off,
notably because we've had theelection just recently in
Australia and we both kind offelt that there was enough going
(00:50):
on that people didn't reallyneed to listen to us drone on
about things in property andpolicy.
So let's spend tonight'sepisode just getting a bit of a
recap on some of the things thathave happened over the last
fortnight.
Recap on some of the thingsthat have happened over the last
fortnight.
And, if you would be so kind,I'd really like to start
tonight's episode by chattingabout the quarterly CPI numbers
(01:11):
and the headline inflation.
As our listeners would know, theRBA uses, obviously, cpi and
inflation as one of its keymetrics for how it adjusts the
cash rate and what it actuallydoes with monetary policy.
And we often talk about thequarterly rate and what it
actually does with monetarypolicy, and we often talk about
the quarterly figures and whatthey mean and how they're
tracking in the trend and whatit actually does indicate is
(01:33):
likely going on in the economy.
So, given that about a week agonow the CPI figures were
released for the quarter, if youdon't mind, why don't you run
us through what those figureslook like, what the RBA's
response to that was and whatthat likely means for rate cuts
and rate movements in the verynear future?
Speaker 1 (01:51):
Thanks, kieran.
Look, the headline inflationnumber is down to 2.4% and the
underlying inflation number is2.9%, moving what they call the
trimmed mean inflation to withinthe target band, the RBA's
target band of 2% to 3%.
Most people are pretty fairlyaware of that.
Now I think the big storybecause that side of it is a
(02:15):
little bit of an old story nowthe big story that's potentially
brewing is there's anincreasing chance that when the
RBA do meet on May 20 that theymay go for a 0.5% interest rate
cut and NAB, even after theelection results, have
(02:38):
maintained their view that theRBA will cut by half a
percentage point in May.
If the RBA do cut by half apercentage point in May, that
would essentially be anadmission without being an
admission from the RBA that theyshould have cut rates in April.
Speaker 4 (02:55):
Yeah, I know that most commentators are pretty
confident that a 25 basis pointcut is certainly on the cards
for the meeting in May.
Speaker 1 (03:04):
That's 100% priced in by the money markets.
Speaker 4 (03:06):
Correct.
That's been priced in and therewas certainly some suggestion.
I read myself that, yeah, a 0.5or a 50 basis point cut was
potentially on the cards.
I guess the question I have foryou is given that we'll talk
about the election in detailshortly, but given that we've
just had an election, there'splenty of promises and things
(03:27):
been thrown out and all of thethings that are happening
globally in terms of theirimpact on the financial markets
at the moment Do you think thatthere's any risk that if the RBA
was to work on a 50 basis pointcut and be confident that the
interest or the inflation iswithin the target band and they
can go a little bit moreaggressive, do you think there's
(03:48):
any risk that they may actuallyovershoot in the current
climate economically?
but also in the politicalclimate.
Speaker 1 (03:54):
No, there was 12, 15 months ago.
So when commentators werescreaming they should be cutting
in May 2024, the RBA probablygot it right to hold then
cutting in May 2024.
The RBA probably got it rightto hold then.
I don't know who you, how manypeople you may have or haven't
spoken to about businessconditions through April into
(04:15):
early May, but every businessperson from a range of
industries that I have spoken tohas spoken about what a putrid
month April was.
Yeah.
Admittedly, April had immensedistractions.
It had the Easter weekend, ofcourse, the Anzac Day, long
weekend.
School holidays overlapped that, combined with a federal
election.
In my 27 years in real estatesales I've worked during many
(04:39):
federal elections but I've neverhad one as dead as what the one
that's just gone was.
And I don't think that wasbecause of policy.
I think it was just because itwas combined with school
holidays and a couple of longweekends back to back in.
The interest rate setting of theday, as the RBA have admitted
themselves, is restrictive.
So just tonight, as we'rerecording this, China has again
(05:02):
eased its monetary policy.
Today Central banks, as we know, around the world have been
cutting interest rates.
The RBA did go in February.
We were of the view at the timethey should have cut in April.
They didn't because we're inthe middle of a federal election
and we are now running towardMay 20 with a property market in
(05:22):
Sydney.
For example, it had a clearancerate of 44% last weekend, a
property market that has beenstruggling for confidence on
very low stock levels.
So I think the environment isabsolutely right for the RBA to
get serious about easingconditions for households.
Speaker 4 (05:41):
I think you've certainly highlighted some
important points.
I mean, I know, even just youknow, existing through April was
challenging.
With all of the differentbreaks and the reals, it felt
like a very staccato month,right, it was very hard to get
rhythm.
But even just you know,observing anecdotally where I
live, I've certainly seen morebusinesses put up, you know, for
lease signs or close up in thepast, say month or two, than I
have in the past, you know sixmonths prior to that which or
(06:01):
close up in the past, say monthor two, than I have in the past,
you know six months prior tothat, which certainly aligns
with what you're saying in yourdiscussions with other business
owners, one of the things thathas been mentioned as a driver
of you know, a bit of aninflationary rise in the last
month.
So even though we had, you know,headline inflation at 2.4 and
underlying or trimmed mean at2.9, there was a 0.9% increase
(06:27):
in March alone and one of thesuggestions has been that that
in many ways was due to easingof some of the electricity
subsidies.
So I guess my question was alittle bit loaded in the sense
that you know this election wasfull of a lot of promises about,
you know, cutting this andoffering that and stimulus for
this and tax breaks and hexbreaks and all kinds of things.
(06:48):
They all have to be paid for.
As we know, and given that youknow something is as seemingly
minimal as the electricityrebate or subsidy scheme had a
pretty major impact on inflation, do you think there's any
chance that you know Labor'sspend first, worry later kind of
approach could actually resultin a bit of an inflationary
(07:08):
uptick?
Speaker 1 (07:10):
No, I don't, because I think the business conditions
and the consumer confidence hasnow turned sufficiently for that
not to happen.
If there were even oil, let'sgo to oil.
Oil price has been crashingyeah.
Oil per barrel has been crashing.
Did it get below $60 a barrel?
Yeah, yeah, so that's immenselydeflationary.
(07:30):
So we've clearly gotdisinflation in the economy at
the moment, disinflation beingthe inflation rate pulling back.
Deflation is where it dropsbelow zero.
I'm not here to say that we'reheading for a deflationary
environment, but just as we sawwith inflation, where it can pop
really quickly to points thatyou never imagined would happen
(07:54):
in your lifetime yeah, if therba leave the cash rate too
restrictive for too long, theycan create an episode to the
downside, just as their easyconditions through 2021 created
an overreaction to the upside onthe inflation number.
It is time to throw seriousrelief at households and I
(08:18):
believe they should have cut inApril, except that in the end,
they weren't going to cutbecause of the federal election
and their messaging.
But I think you've got to keepan eye on the fact that they
might go by half a percent,because everything that we're
talking about here today, ifwe're talking about it, the RBA
knew about it two weeks ago,trust me.
Yeah of course.
Speaker 4 (08:39):
And I guess, as a reference for our listeners,
current cash rate is 4.1.
If we get the 25 basis basispoints, we'll end up at 385.
Uh, but you're suggesting wecould actually get down to 3.6,
which there's plenty of peoplewould be pretty happy with that
outcome.
Speaker 1 (08:52):
I think, and the last time interest the cash rate was
at a cash rate of 3.6 was march2023.
Speaker 4 (08:59):
Yeah, feels like a long time ago.
Speaker 1 (09:00):
That's for sure it does feel like it was a long
time ago, but nobody felt thatinterest rates were low when
they were at 3.6 in March 2023,right.
Well considering where we werebefore that.
So the two or three rate hikesthat came after that really did
feel like they were bringing themallet down on the economy, and
(09:22):
the RBA have been proud andunrelenting in saying that we've
got interest rates that are arestrictive setting for the
economy and it's now time to toloosen it all well by myself,
like many others, I'm surehoping that the RBA do go 50
points and make it just a littlebit more palatable out there oh
, look, let's go back to it.
(09:43):
I think, um, the liberal partydid a good enough job, good
enough job themselves of umlosing the election, um, the rba
giving the economy a muchneeded rate cut in april was not
going to have an impact on theelection.
Yeah, and, and I think the Ijust really think the rba should
have cut in april.
There will be jobs lost andbusinesses gone to the wall
(10:07):
because the RBA didn't cut inApril, and all of the data, all
of the reasoning was there.
The only reason they didn't cutin April was because we're in a
federal election.
And if you're trying to beapolitical, well, you don't
achieve that by staying on holdwhen every skerrick of evidence
says you should cut.
(10:27):
You are being political whenyou do that, right.
Speaker 4 (10:30):
Of course You're favouring the instructions of
the incumbent, right?
Yeah, look, I'm sure someonewill.
When they write about MichelleBullock's time at the RBA,
they'll, you know.
Let's hope this is not herlegacy, the fact that she sent
business to the wall by, youknow, through inaction, we.
This is not her legacy, thefact that she sent business to
the wall through inaction.
We'll certainly see what thefuture holds, but I think you're
exactly right.
The inflationary projectionsand picture is so much more
(10:53):
promising than when we firstreally started focusing on this
12 months ago, and I think we'reentering a really positive
phase for homeowners, but alsofor just consumers in Australia
in general.
Speaker 1 (11:01):
Yeah, look, it was pretty brave by the RBA to stare
the market down 12 months agoand say no, if we start cutting
rates now, everything's going topop again.
So I understand that they'vegot really difficult decisions
to make and I was actually evenaccepting personally that they
(11:22):
didn't cut at any stage in 2024,even very late in the year.
They obviously went in Februarythis year, but to have not gone
in April I just think was areal lousy decision.
And the reason I think it's areally poor decision is that it
takes six weeks from the timethey cut rates for it to be
(11:43):
really impacted by households.
So let's say they cut rates onMay 20.
Households are not going tonotice any sort of relief until
mid-July.
Yeah.
Where, if they had a cut inApril, that relief would be
hitting.
Now, at a time where, whetherit's a car dealership or someone
who's in the fitness industry,or someone in retail or another
real estate agent, I haven'theard from anybody tell me that
(12:07):
they've had a good april inbusiness yeah, no, look, neither
, neither.
Speaker 4 (12:11):
And you know, wrapping up this point, but even
thinking back, you know, fourto six weeks ago, I read quite a
lot from plenty of lenders thatwere already pricing in the
april cut when it didn't come,uh it, you know, from a mortgage
perspective, which reallyreiterates that they were
expecting that everything waslining up for the RBA to make
that decision.
And you know, you and I spokeabout this and you were
(12:32):
reasonably confident that theywould go and may even get
pressure from, you know, fromLabor, to actually make the cut
before the election itself.
And you know, here we are now acouple of days after the
election and it still hasn'thappened.
It will happen in a couple ofweeks, but, as you say, it may
be a few weeks too late.
Let's move forward then.
The election is mostly I'm goingto say it with a caveat mostly
(12:57):
over now.
The result is certainlypenciled in, but there are still
a couple of seats that are onthe fringe.
There's still some counting in,but there are still a couple of
seats that are, you know, onthe fringe.
There's still some counting.
There may be some recounts, whoknows, but I'd love to get a
bit of a sense from you justwhat the impact is going to be
of this election result.
We've talked a little bit aboutthe policies on both sides, how
they're not completelydissimilar.
(13:18):
You know how there is not ahuge amount in there for housing
but there is quite a bit forAustralians in general.
But what I'm really really wantto hear a little bit from your
perspective and your experienceis given, the result was quite
resounding and ended with amandate for Labor.
Do you think it's going to havea more substantial effect on
(13:40):
housing and on the economy thanit may have done if they had to
form a minority?
Or do you think it's going tobe business as usual and it
won't really make?
Speaker 1 (13:47):
much difference.
Look, I think the big losersand they're yet to see it
because they're some of Labor'sbiggest supporters, but the
biggest losers out of this willbe tenants.
Yep, Because the immigrationpolicy will persist.
Labor feels like it has amandate to go for it and it
essentially does, and highimmigration numbers are clearly
(14:08):
part of its strategy, and we'renot even close to building
enough dwellings.
So I think the upshot of thatis the queues at rental open
houses will only get longer.
Speaker 4 (14:20):
Yeah, which is possibly, I mean, not surprising
.
We talk about how it's cyclicaland driven by season.
But yeah, I must admit that wasone of the first things I
thought about, and I think evenyou know, in Albanese's speech
you know his victory speech atthe end he talked a lot about
just Labor's focus on people andrenters and you know housing
(14:40):
security and all this kind ofthing, and I kept thinking to
myself well, you know they'retalking big but they're building
slow and they're not going todeliver anywhere near enough to
support the incoming.
Speaker 1 (14:49):
He won the campaign, hands down.
Why do we say that?
Well, going into the campaign,dutton was in front in the polls
.
At the end of the campaign onelection night, albanese and the
Labor Party had absolutelythumped the daylights out of
them.
Yeah, so it absolutely thumpedthe daylights out of them.
So clearly Labor won thecampaign.
You're absolutely right.
They spoke to those people,they connected with those people
, they promised to those people.
(15:10):
But when you look at the policyin action, they're going to
clobber those people with amallet.
Speaker 4 (15:17):
Yeah well, exactly right.
It really is an interestingtime.
I'd love to get your thoughts,and it's not directly related to
housing, but the Greens Partyover the last couple of years
has been incredibly vocal.
Who the Greens?
Who Exactly?
Are they still around?
Speaker 1 (15:32):
They're still one of the primary colours.
I'm looking at the electionsheet here and it says they're
on zero.
Speaker 4 (15:37):
Well, we can't ignore the fact that there are three
primary colours right in ourspectrum red, green and blue.
The Greens Party were and havebeen incredibly vocal on housing
security, tenants' rights.
You know they love the idea ofthe great economic reset and
everyone effectively losingeverything to make it fairer for
(15:58):
everyone.
You know the socialist kind ofutopia, given that they've had
such a resounding thump also inthis election and lost seats in
some cases to Liberal candidates, which you know is the kind of
antithesis of the Greens'outlook, I guess.
Speaker 1 (16:17):
Do you think that Till's lost to the Liberal
candidates?
Did any Greens lose to aLiberal candidate?
Speaker 4 (16:21):
Oh look, I could be wrong there.
I thought there was one, maybein Brisbane or Queensland that
went to a Lib, but I mightactually be wrong.
Speaker 1 (16:27):
There's two lost in Brisbane.
Might have both gone to Labor.
That could be my error.
Yeah, so all three went toLabor, yeah.
Speaker 4 (16:32):
So I mean even that, though, says you know, do you
think that that's a reflectionof people accepting the fact
thatopian ideology is fantasticto think about and read about,
but in reality you have togovern with some kind of sense
and it shows a bit of a shift.
If you look at the traditionalspectrum of politics, I guess
(16:55):
going from green to redindicates that they're moving a
little bit more to the centre.
Do you think that, given theGreens have had such a thumping
this time around, that Labor mayeven feel a bit of pressure off
them to focus on housing andrental and tenant security,
given that they don't have toworry so much about the Greens?
Speaker 1 (17:15):
Look if Albo can pull this off where he can keep
rents low by somehow creatinghousing supply and keep rents.
Speaker 4 (17:27):
But rents aren't low now, Peter.
Speaker 1 (17:29):
Yeah, we'll keep rents at current levels without
rising.
I should say I actually don'tthink rents are high.
You might say they're not low.
Let me tell you where rents cango.
Speaker 4 (17:40):
Oh look, we certainly talked about where they could
go.
Speaker 1 (17:43):
They are not high.
So we'll agree that if Albo canstop rents from rising and
still bring mass immigrationnumbers into the country to
break the labour supplyshortages that he's trying to
deal with, he'll comfortably winanother term comfortably.
Albo's campaign, as we justsaid about the Liberals, was so
(18:04):
effective that he went, as wesaid here, when he was $2.65 in
the betting he's a good bet,yeah.
And by the time of electionnight he was $1.04.
Speaker 4 (18:14):
Oh yeah, I think he had so many zeros in front of
the final number he wasbasically even money, right?
Speaker 1 (18:19):
Yeah.
So they ran a highly effectivecampaign.
Whether you were a Labor voteror a Greens voter or a Liberal
voter, it doesn't matter.
You have to accept that Laborran a highly effective campaign
and they did it by making a lotof promises, and I think a lot
of the Greens vote in thoseseats were were people that
(18:43):
weren't happy with where Laborwas going at the time in
Melbourne and the two Brisbaneseats.
And they've just returned hometo something more pragmatic
because Labor ran such a goodcampaign and the Greens have
always strongly appealed to acertain part of the electorate
and then tried to bringthemselves along a little bit
(19:05):
more mainstream, but they werelike the Liberal Party They'll
run over by the elbow bus.
Speaker 4 (19:10):
Yeah, which is a pretty dangerous bus to get hit
by.
Final question I guess then foryou on the election is all the
policies, all the campaignspeople will pick apart from both
sides, what's happened heregiven it's fairly monumental in
the last 20-, in the last 20 oddyears, it's a pretty
significant election.
Do you think that any of thepolicy on the liberal side
(19:34):
specifically related to housing,or, you know, finance, monetary
policy, etc.
Any of that has had any impacton this result?
And if so, do you think thatthe libs may start to take a
more aggressive housing you knowtenant uh immigration stance as
we move toward the next threeyears?
Speaker 1 (19:55):
oh look if, if you get granular with it, but their
policies were sort of so poorlycommunicated, lacked conviction,
it was very, very hard to takeany of them seriously.
Um, what?
What I would say is that takenote of the commentary that the
liberal party has completelylost young adults.
(20:16):
Yep, so anyone between 18 and26, say?
The representation in that agegroup that voted Labor was sky
high.
Yeah.
And they're primarily tenantsand they feel like the deck is
stacked against them.
This wealth inequality thatwe're seeing across Australian
(20:36):
society since COVID yes, there'sno doubt that certain factions
of the left have made them feellike victims and aggrieved at.
You know, baby boomers are theum, are the cause of your
inability to buy a house andthey've enjoyed these, uh,
tax-free gains and I just don'tthink, whether it be through
(20:58):
incompetence or or being blindto the facts, the liberal party
didn't see any of this coming.
Um, you you as well as I do theimpact of the HECS had on the
young people, Myself included.
I don't know why the LiberalParty thinks it's beneath them
to talk to tenants, but theydidn't seem to have offered
(21:21):
tenants any assistance anyway toget by.
The Labor Party did.
And then they had their HECSpolicy, which was highly
appealing to people in that agebracket, and you know what the
Liberal Party were offering forpeople between 18 and 26 wasn't
much.
They played to their what youmight call their traditional
(21:42):
base, which is the older,wealthier person in society, and
, yeah, I suppose those peoplestuck with them.
But the reality is that,demographically I love
demographics, it's such a greattopic demographically the
younger people are beginning tooutnumber.
You know the older age groupsnow.
Speaker 4 (22:05):
Yeah, look, I'm glad you mentioned that I also love
demographics and we should.
You know, maybe we should tryand look, I'm glad you mentioned
that I also love demographicsand we should.
You know, maybe we should tryand get bernard salt on here for
an episode one night.
But uh, you know, it washeavily reported in the week
before the election that this isthe first time that the younger
cohorts uh, you know, the, thegen, whatever's they are, the
z's and the y's and themillennials, etc.
Outnumber the boomers for afederal election.
(22:25):
And you could argue, the result, you know, reflected that
perfectly.
But I, I personally don't thinkit's quite that simplistic.
Uh, I agree with you, I thinkthe liberals targeted their base
, but they also completelyeither avoided or ignored a
whole section thinking.
Well, I'm not sure what theywere thinking and I'm sure you
know people within the partywill figure that out.
But personally I'm veryinterested to see because this
(22:49):
could be a pivotal turning pointin our political kind of path
as a nation, if the Libs don'trediscover themselves, that's
for sure.
Speaker 1 (22:58):
The Libs will rediscover themselves.
There's no doubt about that, Ithink in the short term.
For me, the bigger determinantof where we go politically is
does Albo and his governmentmove and manage the country in
the centre, move closer towardsthe centre, or do they have
vested interests that pull themto the hard left and then give
(23:21):
the Liberal Party a greateropportunity to rise?
So what was interesting aboutthis is, as we know, at the 2022
election, the Teals didtremendous damage to the Liberal
Party, but those seats, even inthe Liberal Party's darkest
hours, the Teal seats werealready beginning to return home
to some of the Liberals, and wehaven't got the final result in
(23:44):
Bradfield.
But that was a Tealwell-financed, running a
phenomenal campaign against theLiberal, and it looks like the
Liberal held on.
Speaker 4 (23:53):
I think he's already claimed victory.
I believe.
Speaker 1 (23:55):
She in Bradfield, two ladies.
Speaker 4 (23:57):
Oh, okay, there's one I certainly want.
The Liberal claimed victory,but the Teals refused to concede
.
It was one of the lastheadlines I read, oh that would
be Tim Wilson and Zoe Danielsdown in Melbourne.
Speaker 1 (24:08):
Yeah, that's probably right.
So that was one of the tailseats that Tim Wilson lost at
last time to the tails of the.
Speaker 4 (24:14):
Daniels, correct, yeah, that's the one.
Speaker 1 (24:16):
And it's officially come back to Tim Wilson.
So there's a pathway back forthe Liberal Party.
But they have to get thishousing and this young adult
vote and demographic rights.
I was in a meeting today and ayoung lady she must be 23, 24
(24:37):
years of age she said I justfelt that Peter Dutton was the
bad cop in the good cop, bad coproutine.
I didn't connect with him, Ijust got bad vibes about him.
There was no way, even if I wasright-wing minded, that I could
bring myself to vote for him,and apparently the strategists
were trying to tell Peter Duttonthis throughout the campaign.
(24:59):
He wasn't listening.
I don't know if that's true ornot, but what I'm saying here is
the Labor Party mustacknowledge.
But what I'm saying here is theLabor Party must acknowledge
they won't have a salesperson asbad as Peter Dutton in 2028
when we go to the polls again.
Speaker 4 (25:14):
They were given a gift.
Certainly, I'm not going totake up any more podcast time
asking for your predictions onwhether we're going to see the
return of Frydenberg or whetherwe're going to find someone else
taking the helm.
But look, I think it'scertainly an interesting time
ahead and I personally, too, amgoing to see the return of
Frydenberg or whether we'regoing to find someone else
taking the helm.
But look, I think it'scertainly an interesting time
ahead.
And you know, I personally too,am interested to see what
Albanese does, because I have afeeling Labor is going to shift
(25:35):
more centrist.
But time will tell.
You know they've got theyreally have a mandate to do what
they want.
Speaker 1 (25:41):
If he manages in the centre, say political leaders
like Gladys coming back theother way, right wing but
managed in the centre.
She was unassailable until anunfortunate event brought her
down.
But in the polls and the waypeople felt about her New South
Wales premiership she wasunassailable.
And if Albo does move to thecentre and gets this whole
(26:04):
housing crisis thing makes goodprogress on it in the next three
years, just as he did withinflation in the last three
years, he'll get another term.
Simple as that.
Speaker 4 (26:14):
Well, we'll certainly see when we're talking about
this in three years, peter, aswe move forward then with the
rest of the episode, I'd love tojust catch up on what's
actually happening.
So you in property that is, youhave spoken about how the
auction clearance rate's alittle bit low and we'll get
into the numbers in a minute onlow stock volume as it is and
(26:36):
you've also talked about justhow it is tough economic
conditions and it's been areally, really tumultuous month
just in terms of timing andpeople's activity levels, et
cetera.
So if you can give us a this isa bit of a recap or a bit of
insight into what you'reactually seeing on the ground at
the moment, at open homes, whatkind of things are you talking
about with your vendors that areconcerning, or, or you know,
(26:59):
possible highlights for them?
And then, I guess, as a finalpoint, what kind of buyers
you're seeing, what's's thecommon profile, if you could
even say there are buyers outthere at the moment.
Speaker 1 (27:10):
Oh, there's definitely buyers out there and
we're getting offers on a lot ofproperties.
Some of those offers meet orexceed the vendor's expectations
.
But there's a lot of exampleswhere we bring the vendor offers
and you know the offer's notworking for them and they've
then got to make a decisionwhether they take the property
(27:32):
off the market.
So across the market there's ahigh withdrawal rate much higher
, by the way, much higher thanis being reported and that's
unsurprising because when you'vegot an auction clearance rate
systemically stuck below 50%,it's unsurprising that as night
follows day you're going to geta high withdrawal rate.
So we are running into a lot ofpeople in the community that
(27:55):
don't understand the importanceof risk-free selling when going
on the market.
They think you know what harmcan there be in?
We're really serious aboutselling our house.
All our friends tell us it's anice house.
We'll just pay for theadvertising campaign up front.
I'm sure it'll work out fine.
They invest $10,000 or $15,000in the campaign.
They get a bid on auction day,then work out what they could
(28:18):
have done with that $10,000 or$15,000 and they're just
absolutely gobsmacked at howthey've been played off a break
and fallen down a hole.
And that's very common in themarketplace at the moment failed
vendors that have got a bigadvertising bill or a big
advertising deficit and no sale.
In terms of open houses,there's a mixture of all sorts
(28:39):
of buyers in the marketplace,but when it gets to the
negotiation table're tough andwe constantly keep hearing from
buyers that the banks are beingvery restrictive around lending.
There's no easy money policyfrom the banks at the moment.
They're really working peopleover before giving them a loan
approval do you think?
Speaker 4 (29:01):
just a couple of points I just want to touch on
there.
One you talk about the fact thatfailed vendors there's quite a
few that have paid money upfront, and I know you've spoken
before about how traditionallythat's the type of client that
you often will work with.
Are you finding, or are youhaving any conversations with,
(29:22):
vendors that have failed thatare just so disappointed with
the process that they'restepping away from it altogether
?
Or are you finding that peoplethat are on the market at the
moment are reasonably motivatedto be there and they're willing
to entertain you know analternative, risk-free solution,
as opposed to, you know, havingalready spent money or not?
Or are you finding that peopleare, you know, testing the
(29:45):
waters a little bit with theirsales?
Or do you you know what's thekind of, I guess, what's the
motivation level of your vendorsat the moment?
Do you think that most peopleare selling out of necessity?
Or, you know, is it a bit of ablend of people who are just
kind of testing the water andsaying, hey, it's low stock,
let's see if we can capitalize?
Speaker 1 (30:03):
look.
I think you've got to look ateach individual situation in and
of its own merit.
So when a property doesn't sell, we like to sit down with the
client and say well you know,did it sell because of the price
, the presentation or the personselling it, ie the agent and we
try to get an understanding.
(30:24):
Well, what happened during thecampaign to you know?
Deliver this non-result andjust understand what the root
cause is.
Now there's lots of agents, asthere always is.
There's lots of agents thatwill overquote to win the
listing.
And any agent out there at themoment who is overquoting to win
(30:45):
the listing will know thatthere are absolutely no chance
of getting that property sold.
And the reason I say that iseven when you're making
evidence-based valuations at themoment, in many instances the
market's undershooting,undershooting you and making
offers below what the evidencesuggests yeah so it's not an
(31:06):
easy environment for agents orvendors out there at the moment
and it's really.
you know, it takes a lot for theagent to get it up into the
back to the reasonable category.
So what you don't want to do,there are vendors.
Unfortunately the fall for theagent that's quoted too much or
the market slipped below thembetween the time they sign to go
(31:27):
on the market, the time theyget to market and they've just
got to ask themselves am Iprepared to meet the market if I
go back out there?
So that meeting I was in todaywith the lady who said I didn't
get good vibes from Peter Dutton.
She's selling her familyproperty and the agent
overquoted somewhere to the tuneof 20% on her property so,
(31:52):
unsurprisingly, it hasn't soldand it's been on the market for
several months.
The opportunity costs of nothaving sold six months ago and
having cash in the bank hasresulted in her losing possibly
$15,000 a month in term depositincome.
Yeah.
The ramifications aresignificant because the property
(32:15):
hasn't been sold.
So in that meeting I was sayingunless you're prepared to
accept that you were overquotedand you can't go back to the
market looking for the sameprice point, you have to
seriously reassess your priceexpectations to sell this.
And if you don't want to dothat, that's okay.
Just don't come to market.
Speaker 4 (32:34):
Yeah, I mean that's perfectly reasonable advice,
right.
But there are always going tobe scenarios where a vendor has
to sell regardless.
And then you know,unfortunately there's going to
be scenarios where people stillsuccumb to the sunk cost fallacy
, right that they've put moneyinto an advertising campaign and
they've been on the market andthe opportunity cost is gone.
(32:54):
So what the hell?
They're just going to keepgoing.
You know, unfortunately thatdoes happen.
But what I'm getting from youis that really at the moment
there's not a lot of stressselling going on, so people
aren't just desperately tryingto hang on to get out.
But there are definitelydifficult times and people need
to be a little bit pragmaticwith their asset and accept that
, unfortunately, what they weretold potentially three months
(33:16):
ago is definitely not whatthey're going to see today, or
most likely not what they'regoing to see today, or most
likely not what they're going tosee today.
Speaker 1 (33:22):
Well, as we've discussed earlier tonight,
conditions were really reallyawkward through April.
So nobody really knows wherethe market is at, given it sort
of had a unofficial shutdown forthe last month.
So things will become clearerin in the next four weeks as we
get a rate cut and, you know,maybe the market will come
(33:42):
charging back and buyers willsuddenly be a game on,
particularly if it's a 0.5 ratecut here in in sydney.
Um, sometimes the agent justdoesn't give the property the
focus it deserves.
Um, so the the circumstance thatI was telling you about, for
example, um, earlier today, theagent did actually have a
(34:03):
reasonable, market-based offerand he didn't even pop around
and have an in-person meetingwith the vendor to explain why,
all things considered, thisoffer should be considered and
accepted yeah and it's only whenI was with the vendor today and
talking it through that I wasbasically saying it looks like
(34:24):
your best buyer has turned up,made an offer, had it rejected
and moved on and your agenthasn't told you any of that
because they weren't reallyacross the fine detail and
really giving the campaigneverything that it deserved.
So sometimes the agent, theproperty can be a good property
(34:46):
and drawing good interest, butthe agent's just not on for
whatever reason.
Presentation we know theimportance of presentation as
well at the moment.
Is that because buyers are verywary about work, cost of works,
ease of getting works done.
I've never been involved in somany house renovations in all my
(35:07):
life as what I am at the moment.
Because when people call me outand say how should we present
this for sale, I'm looking atthem and saying you can spend
$50,000 here and add $200 invalue to your property, but if
you don't spend that $50,000,the market's going to drive your
price down $150.
Yeah, what do you want to do?
(35:27):
So I don't ask people to investin an advertising campaign to
present us as the agents betterto the marketplace.
That's largely overblown.
But I will ask a vendor toinvest in their own home up
front, because they can increasethe value and they can stop the
market pushing the price oftheir property down by doing,
(35:49):
you know, some basic repairs andrenos.
Speaker 4 (35:52):
Yeah, well, like all of this aligns, honestly, with
previous episodes we've done.
We've just talked about how toactually, you know, really
optimise your sales campaign.
It is about presentation, it'sabout planning, it's about all
of those things.
So we won't linger, but it'sinteresting, I guess, to get a
sense that you know, in thiskind of market a little bit
tough it's really important tomake sure you stick to those
(36:15):
principles you know and get itall right the first time, which
can be a little bit tough, butyou know, I think if there's
vendors listening that arefeeling concerned, you know
there is hope out there.
You've just got to make surethat you're also being pragmatic
with your agent and make surethat you know, you know exactly
what's going on with your saleas we wrap up then tonight,
peter, given that we've talkedabout how tough the market is,
(36:35):
if you can, why don't you takeus through the auction clearance
numbers and, I guess, put somefigures to that sentiment that
we're certainly feeling outthere?
Speaker 1 (36:43):
So look, last week there was 833 auctions scheduled
with a clearance rate of 44.4%and, interestingly, 185 sold
prior, 185 sold at auction and28 sold after.
So the whole sold prior or soldunder the hammer split neatly
50-50 last week.
(37:03):
Auction numbers will go up inthe next two or three weeks from
that 8.33 a week.
Slightly interesting to seethat many auctions on an
election week.
But you go and there are a lotof campaigns that didn't sell or
were rescheduled.
(37:24):
So of the 833 auctions thatwere scheduled, a clean 154 were
rescheduled.
So that's interesting as well.
So that tells you there thatthere was a number of vendors
that lined up to do a campaignlast Saturday but between them
and their agents they felt itwas better to wait a couple of
(37:45):
weeks, possibly after the ratecut, before having another go.
So not a diabolical market, Iwouldn't say it's a tough market
.
It's just not an easy one.
There are good offers out therebut as a vendor, if you've
overstated in your own mind, ora real estate agent has
overstated what they can achievefor your property beyond market
(38:07):
price, yes it will be a toughmarket.
So it's not really a toughmarket for those vendors that
are determined to sell and happyto work with the market price.
It's tough for those vendorsthat are trying to get above
market price.
Speaker 4 (38:21):
Yeah, my only question for you on the auction
numbers, peter, and I'm notentirely surprised, other than,
like you, I cannot believe thatso many auctions were scheduled
for Election Day.
Speaker 1 (38:33):
Like I just can't even fathom thinking about both
these Is the preceding twoweekends to the Election Day was
Easter and the Anzac Day longweekend, so pretty bolshy saying
you're going to do an auctionon that day.
Speaker 4 (38:47):
It's a clever way to get some money from your vendors
without actually selling aproperty.
But my only question for you isjust based on your knowledge of
the market and your history,how does 833 auctions compare
for this time of yearhistorically?
Is that about right, or do youthink we're a little bit low, a
little bit high?
Where does it kind of sit,based on?
Speaker 1 (39:07):
Well, 536 were on election day and 297 were
midweek.
So what I noticed through thatwhole period is lots of agents
who would normally do theirauctions on a Saturday were
doing midweek auctions.
Yeah, so that was sort of likeeveryone had the same calendar
right, the same events in thecalendar school holidays, easter
(39:28):
, anzac Day, long weekend andthe federal election.
And I noticed that some agents,as I said, dropped the Saturday
auctions altogether and weredoing Wednesday or Thursday
night auctions altogether, andwe're doing Wednesday or
Thursday night auctions, whichis why you had a higher number
for the midweek auctions and youhad a lower number at 5.36 for
(39:49):
the Saturday auctions.
So, to give you an idea,saturday auctions in a market
like this at this time of yearshould be somewhere between 8.50
and $1,050.
And when you get to spring thatgets out to $1,200 to $1,400.
Auctions on a Saturday.
Speaker 4 (40:07):
Yeah, oh, look, it makes sense, and it didn't
escape me that we certainly hada lot more midweeks this time
than we usually do.
Peter, really in-depth episodetonight.
You know quite a long one, butI think it's important that we
did talk about the topics wehave.
You know, inflation obviouslyguides so much of what happens
in Sydney property or nationalproperty.
But Sydney in particular theelection's been such a pivotal
(40:29):
one in terms of result but alsothe policies that have come into
it, and, as always, it's greatto get a bit of a market recap
for our listeners.
So, despite the long chat, Ihope your voice is held out.
I certainly appreciate youcoming in for a talk, peter
Pleasure.
Thanks, kieran, thank you andthanks to everyone for listening
to Current Market Insights.
We look forward to speakingwith you next time.
Speaker 3 (40:47):
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 3 (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 4 (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 Mr
Peter O'Malley.
Peter, hello, hi, kieran, greatto see you.
Great to see you again, peter.
It's been a couple of weeks andwe've taken some time off,
notably because we've had theelection just recently in
Australia and we both kind offelt that there was enough going
(00:50):
on that people didn't reallyneed to listen to us drone on
about things in property andpolicy.
So let's spend tonight'sepisode just getting a bit of a
recap on some of the things thathave happened over the last
fortnight.
Recap on some of the thingsthat have happened over the last
fortnight.
And, if you would be so kind,I'd really like to start
tonight's episode by chattingabout the quarterly CPI numbers
(01:11):
and the headline inflation.
As our listeners would know, theRBA uses, obviously, cpi and
inflation as one of its keymetrics for how it adjusts the
cash rate and what it actuallydoes with monetary policy.
And we often talk about thequarterly rate and what it
actually does with monetarypolicy, and we often talk about
the quarterly figures and whatthey mean and how they're
tracking in the trend and whatit actually does indicate is
(01:33):
likely going on in the economy.
So, given that about a week agonow the CPI figures were
released for the quarter, if youdon't mind, why don't you run
us through what those figureslook like, what the RBA's
response to that was and whatthat likely means for rate cuts
and rate movements in the verynear future?
Speaker 1 (01:51):
Thanks, kieran.
Look, the headline inflationnumber is down to 2.4% and the
underlying inflation number is2.9%, moving what they call the
trimmed mean inflation to withinthe target band, the RBA's
target band of 2% to 3%.
Most people are pretty fairlyaware of that.
Now I think the big storybecause that side of it is a
(02:15):
little bit of an old story nowthe big story that's potentially
brewing is there's anincreasing chance that when the
RBA do meet on May 20 that theymay go for a 0.5% interest rate
cut and NAB, even after theelection results, have
(02:38):
maintained their view that theRBA will cut by half a
percentage point in May.
If the RBA do cut by half apercentage point in May, that
would essentially be anadmission without being an
admission from the RBA that theyshould have cut rates in April.
Speaker 4 (02:55):
Yeah, I know that most commentators are pretty
confident that a 25 basis pointcut is certainly on the cards
for the meeting in May.
Speaker 1 (03:04):
That's 100% priced in by the money markets.
Speaker 4 (03:06):
Correct.
That's been priced in and therewas certainly some suggestion.
I read myself that, yeah, a 0.5or a 50 basis point cut was
potentially on the cards.
I guess the question I have foryou is given that we'll talk
about the election in detailshortly, but given that we've
just had an election, there'splenty of promises and things
(03:27):
been thrown out and all of thethings that are happening
globally in terms of theirimpact on the financial markets
at the moment Do you think thatthere's any risk that if the RBA
was to work on a 50 basis pointcut and be confident that the
interest or the inflation iswithin the target band and they
can go a little bit moreaggressive, do you think there's
(03:48):
any risk that they may actuallyovershoot in the current
climate economically?
but also in the politicalclimate.
Speaker 1 (03:54):
No, there was 12, 15 months ago.
So when commentators werescreaming they should be cutting
in May 2024, the RBA probablygot it right to hold then
cutting in May 2024.
The RBA probably got it rightto hold then.
I don't know who you, how manypeople you may have or haven't
spoken to about businessconditions through April into
(04:15):
early May, but every businessperson from a range of
industries that I have spoken tohas spoken about what a putrid
month April was.
Yeah.
Admittedly, April had immensedistractions.
It had the Easter weekend, ofcourse, the Anzac Day, long
weekend.
School holidays overlapped that, combined with a federal
election.
In my 27 years in real estatesales I've worked during many
(04:39):
federal elections but I've neverhad one as dead as what the one
that's just gone was.
And I don't think that wasbecause of policy.
I think it was just because itwas combined with school
holidays and a couple of longweekends back to back in.
The interest rate setting of theday, as the RBA have admitted
themselves, is restrictive.
So just tonight, as we'rerecording this, China has again
(05:02):
eased its monetary policy.
Today Central banks, as we know, around the world have been
cutting interest rates.
The RBA did go in February.
We were of the view at the timethey should have cut in April.
They didn't because we're inthe middle of a federal election
and we are now running towardMay 20 with a property market in
(05:22):
Sydney.
For example, it had a clearancerate of 44% last weekend, a
property market that has beenstruggling for confidence on
very low stock levels.
So I think the environment isabsolutely right for the RBA to
get serious about easingconditions for households.
Speaker 4 (05:41):
I think you've certainly highlighted some
important points.
I mean, I know, even just youknow, existing through April was
challenging.
With all of the differentbreaks and the reals, it felt
like a very staccato month,right, it was very hard to get
rhythm.
But even just you know,observing anecdotally where I
live, I've certainly seen morebusinesses put up, you know, for
lease signs or close up in thepast, say month or two, than I
have in the past, you know sixmonths prior to that which or
(06:01):
close up in the past, say monthor two, than I have in the past,
you know six months prior tothat, which certainly aligns
with what you're saying in yourdiscussions with other business
owners, one of the things thathas been mentioned as a driver
of you know, a bit of aninflationary rise in the last
month.
So even though we had, you know,headline inflation at 2.4 and
underlying or trimmed mean at2.9, there was a 0.9% increase
(06:27):
in March alone and one of thesuggestions has been that that
in many ways was due to easingof some of the electricity
subsidies.
So I guess my question was alittle bit loaded in the sense
that you know this election wasfull of a lot of promises about,
you know, cutting this andoffering that and stimulus for
this and tax breaks and hexbreaks and all kinds of things.
(06:48):
They all have to be paid for.
As we know, and given that youknow something is as seemingly
minimal as the electricityrebate or subsidy scheme had a
pretty major impact on inflation, do you think there's any
chance that you know Labor'sspend first, worry later kind of
approach could actually resultin a bit of an inflationary
(07:08):
uptick?
Speaker 1 (07:10):
No, I don't, because I think the business conditions
and the consumer confidence hasnow turned sufficiently for that
not to happen.
If there were even oil, let'sgo to oil.
Oil price has been crashingyeah.
Oil per barrel has been crashing.
Did it get below $60 a barrel?
Yeah, yeah, so that's immenselydeflationary.
(07:30):
So we've clearly gotdisinflation in the economy at
the moment, disinflation beingthe inflation rate pulling back.
Deflation is where it dropsbelow zero.
I'm not here to say that we'reheading for a deflationary
environment, but just as we sawwith inflation, where it can pop
really quickly to points thatyou never imagined would happen
(07:54):
in your lifetime yeah, if therba leave the cash rate too
restrictive for too long, theycan create an episode to the
downside, just as their easyconditions through 2021 created
an overreaction to the upside onthe inflation number.
It is time to throw seriousrelief at households and I
(08:18):
believe they should have cut inApril, except that in the end,
they weren't going to cutbecause of the federal election
and their messaging.
But I think you've got to keepan eye on the fact that they
might go by half a percent,because everything that we're
talking about here today, ifwe're talking about it, the RBA
knew about it two weeks ago,trust me.
Yeah of course.
Speaker 4 (08:39):
And I guess, as a reference for our listeners,
current cash rate is 4.1.
If we get the 25 basis basispoints, we'll end up at 385.
Uh, but you're suggesting wecould actually get down to 3.6,
which there's plenty of peoplewould be pretty happy with that
outcome.
Speaker 1 (08:52):
I think, and the last time interest the cash rate was
at a cash rate of 3.6 was march2023.
Speaker 4 (08:59):
Yeah, feels like a long time ago.
Speaker 1 (09:00):
That's for sure it does feel like it was a long
time ago, but nobody felt thatinterest rates were low when
they were at 3.6 in March 2023,right.
Well considering where we werebefore that.
So the two or three rate hikesthat came after that really did
feel like they were bringing themallet down on the economy, and
(09:22):
the RBA have been proud andunrelenting in saying that we've
got interest rates that are arestrictive setting for the
economy and it's now time to toloosen it all well by myself,
like many others, I'm surehoping that the RBA do go 50
points and make it just a littlebit more palatable out there oh
, look, let's go back to it.
(09:43):
I think, um, the liberal partydid a good enough job, good
enough job themselves of umlosing the election, um, the rba
giving the economy a muchneeded rate cut in april was not
going to have an impact on theelection.
Yeah, and, and I think the Ijust really think the rba should
have cut in april.
There will be jobs lost andbusinesses gone to the wall
(10:07):
because the RBA didn't cut inApril, and all of the data, all
of the reasoning was there.
The only reason they didn't cutin April was because we're in a
federal election.
And if you're trying to beapolitical, well, you don't
achieve that by staying on holdwhen every skerrick of evidence
says you should cut.
(10:27):
You are being political whenyou do that, right.
Speaker 4 (10:30):
Of course You're favouring the instructions of
the incumbent, right?
Yeah, look, I'm sure someonewill.
When they write about MichelleBullock's time at the RBA,
they'll, you know.
Let's hope this is not herlegacy, the fact that she sent
business to the wall by, youknow, through inaction, we.
This is not her legacy, thefact that she sent business to
the wall through inaction.
We'll certainly see what thefuture holds, but I think you're
exactly right.
The inflationary projectionsand picture is so much more
(10:53):
promising than when we firstreally started focusing on this
12 months ago, and I think we'reentering a really positive
phase for homeowners, but alsofor just consumers in Australia
in general.
Speaker 1 (11:01):
Yeah, look, it was pretty brave by the RBA to stare
the market down 12 months agoand say no, if we start cutting
rates now, everything's going topop again.
So I understand that they'vegot really difficult decisions
to make and I was actually evenaccepting personally that they
(11:22):
didn't cut at any stage in 2024,even very late in the year.
They obviously went in Februarythis year, but to have not gone
in April I just think was areal lousy decision.
And the reason I think it's areally poor decision is that it
takes six weeks from the timethey cut rates for it to be
(11:43):
really impacted by households.
So let's say they cut rates onMay 20.
Households are not going tonotice any sort of relief until
mid-July.
Yeah.
Where, if they had a cut inApril, that relief would be
hitting.
Now, at a time where, whetherit's a car dealership or someone
who's in the fitness industry,or someone in retail or another
real estate agent, I haven'theard from anybody tell me that
(12:07):
they've had a good april inbusiness yeah, no, look, neither
, neither.
Speaker 4 (12:11):
And you know, wrapping up this point, but even
thinking back, you know, fourto six weeks ago, I read quite a
lot from plenty of lenders thatwere already pricing in the
april cut when it didn't come,uh it, you know, from a mortgage
perspective, which reallyreiterates that they were
expecting that everything waslining up for the RBA to make
that decision.
And you know, you and I spokeabout this and you were
(12:32):
reasonably confident that theywould go and may even get
pressure from, you know, fromLabor, to actually make the cut
before the election itself.
And you know, here we are now acouple of days after the
election and it still hasn'thappened.
It will happen in a couple ofweeks, but, as you say, it may
be a few weeks too late.
Let's move forward then.
The election is mostly I'm goingto say it with a caveat mostly
(12:57):
over now.
The result is certainlypenciled in, but there are still
a couple of seats that are onthe fringe.
There's still some counting in,but there are still a couple of
seats that are, you know, onthe fringe.
There's still some counting.
There may be some recounts, whoknows, but I'd love to get a
bit of a sense from you justwhat the impact is going to be
of this election result.
We've talked a little bit aboutthe policies on both sides, how
they're not completelydissimilar.
(13:18):
You know how there is not ahuge amount in there for housing
but there is quite a bit forAustralians in general.
But what I'm really really wantto hear a little bit from your
perspective and your experienceis given, the result was quite
resounding and ended with amandate for Labor.
Do you think it's going to havea more substantial effect on
(13:40):
housing and on the economy thanit may have done if they had to
form a minority?
Or do you think it's going tobe business as usual and it
won't really make?
Speaker 1 (13:47):
much difference.
Look, I think the big losersand they're yet to see it
because they're some of Labor'sbiggest supporters, but the
biggest losers out of this willbe tenants.
Yep, Because the immigrationpolicy will persist.
Labor feels like it has amandate to go for it and it
essentially does, and highimmigration numbers are clearly
(14:08):
part of its strategy, and we'renot even close to building
enough dwellings.
So I think the upshot of thatis the queues at rental open
houses will only get longer.
Speaker 4 (14:20):
Yeah, which is possibly, I mean, not surprising
.
We talk about how it's cyclicaland driven by season.
But yeah, I must admit that wasone of the first things I
thought about, and I think evenyou know, in Albanese's speech
you know his victory speech atthe end he talked a lot about
just Labor's focus on people andrenters and you know housing
(14:40):
security and all this kind ofthing, and I kept thinking to
myself well, you know they'retalking big but they're building
slow and they're not going todeliver anywhere near enough to
support the incoming.
Speaker 1 (14:49):
He won the campaign, hands down.
Why do we say that?
Well, going into the campaign,dutton was in front in the polls
.
At the end of the campaign onelection night, albanese and the
Labor Party had absolutelythumped the daylights out of
them.
Yeah, so it absolutely thumpedthe daylights out of them.
So clearly Labor won thecampaign.
You're absolutely right.
They spoke to those people,they connected with those people
, they promised to those people.
(15:10):
But when you look at the policyin action, they're going to
clobber those people with amallet.
Speaker 4 (15:17):
Yeah well, exactly right.
It really is an interestingtime.
I'd love to get your thoughts,and it's not directly related to
housing, but the Greens Partyover the last couple of years
has been incredibly vocal.
Who the Greens?
Who Exactly?
Are they still around?
Speaker 1 (15:32):
They're still one of the primary colours.
I'm looking at the electionsheet here and it says they're
on zero.
Speaker 4 (15:37):
Well, we can't ignore the fact that there are three
primary colours right in ourspectrum red, green and blue.
The Greens Party were and havebeen incredibly vocal on housing
security, tenants' rights.
You know they love the idea ofthe great economic reset and
everyone effectively losingeverything to make it fairer for
(15:58):
everyone.
You know the socialist kind ofutopia, given that they've had
such a resounding thump also inthis election and lost seats in
some cases to Liberal candidates, which you know is the kind of
antithesis of the Greens'outlook, I guess.
Speaker 1 (16:17):
Do you think that Till's lost to the Liberal
candidates?
Did any Greens lose to aLiberal candidate?
Speaker 4 (16:21):
Oh look, I could be wrong there.
I thought there was one, maybein Brisbane or Queensland that
went to a Lib, but I mightactually be wrong.
Speaker 1 (16:27):
There's two lost in Brisbane.
Might have both gone to Labor.
That could be my error.
Yeah, so all three went toLabor, yeah.
Speaker 4 (16:32):
So I mean even that, though, says you know, do you
think that that's a reflectionof people accepting the fact
thatopian ideology is fantasticto think about and read about,
but in reality you have togovern with some kind of sense
and it shows a bit of a shift.
If you look at the traditionalspectrum of politics, I guess
(16:55):
going from green to redindicates that they're moving a
little bit more to the centre.
Do you think that, given theGreens have had such a thumping
this time around, that Labor mayeven feel a bit of pressure off
them to focus on housing andrental and tenant security,
given that they don't have toworry so much about the Greens?
Speaker 1 (17:15):
Look if Albo can pull this off where he can keep
rents low by somehow creatinghousing supply and keep rents.
Speaker 4 (17:27):
But rents aren't low now, Peter.
Speaker 1 (17:29):
Yeah, we'll keep rents at current levels without
rising.
I should say I actually don'tthink rents are high.
You might say they're not low.
Let me tell you where rents cango.
Speaker 4 (17:40):
Oh look, we certainly talked about where they could
go.
Speaker 1 (17:43):
They are not high.
So we'll agree that if Albo canstop rents from rising and
still bring mass immigrationnumbers into the country to
break the labour supplyshortages that he's trying to
deal with, he'll comfortably winanother term comfortably.
Albo's campaign, as we justsaid about the Liberals, was so
(18:04):
effective that he went, as wesaid here, when he was $2.65 in
the betting he's a good bet,yeah.
And by the time of electionnight he was $1.04.
Speaker 4 (18:14):
Oh yeah, I think he had so many zeros in front of
the final number he wasbasically even money, right?
Speaker 1 (18:19):
Yeah.
So they ran a highly effectivecampaign.
Whether you were a Labor voteror a Greens voter or a Liberal
voter, it doesn't matter.
You have to accept that Laborran a highly effective campaign
and they did it by making a lotof promises, and I think a lot
of the Greens vote in thoseseats were were people that
(18:43):
weren't happy with where Laborwas going at the time in
Melbourne and the two Brisbaneseats.
And they've just returned hometo something more pragmatic
because Labor ran such a goodcampaign and the Greens have
always strongly appealed to acertain part of the electorate
and then tried to bringthemselves along a little bit
(19:05):
more mainstream, but they werelike the Liberal Party They'll
run over by the elbow bus.
Speaker 4 (19:10):
Yeah, which is a pretty dangerous bus to get hit
by.
Final question I guess then foryou on the election is all the
policies, all the campaignspeople will pick apart from both
sides, what's happened heregiven it's fairly monumental in
the last 20-, in the last 20 oddyears, it's a pretty
significant election.
Do you think that any of thepolicy on the liberal side
(19:34):
specifically related to housing,or, you know, finance, monetary
policy, etc.
Any of that has had any impacton this result?
And if so, do you think thatthe libs may start to take a
more aggressive housing you knowtenant uh immigration stance as
we move toward the next threeyears?
Speaker 1 (19:55):
oh look if, if you get granular with it, but their
policies were sort of so poorlycommunicated, lacked conviction,
it was very, very hard to takeany of them seriously.
Um, what?
What I would say is that takenote of the commentary that the
liberal party has completelylost young adults.
(20:16):
Yep, so anyone between 18 and26, say?
The representation in that agegroup that voted Labor was sky
high.
Yeah.
And they're primarily tenantsand they feel like the deck is
stacked against them.
This wealth inequality thatwe're seeing across Australian
(20:36):
society since COVID yes, there'sno doubt that certain factions
of the left have made them feellike victims and aggrieved at.
You know, baby boomers are theum, are the cause of your
inability to buy a house andthey've enjoyed these, uh,
tax-free gains and I just don'tthink, whether it be through
(20:58):
incompetence or or being blindto the facts, the liberal party
didn't see any of this coming.
Um, you you as well as I do theimpact of the HECS had on the
young people, Myself included.
I don't know why the LiberalParty thinks it's beneath them
to talk to tenants, but theydidn't seem to have offered
(21:21):
tenants any assistance anyway toget by.
The Labor Party did.
And then they had their HECSpolicy, which was highly
appealing to people in that agebracket, and you know what the
Liberal Party were offering forpeople between 18 and 26 wasn't
much.
They played to their what youmight call their traditional
(21:42):
base, which is the older,wealthier person in society, and
, yeah, I suppose those peoplestuck with them.
But the reality is that,demographically I love
demographics, it's such a greattopic demographically the
younger people are beginning tooutnumber.
You know the older age groupsnow.
Speaker 4 (22:05):
Yeah, look, I'm glad you mentioned that I also love
demographics and we should.
You know, maybe we should tryand look, I'm glad you mentioned
that I also love demographicsand we should.
You know, maybe we should tryand get bernard salt on here for
an episode one night.
But uh, you know, it washeavily reported in the week
before the election that this isthe first time that the younger
cohorts uh, you know, the, thegen, whatever's they are, the
z's and the y's and themillennials, etc.
Outnumber the boomers for afederal election.
(22:25):
And you could argue, the result, you know, reflected that
perfectly.
But I, I personally don't thinkit's quite that simplistic.
Uh, I agree with you, I thinkthe liberals targeted their base
, but they also completelyeither avoided or ignored a
whole section thinking.
Well, I'm not sure what theywere thinking and I'm sure you
know people within the partywill figure that out.
But personally I'm veryinterested to see because this
(22:49):
could be a pivotal turning pointin our political kind of path
as a nation, if the Libs don'trediscover themselves, that's
for sure.
Speaker 1 (22:58):
The Libs will rediscover themselves.
There's no doubt about that, Ithink in the short term.
For me, the bigger determinantof where we go politically is
does Albo and his governmentmove and manage the country in
the centre, move closer towardsthe centre, or do they have
vested interests that pull themto the hard left and then give
(23:21):
the Liberal Party a greateropportunity to rise?
So what was interesting aboutthis is, as we know, at the 2022
election, the Teals didtremendous damage to the Liberal
Party, but those seats, even inthe Liberal Party's darkest
hours, the Teal seats werealready beginning to return home
to some of the Liberals, and wehaven't got the final result in
(23:44):
Bradfield.
But that was a Tealwell-financed, running a
phenomenal campaign against theLiberal, and it looks like the
Liberal held on.
Speaker 4 (23:53):
I think he's already claimed victory.
I believe.
Speaker 1 (23:55):
She in Bradfield, two ladies.
Speaker 4 (23:57):
Oh, okay, there's one I certainly want.
The Liberal claimed victory,but the Teals refused to concede
.
It was one of the lastheadlines I read, oh that would
be Tim Wilson and Zoe Danielsdown in Melbourne.
Speaker 1 (24:08):
Yeah, that's probably right.
So that was one of the tailseats that Tim Wilson lost at
last time to the tails of the.
Speaker 4 (24:14):
Daniels, correct, yeah, that's the one.
Speaker 1 (24:16):
And it's officially come back to Tim Wilson.
So there's a pathway back forthe Liberal Party.
But they have to get thishousing and this young adult
vote and demographic rights.
I was in a meeting today and ayoung lady she must be 23, 24
(24:37):
years of age she said I justfelt that Peter Dutton was the
bad cop in the good cop, bad coproutine.
I didn't connect with him, Ijust got bad vibes about him.
There was no way, even if I wasright-wing minded, that I could
bring myself to vote for him,and apparently the strategists
were trying to tell Peter Duttonthis throughout the campaign.
(24:59):
He wasn't listening.
I don't know if that's true ornot, but what I'm saying here is
the Labor Party mustacknowledge.
But what I'm saying here is theLabor Party must acknowledge
they won't have a salesperson asbad as Peter Dutton in 2028
when we go to the polls again.
Speaker 4 (25:14):
They were given a gift.
Certainly, I'm not going totake up any more podcast time
asking for your predictions onwhether we're going to see the
return of Frydenberg or whetherwe're going to find someone else
taking the helm.
But look, I think it'scertainly an interesting time
ahead and I personally, too, amgoing to see the return of
Frydenberg or whether we'regoing to find someone else
taking the helm.
But look, I think it'scertainly an interesting time
ahead.
And you know, I personally too,am interested to see what
Albanese does, because I have afeeling Labor is going to shift
(25:35):
more centrist.
But time will tell.
You know they've got theyreally have a mandate to do what
they want.
Speaker 1 (25:41):
If he manages in the centre, say political leaders
like Gladys coming back theother way, right wing but
managed in the centre.
She was unassailable until anunfortunate event brought her
down.
But in the polls and the waypeople felt about her New South
Wales premiership she wasunassailable.
And if Albo does move to thecentre and gets this whole
(26:04):
housing crisis thing makes goodprogress on it in the next three
years, just as he did withinflation in the last three
years, he'll get another term.
Simple as that.
Speaker 4 (26:14):
Well, we'll certainly see when we're talking about
this in three years, peter, aswe move forward then with the
rest of the episode, I'd love tojust catch up on what's
actually happening.
So you in property that is, youhave spoken about how the
auction clearance rate's alittle bit low and we'll get
into the numbers in a minute onlow stock volume as it is and
(26:36):
you've also talked about justhow it is tough economic
conditions and it's been areally, really tumultuous month
just in terms of timing andpeople's activity levels, et
cetera.
So if you can give us a this isa bit of a recap or a bit of
insight into what you'reactually seeing on the ground at
the moment, at open homes, whatkind of things are you talking
about with your vendors that areconcerning, or, or you know,
(26:59):
possible highlights for them?
And then, I guess, as a finalpoint, what kind of buyers
you're seeing, what's's thecommon profile, if you could
even say there are buyers outthere at the moment.
Speaker 1 (27:10):
Oh, there's definitely buyers out there and
we're getting offers on a lot ofproperties.
Some of those offers meet orexceed the vendor's expectations
.
But there's a lot of exampleswhere we bring the vendor offers
and you know the offer's notworking for them and they've
then got to make a decisionwhether they take the property
(27:32):
off the market.
So across the market there's ahigh withdrawal rate much higher
, by the way, much higher thanis being reported and that's
unsurprising because when you'vegot an auction clearance rate
systemically stuck below 50%,it's unsurprising that as night
follows day you're going to geta high withdrawal rate.
So we are running into a lot ofpeople in the community that
(27:55):
don't understand the importanceof risk-free selling when going
on the market.
They think you know what harmcan there be in?
We're really serious aboutselling our house.
All our friends tell us it's anice house.
We'll just pay for theadvertising campaign up front.
I'm sure it'll work out fine.
They invest $10,000 or $15,000in the campaign.
They get a bid on auction day,then work out what they could
(28:18):
have done with that $10,000 or$15,000 and they're just
absolutely gobsmacked at howthey've been played off a break
and fallen down a hole.
And that's very common in themarketplace at the moment failed
vendors that have got a bigadvertising bill or a big
advertising deficit and no sale.
In terms of open houses,there's a mixture of all sorts
(28:39):
of buyers in the marketplace,but when it gets to the
negotiation table're tough andwe constantly keep hearing from
buyers that the banks are beingvery restrictive around lending.
There's no easy money policyfrom the banks at the moment.
They're really working peopleover before giving them a loan
approval do you think?
Speaker 4 (29:01):
just a couple of points I just want to touch on
there.
One you talk about the fact thatfailed vendors there's quite a
few that have paid money upfront, and I know you've spoken
before about how traditionallythat's the type of client that
you often will work with.
Are you finding, or are youhaving any conversations with,
(29:22):
vendors that have failed thatare just so disappointed with
the process that they'restepping away from it altogether
?
Or are you finding that peoplethat are on the market at the
moment are reasonably motivatedto be there and they're willing
to entertain you know analternative, risk-free solution,
as opposed to, you know, havingalready spent money or not?
Or are you finding that peopleare, you know, testing the
(29:45):
waters a little bit with theirsales?
Or do you you know what's thekind of, I guess, what's the
motivation level of your vendorsat the moment?
Do you think that most peopleare selling out of necessity?
Or, you know, is it a bit of ablend of people who are just
kind of testing the water andsaying, hey, it's low stock,
let's see if we can capitalize?
Speaker 1 (30:03):
look.
I think you've got to look ateach individual situation in and
of its own merit.
So when a property doesn't sell, we like to sit down with the
client and say well you know,did it sell because of the price
, the presentation or the personselling it, ie the agent and we
try to get an understanding.
(30:24):
Well, what happened during thecampaign to you know?
Deliver this non-result andjust understand what the root
cause is.
Now there's lots of agents, asthere always is.
There's lots of agents thatwill overquote to win the
listing.
And any agent out there at themoment who is overquoting to win
(30:45):
the listing will know thatthere are absolutely no chance
of getting that property sold.
And the reason I say that iseven when you're making
evidence-based valuations at themoment, in many instances the
market's undershooting,undershooting you and making
offers below what the evidencesuggests yeah so it's not an
(31:06):
easy environment for agents orvendors out there at the moment
and it's really.
you know, it takes a lot for theagent to get it up into the
back to the reasonable category.
So what you don't want to do,there are vendors.
Unfortunately the fall for theagent that's quoted too much or
the market slipped below thembetween the time they sign to go
(31:27):
on the market, the time theyget to market and they've just
got to ask themselves am Iprepared to meet the market if I
go back out there?
So that meeting I was in todaywith the lady who said I didn't
get good vibes from Peter Dutton.
She's selling her familyproperty and the agent
overquoted somewhere to the tuneof 20% on her property so,
(31:52):
unsurprisingly, it hasn't soldand it's been on the market for
several months.
The opportunity costs of nothaving sold six months ago and
having cash in the bank hasresulted in her losing possibly
$15,000 a month in term depositincome.
Yeah.
The ramifications aresignificant because the property
(32:15):
hasn't been sold.
So in that meeting I was sayingunless you're prepared to
accept that you were overquotedand you can't go back to the
market looking for the sameprice point, you have to
seriously reassess your priceexpectations to sell this.
And if you don't want to dothat, that's okay.
Just don't come to market.
Speaker 4 (32:34):
Yeah, I mean that's perfectly reasonable advice,
right.
But there are always going tobe scenarios where a vendor has
to sell regardless.
And then you know,unfortunately there's going to
be scenarios where people stillsuccumb to the sunk cost fallacy
, right that they've put moneyinto an advertising campaign and
they've been on the market andthe opportunity cost is gone.
(32:54):
So what the hell?
They're just going to keepgoing.
You know, unfortunately thatdoes happen.
But what I'm getting from youis that really at the moment
there's not a lot of stressselling going on, so people
aren't just desperately tryingto hang on to get out.
But there are definitelydifficult times and people need
to be a little bit pragmaticwith their asset and accept that
, unfortunately, what they weretold potentially three months
(33:16):
ago is definitely not whatthey're going to see today, or
most likely not what they'regoing to see today, or most
likely not what they're going tosee today.
Speaker 1 (33:22):
Well, as we've discussed earlier tonight,
conditions were really reallyawkward through April.
So nobody really knows wherethe market is at, given it sort
of had a unofficial shutdown forthe last month.
So things will become clearerin in the next four weeks as we
get a rate cut and, you know,maybe the market will come
(33:42):
charging back and buyers willsuddenly be a game on,
particularly if it's a 0.5 ratecut here in in sydney.
Um, sometimes the agent justdoesn't give the property the
focus it deserves.
Um, so the the circumstance thatI was telling you about, for
example, um, earlier today, theagent did actually have a
(34:03):
reasonable, market-based offerand he didn't even pop around
and have an in-person meetingwith the vendor to explain why,
all things considered, thisoffer should be considered and
accepted yeah and it's only whenI was with the vendor today and
talking it through that I wasbasically saying it looks like
(34:24):
your best buyer has turned up,made an offer, had it rejected
and moved on and your agenthasn't told you any of that
because they weren't reallyacross the fine detail and
really giving the campaigneverything that it deserved.
So sometimes the agent, theproperty can be a good property
(34:46):
and drawing good interest, butthe agent's just not on for
whatever reason.
Presentation we know theimportance of presentation as
well at the moment.
Is that because buyers are verywary about work, cost of works,
ease of getting works done.
I've never been involved in somany house renovations in all my
(35:07):
life as what I am at the moment.
Because when people call me outand say how should we present
this for sale, I'm looking atthem and saying you can spend
$50,000 here and add $200 invalue to your property, but if
you don't spend that $50,000,the market's going to drive your
price down $150.
Yeah, what do you want to do?
(35:27):
So I don't ask people to investin an advertising campaign to
present us as the agents betterto the marketplace.
That's largely overblown.
But I will ask a vendor toinvest in their own home up
front, because they can increasethe value and they can stop the
market pushing the price oftheir property down by doing,
(35:49):
you know, some basic repairs andrenos.
Speaker 4 (35:52):
Yeah, well, like all of this aligns, honestly, with
previous episodes we've done.
We've just talked about how toactually, you know, really
optimise your sales campaign.
It is about presentation, it'sabout planning, it's about all
of those things.
So we won't linger, but it'sinteresting, I guess, to get a
sense that you know, in thiskind of market a little bit
tough it's really important tomake sure you stick to those
(36:15):
principles you know and get itall right the first time, which
can be a little bit tough, butyou know, I think if there's
vendors listening that arefeeling concerned, you know
there is hope out there.
You've just got to make surethat you're also being pragmatic
with your agent and make surethat you know, you know exactly
what's going on with your saleas we wrap up then tonight,
peter, given that we've talkedabout how tough the market is,
(36:35):
if you can, why don't you takeus through the auction clearance
numbers and, I guess, put somefigures to that sentiment that
we're certainly feeling outthere?
Speaker 1 (36:43):
So look, last week there was 833 auctions scheduled
with a clearance rate of 44.4%and, interestingly, 185 sold
prior, 185 sold at auction and28 sold after.
So the whole sold prior or soldunder the hammer split neatly
50-50 last week.
(37:03):
Auction numbers will go up inthe next two or three weeks from
that 8.33 a week.
Slightly interesting to seethat many auctions on an
election week.
But you go and there are a lotof campaigns that didn't sell or
were rescheduled.
(37:24):
So of the 833 auctions thatwere scheduled, a clean 154 were
rescheduled.
So that's interesting as well.
So that tells you there thatthere was a number of vendors
that lined up to do a campaignlast Saturday but between them
and their agents they felt itwas better to wait a couple of
(37:45):
weeks, possibly after the ratecut, before having another go.
So not a diabolical market, Iwouldn't say it's a tough market
.
It's just not an easy one.
There are good offers out therebut as a vendor, if you've
overstated in your own mind, ora real estate agent has
overstated what they can achievefor your property beyond market
(38:07):
price, yes it will be a toughmarket.
So it's not really a toughmarket for those vendors that
are determined to sell and happyto work with the market price.
It's tough for those vendorsthat are trying to get above
market price.
Speaker 4 (38:21):
Yeah, my only question for you on the auction
numbers, peter, and I'm notentirely surprised, other than,
like you, I cannot believe thatso many auctions were scheduled
for Election Day.
Speaker 1 (38:33):
Like I just can't even fathom thinking about both
these Is the preceding twoweekends to the Election Day was
Easter and the Anzac Day longweekend, so pretty bolshy saying
you're going to do an auctionon that day.
Speaker 4 (38:47):
It's a clever way to get some money from your vendors
without actually selling aproperty.
But my only question for you isjust based on your knowledge of
the market and your history,how does 833 auctions compare
for this time of yearhistorically?
Is that about right, or do youthink we're a little bit low, a
little bit high?
Where does it kind of sit,based on?
Speaker 1 (39:07):
Well, 536 were on election day and 297 were
midweek.
So what I noticed through thatwhole period is lots of agents
who would normally do theirauctions on a Saturday were
doing midweek auctions.
Yeah, so that was sort of likeeveryone had the same calendar
right, the same events in thecalendar school holidays, easter
(39:28):
, anzac Day, long weekend andthe federal election.
And I noticed that some agents,as I said, dropped the Saturday
auctions altogether and weredoing Wednesday or Thursday
night auctions altogether, andwe're doing Wednesday or
Thursday night auctions, whichis why you had a higher number
for the midweek auctions and youhad a lower number at 5.36 for
(39:49):
the Saturday auctions.
So, to give you an idea,saturday auctions in a market
like this at this time of yearshould be somewhere between 8.50
and $1,050.
And when you get to spring thatgets out to $1,200 to $1,400.
Auctions on a Saturday.
Speaker 4 (40:07):
Yeah, oh, look, it makes sense, and it didn't
escape me that we certainly hada lot more midweeks this time
than we usually do.
Peter, really in-depth episodetonight.
You know quite a long one, butI think it's important that we
did talk about the topics wehave.
You know, inflation obviouslyguides so much of what happens
in Sydney property or nationalproperty.
But Sydney in particular theelection's been such a pivotal
(40:29):
one in terms of result but alsothe policies that have come into
it, and, as always, it's greatto get a bit of a market recap
for our listeners.
So, despite the long chat, Ihope your voice is held out.
I certainly appreciate youcoming in for a talk, peter
Pleasure.
Thanks, kieran, thank you andthanks to everyone for listening
to Current Market Insights.
We look forward to speakingwith you next time.
Speaker 3 (40:47):
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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