May 21, 2025 • 34 mins
The RBA has delivered a 0.25% interest rate cut, opting for a cautious step down while acknowledging growing international risks. In this episode, Ciaran O'Brien and Peter O'Malley break down what this move signals for property buyers, investors, and the broader economy.
We examine the deteriorating labour market, wage growth dynamics, and why a global economic downturn could reshape the Australian property landscape. From Scott Pape’s warning to Westpac’s workforce cuts, we connect the dots on how this cycle might play out.
Sydney’s auction clearance rates remain stuck below 50%, the housing shortage worsens, and winter conditions start to chill market activity.
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 (00:29):
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, kieran.
Good evening to you.
Great to see you, pete.
It has been a big week.
We always talk about theimportance of the RBA and the
rate cuts and how many of ourepisodes in the past couple of
years have revolved around that,and we are recording this after
(00:51):
the latest RBA announcement,and I will not be alone in being
thankful that the RBA has madea positive decision, I think.
But let's get a bit of a recapfrom yourself as to what the
decision was a couple of daysago from the RBA and what they
had to say about the kind ofrationale and the reasoning for
(01:11):
making that call.
Speaker 1 (01:13):
Yeah, thanks, kieran.
Look, obviously it was a 0.25%rate cut rather than a 0.5%.
But I think the bigger news wasnot so much the rate cut
because that was universallyexpected.
I don't think any seriouscommentator thought that they
were going to sit on hold onTuesday.
There was an outside chance atone stage that it might have
(01:36):
been a half a percent rate cut,but I think the wage data
slightly strong pressures in thelabour market meant that the
RBA felt it was safer to go at0.25 percent on Tuesday.
So when you read theirstatement, what it's pretty
clear in spelling out is thatit's unlikely to be the last
(01:56):
rate cut, though that's good andI guess, first and foremost,
the 0.25 does align with yourcomments last week and you had
said at that point.
Speaker 3 (02:06):
you mentioned the wage data in our last episode
and said you know the result isa little bit too strong and it's
unlikely they'll go to 0.5.
I think you're exactly right.
Most of the banks that hadpriced in a cut already or had
made actually, you know, fixedrate changes of you know,
pre-empting this call, had doneso with a 0.25 in mind.
Given that the wage data isstrong and given that the RBA
(02:30):
are using positive language, doyou think that we are likely, or
do you get the impression thatwe're likely, to have a cut any
time soon?
I know they're using quite openlanguage.
Well, it's not going to be thelast.
Speaker 1 (02:42):
So when you say they're using positive language,
positive about a rate cut.
Speaker 3 (02:45):
Correct, yeah.
Speaker 1 (02:46):
So what we've got to keep in mind I think this is
really lost out there is thatwhen the RBA, or the Central
Bank of the day, are puttingrates up, it's because the
economy's too strong for its owngood, yeah.
And when they're cuttinginterest rates they've deemed in
their statement yesterday, orin extreme cases, they're trying
(03:09):
to basically stimulate spending, as they did in COVID.
they only had three rate cuts toplay with in COVID because they
came into it with interestrates at a historical low anyway
, and then they went to a levelthat no one ever imagined that
they would.
So what came out of thestatement when you talk about
(03:30):
employment is the rba are very,very ready to act decisively if
there is an event on financialmarkets.
It's almost like when you readthis, it's almost like they're
they for it.
Yeah, they really are.
And what's interesting I don'tknow if you saw the article it
looks like Westpac are trying togo with a mass redundancy.
(03:52):
They're trying to purge 5% oftheir workforce in the name of
technology and getting costsdown.
So last week we were told thatwage data was going up.
You know that the people werelooking for pay rises.
Yep, and then this week in therba statement and in westpac
(04:14):
statement, you see that there'sreal pressures on the labor
market, and the way I sort ofsummed it up in preparing for
our chat tonight is australiansare pushing or asking or looking
for a pay rise at a time thatthe labour market looks to be
deteriorating beneath their feet.
Speaker 3 (04:33):
So you have said many times in the last six months
especially, that it's been apretty tough period for small
business in particular, andthat's reinforced by what you're
saying.
The labour market is looking tooffload overheads and try, and
you know yeah, but westpac's nota small business, no of course
they're not, but they're also uh, I mean, they have the, the
(04:54):
flip side, where they'rebeholden to the shareholder and
that you know they've got tomaintain a certain level of
profitability, etc.
But we're also entering a phaseof, I guess, human existence
which is rapidly advancing.
We're in the AI age right nowand the ability and the
capability of the technology isjust advancing so rapidly that
(05:16):
they're not alone Completelyseparate industry.
But recently Duolingo, thelarge language app, the, the
large um language app, you know,probably the most popular
language app in the world uh hasgone down a pathway of getting
rid of all its educators and andpeople in favor of ai teachers
only.
And their argument is you know,the tech's moving so fast, it's
(05:38):
so capable, I you know, at atime where businesses are
struggling at all levels and youknow you can argue, the banks
certainly aren't I'm notsurprised that they're cutting.
But your comment about peopleasking for wages definitely
resonates, and everyone I talkto is always saying well, we
need more money.
I don't understand how wagesare so strong because it feels
like they're not.
(05:58):
So when we're in a scenariolike this, where wages are
subjectively high but they feelweak against the cost of living.
How do we balance that?
Because it certainly neverfeels like I'm earning enough or
anyone's earning enough.
It always feels challenging.
Speaker 1 (06:14):
It's a great take you've just put forward there.
The only thing I would add toit is AI is deflationary.
Speaker 3 (06:20):
Of course yeah, Because it gets rid of costs.
Speaker 1 (06:23):
It gets rid of people .
Speaker 3 (06:24):
You could argue it doesn't get rid of all costs.
You know, I think I don't knowif you read the article a few
weeks back from OpenAI and SamAltman, the CEO there, said that
every time people say pleaseand thank you to chat GPT, it's
costing them, you know, billionsof dollars a year in just extra
computing power.
So it's maybe not know it mayend up being more expensive, but
(06:47):
when you think about, I guess,labor cost in the true sense
it's certainly coming down.
Speaker 1 (06:50):
Oh, it is, yeah, I think on a net, net, um, it is,
and he's obviously talking on amass scale.
So the point we made thatconditions you know anecdotally
because we all live in bubbles,right, but anecdotally
conditions felt really, reallyweak through that whole election
period was actually captured inthe RBA statement.
They said, quote unquote whilea central projection is for
(07:13):
growth in household consumptionto continue and to increase as
real incomes rise, recent datasuggests that the pickup will be
a little slower than wasexpected three months ago.
Yeah, there is a risk that anypickup in consumption is even
slower than this, resulting incontinued subdued growth in
(07:34):
aggregate demand and a sharperdeterioration in the labour
market than currently expected.
So in this statement here, theRBA have clearly said that what
we're picking up and we'vediscussed this before is that
the uh rba's data is is nextlevel, like they would, every
digital transaction would, wouldbe somehow noted in in all of
(07:59):
the data that they're capturing.
Um, they're, they're picking upthis weakness that we were
talking about in the realeconomy.
Speaker 3 (08:06):
So are they?
You've used the termstagflation.
Are they using sort of softlanguage to suggest that that's
kind of?
You know we're hovering aroundthat a little bit.
You know we have got thesestrong wages.
We have got rates now having tocome down.
We've got, you know, theunderlying inflation within
target range, but certainly notideal within the range.
You know the underlyinginflation at a within target
range, but certainly not idealwithin the range.
(08:27):
You know it's at the top endstill.
Uh, do you think that they'rethey are describing something of
a peri stagflationary kind ofperiod, or are they not quite
committing to that doom andgloom level?
Speaker 1 (08:40):
they're definitely not on that train, no um.
So just taking a few morequotes out of their statement.
They've got the subheading heremaintaining low and stable
inflation is the priority.
The board judged that the risksto inflation have become more
balanced.
Inflation is in the target bandand upside risks appear to have
(09:00):
diminished as internationaldevelopments are expected to
weigh on the economy.
That's the whole Trump tariffwar situation.
The board assesses that thismove to cut interest rates will
make monetary policy somewhatless restrictive.
Speaker 3 (09:17):
Yeah.
Speaker 1 (09:18):
So I think the RBA don't see stagflation as an
issue.
I think they can still controlthe outcome.
They still believe they cancontrol the outcome and I saw in
the international press todaythe rba got a bit of a sort of a
tick, if you like, from fromabroad, from people that are
watching our economy is thatthey have managed to bring
inflation into the target bandwithout hurting the employment
(09:42):
market, and the article wasspeaking along on on Bloomberg
was speaking along the lines ofthere could be great lessons out
of this for other economies asto how the RBA achieved this.
Speaker 3 (09:52):
Oh, certainly, and we , or you in particular, have
talked about that, how that's arisk that the RBA has had to
balance all this time and theyhave limited levers to control
inflation and to try and control, I guess, buyer sentiment at a
very broad level.
Discussions a few weeks ago youknow it might be three to four
(10:17):
weeks ago now he was puttingpressure on jerome powell and
the fed, uh, and particularlythe commentary was that he was
looking to get some rate cuts inthe us to stimulate just a
greater economy and you know allpart of his great tariff.
You know reformation makeamerica great kind of campaign.
There seems to have been a bitof stagflation in that
discussion.
Given that you know, pow back alittle bit.
Do you think that, with what'shappening with the tariffs, and
(10:39):
the pause.
Speaker 1 (10:40):
Powell pushed back emphatically.
Speaker 3 (10:41):
No, of course, but do you think that that's the end
of that discussion or do youthink that Trump is likely to
re-attack this?
And I only ask because let's goback six or eight or 12 months
potentially, where we spoke atlength about Jerome Powell and
the Fed's rate decisions havingan impact here, given that we've
got a tariff pause and we'vegot tariffs broadly hanging over
(11:02):
the global economy, we've got abunch of wars in some pretty
critical areas and we havepressure from a sitting
president to just knock therates down, do you think that
that is likely to become afactor that impacts us in the
next six to 12 months?
Speaker 1 (11:16):
What will become a factor that impacts us in the
next six to 12 months?
What will become a factor?
Speaker 3 (11:19):
If Trump gets his way and manages to get the interest
rates cut quite aggressively inthe US as part of an economic
boom, I guess.
Speaker 1 (11:27):
Look, I think the only way he would get the rates
cut aggressively is if he doesblast Jerome Powell out.
So to answer your first call,do I think Donald Trump will
give up on trying to get ratesdown?
Speaker 3 (11:38):
I know the answer to that.
Speaker 2 (11:39):
Thanks for shaking your head because it doesn't
need to be asked.
Speaker 1 (11:42):
Donald Trump, wrongly or rightly, doesn't give up on
anything that he wants.
So he's clearly on a collisionpath with old mate Jerome.
But Jerome's tenure is assureduntil 2026.
And I've read from Republicansthat are pro-Trump that have
said he's not moving this guy sohe might put maximum pressure
(12:04):
on him and, you know, call himnames like he did the other week
.
He called him a fool for notcutting interest rates.
But in economic theorem JeromePowell is right.
Speaker 2 (12:14):
Yeah.
Speaker 1 (12:14):
Their inflation is trending up and commentators
that I like that are notbeholden to vested interest,
just call it as it is.
They see a case where a raterise is brewing in America.
Speaker 3 (12:28):
Yeah, which I just can't envisage Trump's reaction
to that, to be honest, he'stalking the exact opposite.
That's right.
Speaker 1 (12:36):
Yeah, you could only imagine the meltdown that would
occur if that took place, and heshould be grateful that Jerome
Powell is neither increasingrates or decreasing them, but
he's just letting the status quobrew, even though the data is
stacking up against JeromePowell and just a quick question
there.
Speaker 3 (12:55):
I don't know if you know the answer to this, but
it's something I haven't givenmuch thought to until really
considering this.
But given the tariffs and theincreased cost of goods coming
into the US, do they factor intothe US's inflationary basket?
Because the cost of goods isrising under the tariff model?
I would assume that it doescontribute to you contribute to
(13:17):
inflation.
Yeah, if everyone's puttingtheir prices up yeah.
Which they certainly are.
So I wonder, given the tariffsare designed to make America
great and time will tell whetheror not they have the intended
outcome in the short term,surely there is a large
inflationary boom coming in justconsumer goods alone, if
nothing else in the US off theback of this.
Speaker 1 (13:36):
Well, everyone will do modelling, but, as we've
always said, when you change therules, you change the consumer
behaviour, so you get a wholenew set of outcomes.
And one of the things that Idon't like about models is they
keep things constant on the onehand, but then fiddle with the
dial on the other to see howmuch money they'll take, like
the federal government'sproposed tax on unrealised gains
(13:57):
.
Yeah Well, that's going to haveunintended consequences across
the board, and I don't pretendto be an expert in all of this
space, but I've just beenwatching political moves over my
25 years in business, andpoliticians always think they
can fiddle with things inisolation and nothing will
happen to the system at large.
Speaker 3 (14:18):
Well, I think they always.
My take is they always look atthe end column on the
spreadsheet and they don't lookat the 100 columns that make up
the end, Correct?
And they say well, there's areduction, but it doesn't matter
.
That wipes out all of thesecritical services or all of
these people, or you know,whatever it might be.
Speaker 1 (14:32):
Yeah.
So you change the rules, youchange the behaviours.
Therefore you change the modeland the outcome.
So I don't think anybody reallyknows, a, what the final
position of all of these tariffswill be and, b, how it'll look
when it all plays through.
(14:52):
We go back to the RBA statement, though.
That says, quote the boardconsidered a severe downside
scenario and noted that monetarypolicy is well placed to
respond decisively tointernational developments if
they were to have materialimplications for activity and
(15:12):
inflation in Australia.
So Michelle Bullock'sessentially saying there we've
got scope to cut aggressively,if that's what we needed to do,
because things derailed.
Speaker 3 (15:27):
And, as you say, they've got so much access to
data they're going to see itcoming long before we do anyway.
Speaker 1 (15:31):
Yeah, and it's the second month in a row.
In their statement it was notin a month, because they meet
every six weeks.
I should say it's the secondmeeting in a row where this type
of dialogue has been used.
Speaker 3 (15:43):
Yeah.
Speaker 1 (15:44):
And I remember in 2007, as the Liberal government
were going out, and in 2006,peter Costello let people sell a
property and put the proceedstax-free into their super and
then, 12 months later, in the2007 election, when he was
(16:07):
talking about an issue totallyunrelated to that, he said you
need to re-elect the Liberalgovernment because a financial
tsunami is going to come acrossglobal markets very soon.
So everyone likes all thesecommentators on social media say
I'm the one that picked thesubprime crisis in America.
(16:29):
I'm the one that picked themeltdown in 2008.
Maybe they were in the space,maybe they weren't, but what I
got, the distinct impression ofthe time, is that people that
knew really knew, that marketswere heading for a severe storm.
And it's just interesting thatin the last two statements, when
there's no actual evidence forus out there in the real economy
(16:52):
that it's going this way,michelle Bullock is warning that
we are well placed to prepareand respond decisively to a
major event on internationalmarkets.
Speaker 3 (17:03):
Yeah, certainly, when you take it in full context, it
does show that they are.
You know, obviously they'refollowing what's going on, but
they're clearly they'remodelling and they're running
out the data and trying tofigure out.
You know how do we positionourselves?
Speaker 1 (17:15):
to respond quickly, which is, I think, it's quite
reaffirming this statement thatwe're looking at.
It's what is it?
Let's call it.
It's 200 words, 250 words maybe, and it's taken them two days
to write.
There's no loose words in here.
Yeah, of course of course, andshe says says the board
(17:37):
considered a severe downsidescenario and noted that monetary
policy is well placed torespond decisively to
international developments.
That's effectively been in thelast two statements.
So, um, for someone that's uhusing immense word economy, some
of the best business minds inthe country are sitting around
the table with uh crafting thisstatement.
(17:57):
They felt the need to put thatout there twice.
Speaker 3 (18:02):
No, look, certainly important, and the language does
show that they are workingtowards something Everyone knows
, just quickly commenting onyour subprime mortgage crisis,
that everyone knows thatChristian Bale predicted the
fall of the housing market inthe US.
Oh, that's who it was.
It was Christian Bale, althoughfor those, the housing market
in the US, oh that's who it was.
Speaker 2 (18:17):
It was Christian Bale .
Speaker 3 (18:18):
Although, for those who haven't seen the big short,
it was Michael Burry was thefirst.
Well, he's the one depicted,but interestingly, he's the one
who profited.
Well, yeah, he profited bypredicting, I think is the
argument.
But interestingly, I only readyesterday and I don't know, I
can't confirm this source but he, as of yesterday, offloaded his
(18:39):
entire holdings in the US stockmarket as well, interestingly.
Speaker 1 (18:42):
We don't know if he did, based on what you've just
said.
It's not confirmed.
What we do know is Buffett Didoffload Is essentially nearly
all in cash.
Speaker 3 (18:54):
Yeah, which I mean.
If there's ever an oracle inthe stock market, it's Warren
Buffett, that's for sure.
Speaker 1 (18:58):
That's right.
Speaker 3 (19:00):
All right, peter, moving on as we sort of wrap up
the rest of the episode tonight,we've got a couple more things
I want to talk through.
Off the back of the ratedecision from the RBA and the
back of the recent election,scott Pape, who is a I guess
guess you call him a financialcommentator the barefoot
investor, better known as thebarefoot investor to many
(19:21):
australians who picked up hisbook during covet which I think
was a boom time for him he madesome comments in his email
newsletter that went out on the19th that indicated that
australians, particularly youngaust Australians, should be
really unhappy with the rate cutand he said you know, whilst
some people are going to have agreat time off the back of it,
(19:43):
everyone else you know in looselanguage should be upset.
Now, he's someone who isconsidered financially
responsible and a good guide andan oracle for people trying to,
you know, begin their financialsecurity journey.
I guess he's a bit of a shaman.
What do you make of hisstatements and do you think that
he has any real basis or is hemaybe grandstanding for a bit of
(20:07):
speculation and show?
Speaker 1 (20:10):
Look, scott doesn't grandstand.
That's not his style, I canassure you of that.
He's a great guy.
Probably don't quite take thesame view of how his comments
were characterised.
So the heading says PissedBarefoot investor takes aim at
RBA amid predictions housingprices set to soar after rate
(20:33):
cuts is set to soar after ratecuts, and what Scott then says
in the article is that youngpeople have every right to be
pissed off, because every timethey get close to being able to
afford a property, it's like thedeck is then reset against them
, stacked against them, and thehouse that they're saving hard
(20:53):
for becomes elusive, and thehouse that they're saving hard
for becomes elusive.
Scott would know that the RBAhas to make an interest rate
decision on a whole range offactors, not just house prices.
And what I think Scott and Iwon't speak for Scott but what I
think he's most pissed offabout, using his words was the
(21:18):
incentive to young people to beable to buy property from the
federal government at a timethat immigration is still too
high and construction is too low, if not non-existent.
So all that Scott is seeing andhe's seeing what we're all
seeing, and it's not articulatedin this article is the
(21:41):
government at all levels iscontinuing to fuel the demand
side of housing and it's doingnothing.
It's talking a lot but it'sdoing nothing to deliver on the
supply side.
Speaker 3 (21:52):
Yeah, I'm glad you came around to that, because one
of the comments in hisnewsletter is that you know
Albanese charmers and the crew.
They all know what's going on?
Of course they do, and theyknew that we were.
Well, he, I guess, intimatesthat they knew all about the
cost crisis.
We all do.
You know.
We talk about it all the time.
They know there's anundersupply, they know there's
(22:13):
an immigration issue.
They know all these factors,yet they still implement these
policies because they're greatsoundbites on the news and
they're great pre-electioncampaign promises.
Knowing that, you know andwe've said this in different
contexts before every time somekind of government or federal
political policy changes inhousing, someone wins and
usually the first home and newentrance and all those kinds of
(22:35):
buyers end up losing because thegoalpost shifts a little bit
every time.
Speaker 1 (22:42):
Oh, it's not.
If I can give our listeners alocal example that sums up how
hideous all of this is, yeah,yeah, chris Minns did a big post
this week.
Your mate, your mate.
He did a big post this week,regardless of whose mate he is,
about the Tigers Leagues Club.
Yeah, they're finally gettingthe go-ahead and part of the
(23:04):
development consent is they have59 apartments set aside for
affordable housing.
I saw that.
Yeah, now, when you average andprobably a complex like that
where Tigers will be and whatthe design is it probably
wouldn't be 2.5% persons perdwelling, but that's the average
.
That's when you're trying towork out the average dwellings
(23:27):
per person across the country.
That's what it works out at.
That's a site that's been apotential site since, I think,
2011.
Speaker 3 (23:36):
Long time, Long long time it's been abandoned for,
yeah, however long.
Speaker 1 (23:40):
We are in 2025 as we record this If someone's
listening to it well into thefuture, wondering what the time
frame is.
So it's it's been a potentialsite for 14 years and we've got
the premier of the state takinga bow because he's found housing
for 130 people yeah at a timethat the country's let a million
(24:04):
people in over the last twoyears.
Speaker 3 (24:08):
And I hate to say it, but in a location where public
transport leaves a lot to bedesired.
Balmain is not great, and youknow I'm just nitpicking a
little bit, but I mean excludingthe fact that you know this is
the last 14 years that couldhave been utilised for however
many people in however designthey chose.
It's also not a great like.
Anyway, I'm not even going togo down that path, chris.
Speaker 1 (24:29):
Minns is not the person to blame for the property
sitting there as a redundantsite for the last 13 or 14 years
, whatever it might be.
But you see the hideousness ofit all.
So bad I can only laugh thatyou've got the Premier of the
state.
So bad.
I can only laugh that you'vegot the Premier of the state
taking a bow because he'screated housing for what's 59
(24:53):
times 2.5?
.
As you said, 130-odd 130-oddpeople at a time where we are
flooded in Sydney with hundredsof thousands of people every
year.
Now it's not the onlydevelopment that's been approved
, but they are so far off targetwith housing.
The new arrivals that have cometo the country never mind that
(25:17):
are still coming that.
That is why Scott Pape ispissed.
Speaker 3 (25:22):
Yeah, it's also.
I mean, what an indictment onthe Premier's kind of recent
timeframe that that's thevictory he wants to announce
because there's just nothingelse going right for him.
Well, he's making terribledecisions.
Speaker 1 (25:36):
I think Well, as we speak tonight, sydney trains oh
don't even talk to me about that.
Speaker 3 (25:44):
Yeah, yesterday the wires came off.
It was only a couple of weeksago.
I catch the train toStrathfield from the city often
and it was only a couple ofweeks ago.
The trains completely stopped.
Maybe two weeks ago.
Yesterday they were stopped forhalf a day hours.
It took me almost two hours todrive from the city to my place
and then again today out again.
Like it's ridiculous.
(26:04):
It happens all the time andthere's zero contingency in
place ever, which is, I meaneven this morning.
My wife sent me a message andsaid there are people lined up
200 deep to catch a bus near ourhouse because there's obviously
no trains and you know there'sone bus every 25 minutes or
something.
It's ridiculous.
Speaker 1 (26:24):
So the city is bursting at the seams.
Yeah, and I can't say I heardthe whole quote or the the whole
story, but I did hear a snippetof chris minns the other day,
who is not to blame for any ofthese uh issues, by the way,
he's just the premier of the dayyeah, but he has the ability to
uh, you know, he has theauthority and the ability to
(26:45):
negotiate and to ensure thatthose agencies and, you know,
organisations that he puts inplace, particularly public
infrastructure, are managedaccordingly.
Speaker 3 (26:54):
I know that he's not running transport, but it's his
responsibility at the end of theday.
Like I disagree, oh, it's hisresponsibility.
Yeah, he's got to make sure itworks properly, it's his
responsibility.
Speaker 1 (27:03):
But I'm just saying these are legacy issues and it's
all unfolding on his watch.
But anyway, I heard him theother day say on the news that
he's not going to cancel anytransport infrastructure because
they're saying to him there's alack of tradies in the city,
which there is.
Anyone who's tried to get anyworks done around the house
(27:24):
knows exactly.
There's a lack of tradiesavailable at the moment and the
view is that they're beingmopped up and absorbed by the
infrastructure with thetransport.
And they're saying, hey, mrMin's, back off on the transport
infrastructure so we can getthem to start building houses.
And he said point blank, whichyou know he gets a lot of points
for being very frank, chrisMinns.
(27:44):
He said look, labor has areputation for starting and not
finishing transportinfrastructure.
I'm not backing off on anythingto do with transport
infrastructure because I want tosee a Labor project through to
completion.
So he's looking at his legacy,which is fair enough.
He's looking at his ability toget things done, which is
probably halfway through histerm.
(28:04):
And it's not that the formerliberal government had a great
um resume at the halfway pointof their first term, but people
remember what the former liberalgovernment delivered by the end
of their tenure.
And, as you've alluded to there, with with chris minns, his
achievement list is a little bitskinny at the moment.
Speaker 3 (28:24):
Oh, and the yeah, yeah, we've talked about him in
the past.
The government is facing heatfrom a whole range of directions
, not least of which is housing.
Let's not spend any more timeon politics, because I know many
, many people don't want to talkabout it.
Religion and politics we're notto talk of those things.
But as we wrap, up tonight.
Speaker 1 (28:42):
We got a new Pope recently.
Speaker 3 (28:44):
We did get a new Pope an American, I must admit.
I love that.
He is a Chicago White Sox fan.
He's a baseball man and I dolove this is so benign, but I
love that after his inauguralmass he walked out and gave his
brother a big hug, which Ithought was nice.
I mean, it sounds silly, butI've never viewed Popes as
(29:05):
people in that sense, you know,they just seem like they're kind
of beyond that and they don'tengage with the normal man again
.
But it was quite refreshing tosee him just walk through the
crowd and grab his brother andgive him a big hug.
So as we wrap up then, peter, Iwould love to just get a quick
market recap for this week.
It's been pretty dire over thelast few weeks Well, last 12
months almost, but last fewweeks as well it's stayed below
(29:27):
50%.
The clearance rates and you'vetalked about how you know stock
levels have maintained a prettylevel value, but how there have
been some shifts and we were,you know, anticipating or maybe
waiting to see what the RBA weregoing to do, to see if that did
actually stimulate any furtheractivity in the market.
Speaker 1 (29:45):
Yeah, look.
So last week, 756 auctionsscheduled with a clearance rate
of 48%, 167 sold prior, 196under the hammer, 29 sold
afterwards.
So look, still stuck below that50% level.
It'll be interesting to see ifthis one rate cut, one
(30:06):
additional rate cut, but thisone rate cut, one you know
additional rate cut, but thisone rate cut in and of itself is
enough to lift the clearancerate above 50 in weeks to come.
We haven't, we actually did.
Just when they cut rates infebruary, we actually did detect
a slight uptick in buyerenthusiasm almost immediately.
Yep, and I had a journalist askme, not on air or anything, but
(30:29):
just off the record why arepeople so interested in this?
Why is this such a big story?
I'm trying to get a feel forthe newsworthiness of it and I
said it's not the fact that theycut interest rates by 0.25% in
February, it's that it actuallysignalled emphatically through
action, through policy, that theend of the rate hikes is over
(30:52):
and we're now in a downwardcycle.
So subsequent cuts in interestrates will not garner the same
interest as what the Februaryone did, because that was
significant after 13 rate hikesin a row spread over two and a
half years, to then see it cut.
In February it was.
It was big news to officiallysignify a new cycle had begun
(31:14):
and that cycle was, you know,solidified this week when they
cut again.
But it didn't, you know itcarried press but it didn't
carry enormous coverage likelike the February one did,
because it's just another ratecut and the RBA flagged there's
more coming.
So it will be interesting tosee the buyer reaction.
(31:35):
But I would say 24, 48 hours onthe reaction from buyers is
more subdued about this rate cutthan the February one about
this rate cut than the Februaryone.
Speaker 3 (31:47):
Yeah well, as you said, throughout all of the rate
rises in this period of youknow, uncertainty that we
wouldn't necessarily know theterminal rate until it turned
the corner.
And you say that about propertycycles.
You know you don't know the topuntil it drops, and that kind
of thing.
And it makes sense.
You know people use a racinganalogy.
It's more interesting whensomeone crosses the chequered
flag than when they just make aturn and that's, you know.
This next one is just anotherturn on this journey and you
(32:09):
know, next time we cross throughthe checkered flag it might be
a rate rise, or you know whoknows where we'll end up in the
next cycle.
The only, uh, interestingnumbers from the market wrap.
I'm not surprised we're stillbelow 50.
What?
The only thing that stood outto me and I'm not sure if, uh if
, it did to you is, is that outof the last four weeks anyway,
this is the lowest number ofauctions.
The first time I've heard itunder 800.
(32:30):
Not substantially so, but doyou think any of that could be
as a result of people justwaiting for this week to see
what might happen with rates?
Speaker 1 (32:38):
Look good question and the answer is probably not
Okay.
And the reason I say that is Ithink this is seasonal and I've
spoken to a few solicitors.
They said are you preparingmany contracts for sale?
It's gone dead on thesolicitors Because what can
happen again?
We all live in bubbles.
(32:58):
It's like, hey, stock's reallytightening.
Is it us or is this across theboard?
So you speak to the lawyersit's like mate, how are you
going for preparing newcontracts and new matters?
It's really tight.
No, no, it's tightened up rightthrough May, after Easter.
So I think there'll be thetraditional spring selling
season, but I think buyers andsellers, particularly with the
(33:20):
weather we've been having inSydney, it's cold, it's cold,
and wet and it just doesn't feellike it's going away.
Right, it's probably the biggestweather cell that we've seen
since those rains in 2022, whichwere next level.
That was like three, fourmonths of continual rain.
But look this, this, thisweather in sydney's been set in
and, as we know when we'redriving our vehicle around town,
(33:42):
sydney doesn't do rain realwell no, no, and I I was going
to make that comment.
Speaker 3 (33:47):
It certainly feels like at least in the last week
it's cold.
For the first time.
Speaker 1 (33:51):
We've had the rain now pretty consistently for a
while monday night yeah it's.
Speaker 3 (33:55):
It's just felt nippy I.
I love the cold personally, buteven I've kind of, you know,
started to get the jumpers outof the cupboard.
There.
Things are getting ready, soI'm not entirely surprised.
Look, um, really really greatdiscussion, peter.
A lot to talk about when theRBA do make their statements.
I know that in the coming weeksthere's going to be some
interesting activity across themarket.
As you say, I'm always.
(34:15):
I'd love to next week.
I really would love to get yourthoughts on what's happening in
the rental space, particularlybecause we do know that winter
is a slowish time typically, butwe did talk a few weeks ago
about how activity was stillpretty strong and prices were
high.
So plenty to talk about in thecoming weeks.
But, as always, I thank you forcoming in today.
Speaker 1 (34:32):
All the best.
Thanks, Kieran.
Speaker 3 (34:34):
Thanks, Peter, and thanks to everyone for listening
to Current Market Insights.
We look forward to speakingwith you next time.
Speaker 2 (34:39):
Thanks for joining us on the Current Market Insights
podcast brought to you by HarrisPartners Real Estate, the
podcast providing real estateinsights you won't find anywhere
else.
All down, all silent, going, going, going, go on son
Congratulations.
Speaker 2 (00:07):
Welcome to the Current Market Insights podcast
brought to you by HarrisPartners Real Estate.
Each episode we chat with realestate author and industry
leader, peter O'Malley, todiscuss the current property
market conditions and provideinsights to assist you on your
property journey.
Speaker 3 (00:29):
Hello and welcome to another edition of Current
Market Insights.
I'm your host, kieran O'Brien,and with me, as always, is Mr
Peter O'Malley.
Peter hello, kieran.
Good evening to you.
Great to see you, pete.
It has been a big week.
We always talk about theimportance of the RBA and the
rate cuts and how many of ourepisodes in the past couple of
years have revolved around that,and we are recording this after
(00:51):
the latest RBA announcement,and I will not be alone in being
thankful that the RBA has madea positive decision, I think.
But let's get a bit of a recapfrom yourself as to what the
decision was a couple of daysago from the RBA and what they
had to say about the kind ofrationale and the reasoning for
(01:11):
making that call.
Speaker 1 (01:13):
Yeah, thanks, kieran.
Look, obviously it was a 0.25%rate cut rather than a 0.5%.
But I think the bigger news wasnot so much the rate cut
because that was universallyexpected.
I don't think any seriouscommentator thought that they
were going to sit on hold onTuesday.
There was an outside chance atone stage that it might have
(01:36):
been a half a percent rate cut,but I think the wage data
slightly strong pressures in thelabour market meant that the
RBA felt it was safer to go at0.25 percent on Tuesday.
So when you read theirstatement, what it's pretty
clear in spelling out is thatit's unlikely to be the last
(01:56):
rate cut, though that's good andI guess, first and foremost,
the 0.25 does align with yourcomments last week and you had
said at that point.
Speaker 3 (02:06):
you mentioned the wage data in our last episode
and said you know the result isa little bit too strong and it's
unlikely they'll go to 0.5.
I think you're exactly right.
Most of the banks that hadpriced in a cut already or had
made actually, you know, fixedrate changes of you know,
pre-empting this call, had doneso with a 0.25 in mind.
Given that the wage data isstrong and given that the RBA
(02:30):
are using positive language, doyou think that we are likely, or
do you get the impression thatwe're likely, to have a cut any
time soon?
I know they're using quite openlanguage.
Well, it's not going to be thelast.
Speaker 1 (02:42):
So when you say they're using positive language,
positive about a rate cut.
Speaker 3 (02:45):
Correct, yeah.
Speaker 1 (02:46):
So what we've got to keep in mind I think this is
really lost out there is thatwhen the RBA, or the Central
Bank of the day, are puttingrates up, it's because the
economy's too strong for its owngood, yeah.
And when they're cuttinginterest rates they've deemed in
their statement yesterday, orin extreme cases, they're trying
(03:09):
to basically stimulate spending, as they did in COVID.
they only had three rate cuts toplay with in COVID because they
came into it with interestrates at a historical low anyway
, and then they went to a levelthat no one ever imagined that
they would.
So what came out of thestatement when you talk about
(03:30):
employment is the rba are very,very ready to act decisively if
there is an event on financialmarkets.
It's almost like when you readthis, it's almost like they're
they for it.
Yeah, they really are.
And what's interesting I don'tknow if you saw the article it
looks like Westpac are trying togo with a mass redundancy.
(03:52):
They're trying to purge 5% oftheir workforce in the name of
technology and getting costsdown.
So last week we were told thatwage data was going up.
You know that the people werelooking for pay rises.
Yep, and then this week in therba statement and in westpac
(04:14):
statement, you see that there'sreal pressures on the labor
market, and the way I sort ofsummed it up in preparing for
our chat tonight is australiansare pushing or asking or looking
for a pay rise at a time thatthe labour market looks to be
deteriorating beneath their feet.
Speaker 3 (04:33):
So you have said many times in the last six months
especially, that it's been apretty tough period for small
business in particular, andthat's reinforced by what you're
saying.
The labour market is looking tooffload overheads and try, and
you know yeah, but westpac's nota small business, no of course
they're not, but they're also uh, I mean, they have the, the
(04:54):
flip side, where they'rebeholden to the shareholder and
that you know they've got tomaintain a certain level of
profitability, etc.
But we're also entering a phaseof, I guess, human existence
which is rapidly advancing.
We're in the AI age right nowand the ability and the
capability of the technology isjust advancing so rapidly that
(05:16):
they're not alone Completelyseparate industry.
But recently Duolingo, thelarge language app, the, the
large um language app, you know,probably the most popular
language app in the world uh hasgone down a pathway of getting
rid of all its educators and andpeople in favor of ai teachers
only.
And their argument is you know,the tech's moving so fast, it's
(05:38):
so capable, I you know, at atime where businesses are
struggling at all levels and youknow you can argue, the banks
certainly aren't I'm notsurprised that they're cutting.
But your comment about peopleasking for wages definitely
resonates, and everyone I talkto is always saying well, we
need more money.
I don't understand how wagesare so strong because it feels
like they're not.
(05:58):
So when we're in a scenariolike this, where wages are
subjectively high but they feelweak against the cost of living.
How do we balance that?
Because it certainly neverfeels like I'm earning enough or
anyone's earning enough.
It always feels challenging.
Speaker 1 (06:14):
It's a great take you've just put forward there.
The only thing I would add toit is AI is deflationary.
Speaker 3 (06:20):
Of course yeah, Because it gets rid of costs.
Speaker 1 (06:23):
It gets rid of people .
Speaker 3 (06:24):
You could argue it doesn't get rid of all costs.
You know, I think I don't knowif you read the article a few
weeks back from OpenAI and SamAltman, the CEO there, said that
every time people say pleaseand thank you to chat GPT, it's
costing them, you know, billionsof dollars a year in just extra
computing power.
So it's maybe not know it mayend up being more expensive, but
(06:47):
when you think about, I guess,labor cost in the true sense
it's certainly coming down.
Speaker 1 (06:50):
Oh, it is, yeah, I think on a net, net, um, it is,
and he's obviously talking on amass scale.
So the point we made thatconditions you know anecdotally
because we all live in bubbles,right, but anecdotally
conditions felt really, reallyweak through that whole election
period was actually captured inthe RBA statement.
They said, quote unquote whilea central projection is for
(07:13):
growth in household consumptionto continue and to increase as
real incomes rise, recent datasuggests that the pickup will be
a little slower than wasexpected three months ago.
Yeah, there is a risk that anypickup in consumption is even
slower than this, resulting incontinued subdued growth in
(07:34):
aggregate demand and a sharperdeterioration in the labour
market than currently expected.
So in this statement here, theRBA have clearly said that what
we're picking up and we'vediscussed this before is that
the uh rba's data is is nextlevel, like they would, every
digital transaction would, wouldbe somehow noted in in all of
(07:59):
the data that they're capturing.
Um, they're, they're picking upthis weakness that we were
talking about in the realeconomy.
Speaker 3 (08:06):
So are they?
You've used the termstagflation.
Are they using sort of softlanguage to suggest that that's
kind of?
You know we're hovering aroundthat a little bit.
You know we have got thesestrong wages.
We have got rates now having tocome down.
We've got, you know, theunderlying inflation within
target range, but certainly notideal within the range.
You know the underlyinginflation at a within target
range, but certainly not idealwithin the range.
(08:27):
You know it's at the top endstill.
Uh, do you think that they'rethey are describing something of
a peri stagflationary kind ofperiod, or are they not quite
committing to that doom andgloom level?
Speaker 1 (08:40):
they're definitely not on that train, no um.
So just taking a few morequotes out of their statement.
They've got the subheading heremaintaining low and stable
inflation is the priority.
The board judged that the risksto inflation have become more
balanced.
Inflation is in the target bandand upside risks appear to have
(09:00):
diminished as internationaldevelopments are expected to
weigh on the economy.
That's the whole Trump tariffwar situation.
The board assesses that thismove to cut interest rates will
make monetary policy somewhatless restrictive.
Speaker 3 (09:17):
Yeah.
Speaker 1 (09:18):
So I think the RBA don't see stagflation as an
issue.
I think they can still controlthe outcome.
They still believe they cancontrol the outcome and I saw in
the international press todaythe rba got a bit of a sort of a
tick, if you like, from fromabroad, from people that are
watching our economy is thatthey have managed to bring
inflation into the target bandwithout hurting the employment
(09:42):
market, and the article wasspeaking along on on Bloomberg
was speaking along the lines ofthere could be great lessons out
of this for other economies asto how the RBA achieved this.
Speaker 3 (09:52):
Oh, certainly, and we , or you in particular, have
talked about that, how that's arisk that the RBA has had to
balance all this time and theyhave limited levers to control
inflation and to try and control, I guess, buyer sentiment at a
very broad level.
Discussions a few weeks ago youknow it might be three to four
(10:17):
weeks ago now he was puttingpressure on jerome powell and
the fed, uh, and particularlythe commentary was that he was
looking to get some rate cuts inthe us to stimulate just a
greater economy and you know allpart of his great tariff.
You know reformation makeamerica great kind of campaign.
There seems to have been a bitof stagflation in that
discussion.
Given that you know, pow back alittle bit.
Do you think that, with what'shappening with the tariffs, and
(10:39):
the pause.
Speaker 1 (10:40):
Powell pushed back emphatically.
Speaker 3 (10:41):
No, of course, but do you think that that's the end
of that discussion or do youthink that Trump is likely to
re-attack this?
And I only ask because let's goback six or eight or 12 months
potentially, where we spoke atlength about Jerome Powell and
the Fed's rate decisions havingan impact here, given that we've
got a tariff pause and we'vegot tariffs broadly hanging over
(11:02):
the global economy, we've got abunch of wars in some pretty
critical areas and we havepressure from a sitting
president to just knock therates down, do you think that
that is likely to become afactor that impacts us in the
next six to 12 months?
Speaker 1 (11:16):
What will become a factor that impacts us in the
next six to 12 months?
What will become a factor?
Speaker 3 (11:19):
If Trump gets his way and manages to get the interest
rates cut quite aggressively inthe US as part of an economic
boom, I guess.
Speaker 1 (11:27):
Look, I think the only way he would get the rates
cut aggressively is if he doesblast Jerome Powell out.
So to answer your first call,do I think Donald Trump will
give up on trying to get ratesdown?
Speaker 3 (11:38):
I know the answer to that.
Speaker 2 (11:39):
Thanks for shaking your head because it doesn't
need to be asked.
Speaker 1 (11:42):
Donald Trump, wrongly or rightly, doesn't give up on
anything that he wants.
So he's clearly on a collisionpath with old mate Jerome.
But Jerome's tenure is assureduntil 2026.
And I've read from Republicansthat are pro-Trump that have
said he's not moving this guy sohe might put maximum pressure
(12:04):
on him and, you know, call himnames like he did the other week
.
He called him a fool for notcutting interest rates.
But in economic theorem JeromePowell is right.
Speaker 2 (12:14):
Yeah.
Speaker 1 (12:14):
Their inflation is trending up and commentators
that I like that are notbeholden to vested interest,
just call it as it is.
They see a case where a raterise is brewing in America.
Speaker 3 (12:28):
Yeah, which I just can't envisage Trump's reaction
to that, to be honest, he'stalking the exact opposite.
That's right.
Speaker 1 (12:36):
Yeah, you could only imagine the meltdown that would
occur if that took place, and heshould be grateful that Jerome
Powell is neither increasingrates or decreasing them, but
he's just letting the status quobrew, even though the data is
stacking up against JeromePowell and just a quick question
there.
Speaker 3 (12:55):
I don't know if you know the answer to this, but
it's something I haven't givenmuch thought to until really
considering this.
But given the tariffs and theincreased cost of goods coming
into the US, do they factor intothe US's inflationary basket?
Because the cost of goods isrising under the tariff model?
I would assume that it doescontribute to you contribute to
(13:17):
inflation.
Yeah, if everyone's puttingtheir prices up yeah.
Which they certainly are.
So I wonder, given the tariffsare designed to make America
great and time will tell whetheror not they have the intended
outcome in the short term,surely there is a large
inflationary boom coming in justconsumer goods alone, if
nothing else in the US off theback of this.
Speaker 1 (13:36):
Well, everyone will do modelling, but, as we've
always said, when you change therules, you change the consumer
behaviour, so you get a wholenew set of outcomes.
And one of the things that Idon't like about models is they
keep things constant on the onehand, but then fiddle with the
dial on the other to see howmuch money they'll take, like
the federal government'sproposed tax on unrealised gains
(13:57):
.
Yeah Well, that's going to haveunintended consequences across
the board, and I don't pretendto be an expert in all of this
space, but I've just beenwatching political moves over my
25 years in business, andpoliticians always think they
can fiddle with things inisolation and nothing will
happen to the system at large.
Speaker 3 (14:18):
Well, I think they always.
My take is they always look atthe end column on the
spreadsheet and they don't lookat the 100 columns that make up
the end, Correct?
And they say well, there's areduction, but it doesn't matter
.
That wipes out all of thesecritical services or all of
these people, or you know,whatever it might be.
Speaker 1 (14:32):
Yeah.
So you change the rules, youchange the behaviours.
Therefore you change the modeland the outcome.
So I don't think anybody reallyknows, a, what the final
position of all of these tariffswill be and, b, how it'll look
when it all plays through.
(14:52):
We go back to the RBA statement, though.
That says, quote the boardconsidered a severe downside
scenario and noted that monetarypolicy is well placed to
respond decisively tointernational developments if
they were to have materialimplications for activity and
(15:12):
inflation in Australia.
So Michelle Bullock'sessentially saying there we've
got scope to cut aggressively,if that's what we needed to do,
because things derailed.
Speaker 3 (15:27):
And, as you say, they've got so much access to
data they're going to see itcoming long before we do anyway.
Speaker 1 (15:31):
Yeah, and it's the second month in a row.
In their statement it was notin a month, because they meet
every six weeks.
I should say it's the secondmeeting in a row where this type
of dialogue has been used.
Speaker 3 (15:43):
Yeah.
Speaker 1 (15:44):
And I remember in 2007, as the Liberal government
were going out, and in 2006,peter Costello let people sell a
property and put the proceedstax-free into their super and
then, 12 months later, in the2007 election, when he was
(16:07):
talking about an issue totallyunrelated to that, he said you
need to re-elect the Liberalgovernment because a financial
tsunami is going to come acrossglobal markets very soon.
So everyone likes all thesecommentators on social media say
I'm the one that picked thesubprime crisis in America.
(16:29):
I'm the one that picked themeltdown in 2008.
Maybe they were in the space,maybe they weren't, but what I
got, the distinct impression ofthe time, is that people that
knew really knew, that marketswere heading for a severe storm.
And it's just interesting thatin the last two statements, when
there's no actual evidence forus out there in the real economy
(16:52):
that it's going this way,michelle Bullock is warning that
we are well placed to prepareand respond decisively to a
major event on internationalmarkets.
Speaker 3 (17:03):
Yeah, certainly, when you take it in full context, it
does show that they are.
You know, obviously they'refollowing what's going on, but
they're clearly they'remodelling and they're running
out the data and trying tofigure out.
You know how do we positionourselves?
Speaker 1 (17:15):
to respond quickly, which is, I think, it's quite
reaffirming this statement thatwe're looking at.
It's what is it?
Let's call it.
It's 200 words, 250 words maybe, and it's taken them two days
to write.
There's no loose words in here.
Yeah, of course of course, andshe says says the board
(17:37):
considered a severe downsidescenario and noted that monetary
policy is well placed torespond decisively to
international developments.
That's effectively been in thelast two statements.
So, um, for someone that's uhusing immense word economy, some
of the best business minds inthe country are sitting around
the table with uh crafting thisstatement.
(17:57):
They felt the need to put thatout there twice.
Speaker 3 (18:02):
No, look, certainly important, and the language does
show that they are workingtowards something Everyone knows
, just quickly commenting onyour subprime mortgage crisis,
that everyone knows thatChristian Bale predicted the
fall of the housing market inthe US.
Oh, that's who it was.
It was Christian Bale, althoughfor those, the housing market
in the US, oh that's who it was.
Speaker 2 (18:17):
It was Christian Bale .
Speaker 3 (18:18):
Although, for those who haven't seen the big short,
it was Michael Burry was thefirst.
Well, he's the one depicted,but interestingly, he's the one
who profited.
Well, yeah, he profited bypredicting, I think is the
argument.
But interestingly, I only readyesterday and I don't know, I
can't confirm this source but he, as of yesterday, offloaded his
(18:39):
entire holdings in the US stockmarket as well, interestingly.
Speaker 1 (18:42):
We don't know if he did, based on what you've just
said.
It's not confirmed.
What we do know is Buffett Didoffload Is essentially nearly
all in cash.
Speaker 3 (18:54):
Yeah, which I mean.
If there's ever an oracle inthe stock market, it's Warren
Buffett, that's for sure.
Speaker 1 (18:58):
That's right.
Speaker 3 (19:00):
All right, peter, moving on as we sort of wrap up
the rest of the episode tonight,we've got a couple more things
I want to talk through.
Off the back of the ratedecision from the RBA and the
back of the recent election,scott Pape, who is a I guess
guess you call him a financialcommentator the barefoot
investor, better known as thebarefoot investor to many
(19:21):
australians who picked up hisbook during covet which I think
was a boom time for him he madesome comments in his email
newsletter that went out on the19th that indicated that
australians, particularly youngaust Australians, should be
really unhappy with the rate cutand he said you know, whilst
some people are going to have agreat time off the back of it,
(19:43):
everyone else you know in looselanguage should be upset.
Now, he's someone who isconsidered financially
responsible and a good guide andan oracle for people trying to,
you know, begin their financialsecurity journey.
I guess he's a bit of a shaman.
What do you make of hisstatements and do you think that
he has any real basis or is hemaybe grandstanding for a bit of
(20:07):
speculation and show?
Speaker 1 (20:10):
Look, scott doesn't grandstand.
That's not his style, I canassure you of that.
He's a great guy.
Probably don't quite take thesame view of how his comments
were characterised.
So the heading says PissedBarefoot investor takes aim at
RBA amid predictions housingprices set to soar after rate
(20:33):
cuts is set to soar after ratecuts, and what Scott then says
in the article is that youngpeople have every right to be
pissed off, because every timethey get close to being able to
afford a property, it's like thedeck is then reset against them
, stacked against them, and thehouse that they're saving hard
(20:53):
for becomes elusive, and thehouse that they're saving hard
for becomes elusive.
Scott would know that the RBAhas to make an interest rate
decision on a whole range offactors, not just house prices.
And what I think Scott and Iwon't speak for Scott but what I
think he's most pissed offabout, using his words was the
(21:18):
incentive to young people to beable to buy property from the
federal government at a timethat immigration is still too
high and construction is too low, if not non-existent.
So all that Scott is seeing andhe's seeing what we're all
seeing, and it's not articulatedin this article is the
(21:41):
government at all levels iscontinuing to fuel the demand
side of housing and it's doingnothing.
It's talking a lot but it'sdoing nothing to deliver on the
supply side.
Speaker 3 (21:52):
Yeah, I'm glad you came around to that, because one
of the comments in hisnewsletter is that you know
Albanese charmers and the crew.
They all know what's going on?
Of course they do, and theyknew that we were.
Well, he, I guess, intimatesthat they knew all about the
cost crisis.
We all do.
You know.
We talk about it all the time.
They know there's anundersupply, they know there's
(22:13):
an immigration issue.
They know all these factors,yet they still implement these
policies because they're greatsoundbites on the news and
they're great pre-electioncampaign promises.
Knowing that, you know andwe've said this in different
contexts before every time somekind of government or federal
political policy changes inhousing, someone wins and
usually the first home and newentrance and all those kinds of
(22:35):
buyers end up losing because thegoalpost shifts a little bit
every time.
Speaker 1 (22:42):
Oh, it's not.
If I can give our listeners alocal example that sums up how
hideous all of this is, yeah,yeah, chris Minns did a big post
this week.
Your mate, your mate.
He did a big post this week,regardless of whose mate he is,
about the Tigers Leagues Club.
Yeah, they're finally gettingthe go-ahead and part of the
(23:04):
development consent is they have59 apartments set aside for
affordable housing.
I saw that.
Yeah, now, when you average andprobably a complex like that
where Tigers will be and whatthe design is it probably
wouldn't be 2.5% persons perdwelling, but that's the average
.
That's when you're trying towork out the average dwellings
(23:27):
per person across the country.
That's what it works out at.
That's a site that's been apotential site since, I think,
2011.
Speaker 3 (23:36):
Long time, Long long time it's been abandoned for,
yeah, however long.
Speaker 1 (23:40):
We are in 2025 as we record this If someone's
listening to it well into thefuture, wondering what the time
frame is.
So it's it's been a potentialsite for 14 years and we've got
the premier of the state takinga bow because he's found housing
for 130 people yeah at a timethat the country's let a million
(24:04):
people in over the last twoyears.
Speaker 3 (24:08):
And I hate to say it, but in a location where public
transport leaves a lot to bedesired.
Balmain is not great, and youknow I'm just nitpicking a
little bit, but I mean excludingthe fact that you know this is
the last 14 years that couldhave been utilised for however
many people in however designthey chose.
It's also not a great like.
Anyway, I'm not even going togo down that path, chris.
Speaker 1 (24:29):
Minns is not the person to blame for the property
sitting there as a redundantsite for the last 13 or 14 years
, whatever it might be.
But you see the hideousness ofit all.
So bad I can only laugh thatyou've got the Premier of the
state.
So bad.
I can only laugh that you'vegot the Premier of the state
taking a bow because he'screated housing for what's 59
(24:53):
times 2.5?
.
As you said, 130-odd 130-oddpeople at a time where we are
flooded in Sydney with hundredsof thousands of people every
year.
Now it's not the onlydevelopment that's been approved
, but they are so far off targetwith housing.
The new arrivals that have cometo the country never mind that
(25:17):
are still coming that.
That is why Scott Pape ispissed.
Speaker 3 (25:22):
Yeah, it's also.
I mean, what an indictment onthe Premier's kind of recent
timeframe that that's thevictory he wants to announce
because there's just nothingelse going right for him.
Well, he's making terribledecisions.
Speaker 1 (25:36):
I think Well, as we speak tonight, sydney trains oh
don't even talk to me about that.
Speaker 3 (25:44):
Yeah, yesterday the wires came off.
It was only a couple of weeksago.
I catch the train toStrathfield from the city often
and it was only a couple ofweeks ago.
The trains completely stopped.
Maybe two weeks ago.
Yesterday they were stopped forhalf a day hours.
It took me almost two hours todrive from the city to my place
and then again today out again.
Like it's ridiculous.
(26:04):
It happens all the time andthere's zero contingency in
place ever, which is, I meaneven this morning.
My wife sent me a message andsaid there are people lined up
200 deep to catch a bus near ourhouse because there's obviously
no trains and you know there'sone bus every 25 minutes or
something.
It's ridiculous.
Speaker 1 (26:24):
So the city is bursting at the seams.
Yeah, and I can't say I heardthe whole quote or the the whole
story, but I did hear a snippetof chris minns the other day,
who is not to blame for any ofthese uh issues, by the way,
he's just the premier of the dayyeah, but he has the ability to
uh, you know, he has theauthority and the ability to
(26:45):
negotiate and to ensure thatthose agencies and, you know,
organisations that he puts inplace, particularly public
infrastructure, are managedaccordingly.
Speaker 3 (26:54):
I know that he's not running transport, but it's his
responsibility at the end of theday.
Like I disagree, oh, it's hisresponsibility.
Yeah, he's got to make sure itworks properly, it's his
responsibility.
Speaker 1 (27:03):
But I'm just saying these are legacy issues and it's
all unfolding on his watch.
But anyway, I heard him theother day say on the news that
he's not going to cancel anytransport infrastructure because
they're saying to him there's alack of tradies in the city,
which there is.
Anyone who's tried to get anyworks done around the house
(27:24):
knows exactly.
There's a lack of tradiesavailable at the moment and the
view is that they're beingmopped up and absorbed by the
infrastructure with thetransport.
And they're saying, hey, mrMin's, back off on the transport
infrastructure so we can getthem to start building houses.
And he said point blank, whichyou know he gets a lot of points
for being very frank, chrisMinns.
(27:44):
He said look, labor has areputation for starting and not
finishing transportinfrastructure.
I'm not backing off on anythingto do with transport
infrastructure because I want tosee a Labor project through to
completion.
So he's looking at his legacy,which is fair enough.
He's looking at his ability toget things done, which is
probably halfway through histerm.
(28:04):
And it's not that the formerliberal government had a great
um resume at the halfway pointof their first term, but people
remember what the former liberalgovernment delivered by the end
of their tenure.
And, as you've alluded to there, with with chris minns, his
achievement list is a little bitskinny at the moment.
Speaker 3 (28:24):
Oh, and the yeah, yeah, we've talked about him in
the past.
The government is facing heatfrom a whole range of directions
, not least of which is housing.
Let's not spend any more timeon politics, because I know many
, many people don't want to talkabout it.
Religion and politics we're notto talk of those things.
But as we wrap, up tonight.
Speaker 1 (28:42):
We got a new Pope recently.
Speaker 3 (28:44):
We did get a new Pope an American, I must admit.
I love that.
He is a Chicago White Sox fan.
He's a baseball man and I dolove this is so benign, but I
love that after his inauguralmass he walked out and gave his
brother a big hug, which Ithought was nice.
I mean, it sounds silly, butI've never viewed Popes as
(29:05):
people in that sense, you know,they just seem like they're kind
of beyond that and they don'tengage with the normal man again
.
But it was quite refreshing tosee him just walk through the
crowd and grab his brother andgive him a big hug.
So as we wrap up then, peter, Iwould love to just get a quick
market recap for this week.
It's been pretty dire over thelast few weeks Well, last 12
months almost, but last fewweeks as well it's stayed below
(29:27):
50%.
The clearance rates and you'vetalked about how you know stock
levels have maintained a prettylevel value, but how there have
been some shifts and we were,you know, anticipating or maybe
waiting to see what the RBA weregoing to do, to see if that did
actually stimulate any furtheractivity in the market.
Speaker 1 (29:45):
Yeah, look.
So last week, 756 auctionsscheduled with a clearance rate
of 48%, 167 sold prior, 196under the hammer, 29 sold
afterwards.
So look, still stuck below that50% level.
It'll be interesting to see ifthis one rate cut, one
(30:06):
additional rate cut, but thisone rate cut, one you know
additional rate cut, but thisone rate cut in and of itself is
enough to lift the clearancerate above 50 in weeks to come.
We haven't, we actually did.
Just when they cut rates infebruary, we actually did detect
a slight uptick in buyerenthusiasm almost immediately.
Yep, and I had a journalist askme, not on air or anything, but
(30:29):
just off the record why arepeople so interested in this?
Why is this such a big story?
I'm trying to get a feel forthe newsworthiness of it and I
said it's not the fact that theycut interest rates by 0.25% in
February, it's that it actuallysignalled emphatically through
action, through policy, that theend of the rate hikes is over
(30:52):
and we're now in a downwardcycle.
So subsequent cuts in interestrates will not garner the same
interest as what the Februaryone did, because that was
significant after 13 rate hikesin a row spread over two and a
half years, to then see it cut.
In February it was.
It was big news to officiallysignify a new cycle had begun
(31:14):
and that cycle was, you know,solidified this week when they
cut again.
But it didn't, you know itcarried press but it didn't
carry enormous coverage likelike the February one did,
because it's just another ratecut and the RBA flagged there's
more coming.
So it will be interesting tosee the buyer reaction.
(31:35):
But I would say 24, 48 hours onthe reaction from buyers is
more subdued about this rate cutthan the February one about
this rate cut than the Februaryone.
Speaker 3 (31:47):
Yeah well, as you said, throughout all of the rate
rises in this period of youknow, uncertainty that we
wouldn't necessarily know theterminal rate until it turned
the corner.
And you say that about propertycycles.
You know you don't know the topuntil it drops, and that kind
of thing.
And it makes sense.
You know people use a racinganalogy.
It's more interesting whensomeone crosses the chequered
flag than when they just make aturn and that's, you know.
This next one is just anotherturn on this journey and you
(32:09):
know, next time we cross throughthe checkered flag it might be
a rate rise, or you know whoknows where we'll end up in the
next cycle.
The only, uh, interestingnumbers from the market wrap.
I'm not surprised we're stillbelow 50.
What?
The only thing that stood outto me and I'm not sure if, uh if
, it did to you is, is that outof the last four weeks anyway,
this is the lowest number ofauctions.
The first time I've heard itunder 800.
(32:30):
Not substantially so, but doyou think any of that could be
as a result of people justwaiting for this week to see
what might happen with rates?
Speaker 1 (32:38):
Look good question and the answer is probably not
Okay.
And the reason I say that is Ithink this is seasonal and I've
spoken to a few solicitors.
They said are you preparingmany contracts for sale?
It's gone dead on thesolicitors Because what can
happen again?
We all live in bubbles.
(32:58):
It's like, hey, stock's reallytightening.
Is it us or is this across theboard?
So you speak to the lawyersit's like mate, how are you
going for preparing newcontracts and new matters?
It's really tight.
No, no, it's tightened up rightthrough May, after Easter.
So I think there'll be thetraditional spring selling
season, but I think buyers andsellers, particularly with the
(33:20):
weather we've been having inSydney, it's cold, it's cold,
and wet and it just doesn't feellike it's going away.
Right, it's probably the biggestweather cell that we've seen
since those rains in 2022, whichwere next level.
That was like three, fourmonths of continual rain.
But look this, this, thisweather in sydney's been set in
and, as we know when we'redriving our vehicle around town,
(33:42):
sydney doesn't do rain realwell no, no, and I I was going
to make that comment.
Speaker 3 (33:47):
It certainly feels like at least in the last week
it's cold.
For the first time.
Speaker 1 (33:51):
We've had the rain now pretty consistently for a
while monday night yeah it's.
Speaker 3 (33:55):
It's just felt nippy I.
I love the cold personally, buteven I've kind of, you know,
started to get the jumpers outof the cupboard.
There.
Things are getting ready, soI'm not entirely surprised.
Look, um, really really greatdiscussion, peter.
A lot to talk about when theRBA do make their statements.
I know that in the coming weeksthere's going to be some
interesting activity across themarket.
As you say, I'm always.
(34:15):
I'd love to next week.
I really would love to get yourthoughts on what's happening in
the rental space, particularlybecause we do know that winter
is a slowish time typically, butwe did talk a few weeks ago
about how activity was stillpretty strong and prices were
high.
So plenty to talk about in thecoming weeks.
But, as always, I thank you forcoming in today.
Speaker 1 (34:32):
All the best.
Thanks, Kieran.
Speaker 3 (34:34):
Thanks, Peter, and thanks to everyone for listening
to Current Market Insights.
We look forward to speakingwith you next time.
Speaker 2 (34:39):
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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