July 3, 2025 • 30 mins
SQM Research’s Managing Director Louis Christopher recently joined us to outline provide his view on how the Sydney Property Market will perform heading toward Christmas.
Louis discusses:
- Why both the Sydney and National property market are likely to rise in the next 12 months
- The impact of falling interest rates and rising immigration numbers
- Benefits infrastructure brings to the suburbs and locations close to the new roads, Metro Stations and Airports
- First home buyers entering the market and fuelling the bottom end of the market
- The best performing segments of the market
- Why home sellers and buyers should care about the ACCC’s investigation into REA Group and
- Much more…
This is a deep dive on the factors that will determine the market’s direction in the near term.
As always if there is a specific topic you would like for us to cover, please reach out and let us know!
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:05):
Welcome to Talking Property Today.
I'm joined by SQM Research'sManaging Director, Louis
Christopher, as we preview thesecond half of the Sydney
property market.
Louis, thanks as always forjoining us.
Good to be with you once again.
Louis, what are you predictingfor the second half of the 2025
market in Sydney?
Speaker 2 (00:23):
I believe we'll see a rally in the Sydney housing
market.
I think that's already beenhappening, albeit on a slower
rate, but I think the rate'sgoing to accelerate, based on a
rate cut in July, more certaintyfor the economy going forward
as well, given the fact thefederal election's well and
(00:46):
truly out of the way.
So, yeah, the expectation iswe'll see a rally which will be
fairly wide across the Sydneymarket, but I think for the
outer ring of Sydney inparticular, it's going to be a
fairly strong rally.
Speaker 1 (01:00):
Let's go straight to the rate cut on the 8th of July.
Some people will be watchingthis after the 8th of July.
Some people will be watchingthis after the 8th of July and
the fact will be known.
But do you think it'll be 0.25or will they go more
aggressively?
Speaker 2 (01:12):
It'll be at least 0.25.
It could be 0.5 depending onwhat equity markets do at the
time.
Into the lead up, as we know,we've got a lot of geopolitical
uncertainty that it'll be atleast 0.25.
Speaker 1 (01:24):
Louis, when I read the statements from the RBA this
year and I'll bring up ourfirst slide for today's
discussion.
The RBA have many messagessuccinctly articulated in these
statements, but something that Inoticed in the last three is
this constant preparedness formajor global events that could
(01:46):
impact on the Australian economy, as outlined in our slide here.
What do you make of thesecomments from the RBA in their
statements?
Speaker 2 (01:55):
Oh, no doubt they're becoming increasingly dovish for
the outlook of interest ratecuts and they see interest rate
cuts as a way to create a bufferfor the Australian economy if
the economic geopoliticalturbulence we're seeing gets
worse.
Their fear would be that withthe rise of tariffs and the rise
(02:16):
of more and more conflict, thatis going to see a slowdown in
economic growth, driven by aslowdown in global confidence
towards a global economy.
And so they believe theresponse to that will be to cut
rates now, sooner rather thanlater, to create that buffer for
(02:37):
the Australian economy.
Speaker 1 (02:38):
Now, at the time of recording, trump has sidestepped
Albo at the G7 and headed backto Washington to deal with the
Middle East crisis, and Albo wasgoing to take Trump on about
the tariffs on Australia.
You would suspect and look forrelief in that meeting.
If tariffs, as they're proposedby the US government, land on
(03:01):
the Australian economy, whatdoes that look like for
Australians?
Speaker 2 (03:04):
My understanding of what's and it has been a fluid
situation, but my understandingis that Australia would have a
10% broad tariff rate appliedacross its goods and services.
That is considerably lesscompared to what the US was
applying towards, say, forexample, europe towards China,
(03:24):
towards most other countries.
So, relatively speaking, itshouldn't hit us directly that
hard.
The real potential impact isthe indirect effects of a global
economic slowdown due to othercountries being hit hard by
tariffs.
Speaker 1 (03:41):
So we're thinking, when you say the property
market's going to rally in thesecond half of the year, we're
thinking the housing market willbe immune from those factors
and that home buyers won't becaught up in them and they will
respond very favourably,provided employment holds, to
rate cuts.
Speaker 2 (04:00):
That's a key assumption, peter.
Yes.
So if we were to see a scenariowhere we had an absolute
economic route worldwide,creating rapid increases in
unemployment, we would not beimmune to that wave.
So, assuming that unemploymentdoesn't rise rapidly, I think
the combination of rate cutsplus very strong population
(04:22):
growth will drive housing pricesup, not just in Sydney, but in
most capital cities for thesecond half of 2025.
Speaker 1 (04:30):
When we come to the Sydney market, the prestige end
of the market through this ratehiking cycle was clearly the
strongest.
Will that continue to performwell and be the best performer
in the market, or will we seemore life at the bottom end of
the market?
I believe we'll see more lifeat the bottom end in the market,
or will we see more life at thebottom end of the market?
Speaker 2 (04:45):
I believe we'll see more life at the bottom end of
the market.
We will see more first homebuyers enter into the market.
Let's keep in mind that we'restill in a rental crisis.
Rents are still very elevated,so there's a lot of incentive
for renters to turn themselvesinto first home buyers and,
given the incentives driven bythe federal government out there
(05:06):
for renters to do just that,combined with the rate cuts, I
think we'll see a wave offirst-home buyers entering into
the Sydney market.
And, of course, for manyfirst-home buyers, their first
property will be a propertywhich will have to be a very
affordable property.
So it may well be a unit, a oneor two bedroom unit, perhaps in
(05:26):
the middle to outer ring ofSydney.
And it's one of the reasons whywe think the outer ring of
Sydney is going to be theoutperforming area or the
outperforming ring for thesecond half of 2025 and into
2026.
Speaker 1 (05:39):
So affordable housing with still relatively easily
accessible back into the cityfor work, etc.
Correct, yeah, and inpercentage terms, what would you
expect that segment of themarket to move by Louis?
Speaker 2 (05:53):
I think for this current calendar year.
Let's keep in mind we do ourforecasts for calendar year by
calendar year.
So we have for our forecast forthis calendar year housing
prices overall to rise by up toabout 6% in terms of the year
and year change.
I think Sydney's outer west islikely to do more than that.
(06:14):
I don't think it'll hit doubledigits for this year, but I
think the probabilities of adouble digit increase are
increasing for 2026.
So good times ahead.
Good times are ahead, providedthe Middle East doesn't blow up
to the point where the wholeworld goes down with it.
Speaker 1 (06:31):
Okay, well, let's come to that.
Our next slide is about theMiddle East.
David Taylor is an ABCjournalist too.
I follow his commentary andit's pretty reasonable.
Like all of us, he has a slant.
That's okay, reasonable.
You know, like all of us, hehas a slant, that's OK.
But he put this post out whenthe Iran-Israel conflict really
escalated.
What would you make of thisview that Taylor's taken here?
Speaker 2 (06:54):
Yeah, look, it was one of the fears that I had,
which we actually wrote up aboutin our 2024 report.
Yes, About this scenario whereIran blocks the Straits of Homs,
which means that oil supply isseverely constrained worldwide,
which pushes up oil prices,petrol prices, energy prices
(07:16):
overall and creates thisstagflationary event worldwide.
It is definitely a risk.
I think the US will do all intheir power to stop something
like that from happening.
Speaker 1 (07:28):
This scenario that he's outlined here is
essentially a rerun of whathappened in the 70s, wasn't it?
Speaker 2 (07:33):
That is correct.
Now, keep in mind, in the 1970s, it wasn't just Iran that was
creating this shortage of oil,it was OPEC overall.
So we're just talking about thecountry of Iran.
Now Iran, of course, is a major, major, major oil supplier, so
they can certainly have animpact upon the market and they
(07:54):
can certainly have an impact interms of the oil tankers that
run in and out of the Straits ofHoms, which basically import
oil not just from Iran but fromother countries around the area,
including, for example, saudiArabia.
So, no question, it is a risk.
I think the United States wouldforesee this risk and I think
(08:15):
that's when they would bring intheir military power to stop
such an event taking place.
Speaker 1 (08:22):
Because of the havoc it would create on the global
economy if they didn't.
Speaker 2 (08:26):
That's exactly right.
So, for example, they could runtheir naval convoys through the
strait and keep it open thatway, right?
So I think that there aremeasures that can occur which
perhaps might not be able tostop it immediately, but might
be able to stop it within acouple of weeks if Iran were to
take that action.
Speaker 1 (08:47):
Okay.
So, moving on from the MiddleEast, that's a big story and
it's very, very difficult, asyou say, at this fluid stage to
work out where it's going to.
I do want to talk historicalinterest rates, louis, and I
accept your point that the RBAcutting rates will be good for
the property market.
I feel that on a day-to-daybasis as a real estate agent.
But I do want to go back intime.
(09:09):
People somehow believe that thereduction in interest rates
during COVID caused the propertyboom.
People are actually shockedwhen you tell them that how low
the cash rate was before COVIDwas even a thing.
And if we look at our slidehere, in February 2020, the cash
rate was at 0.75%.
It was already at emergencylevels.
(09:31):
It was a decent property marketthen, but it was by no means
booming to the degree that itwent on to boom in 2021.
And when I look at this againnow, five years after, the fact
tells me that, yes, okay, we'vegot a 0.65 reduction in the cash
rate, but the true catalyst forthat wild boom in 2021 was all
(09:53):
the free money that governmentpumped into the economy.
Um, because, at the end of theday, the the cash rate only
moved from 0.75 to 0.1.
The rba didn't have scope atthat time to aggressively cut
rates to see us through covert.
So what's your thoughts nowthat when we bring up our next
slide, we come to um may 2025,we've got a cash rate of 3.85,
(10:20):
down from a high of point four,point three, five in this cycle
and we might go to you know, wemight go to what three point six
on July 8.
Why is that having such a bigimpact on property prices?
Speaker 2 (10:34):
hmm well, if we wind ourselves back to 2019, we must
remember back then migrationrates were not as strong.
The population growth rate ofAustralia was considerably lower
than what we have now, sounderlying demand for
accommodation, while it wasgrowing, was just not growing at
such a great clip that we havenow.
(10:55):
So that's one thing to keep inmind.
Second, the inflation rate thatwe had at the time was a lot
lower than what we've beenexperiencing in recent years, so
the RBA was struggling to tryand create some type of
inflation.
The concern was deflation atthe time, hence the reason why
interest rates were so low.
(11:16):
So the real interest rate thatwas running at the time was
actually quite it was stillpositive, but we were still
running real positive interestrates, and that was putting a
little bit of a drag on theeconomy.
And when you have a bit of adrag on the economy combined
with, say, lower migrationlevels, housing prices struggle
in that environment.
Keeping in mind, though, in thesecond half of 2019 we did
(11:38):
start to see a recovery in thehousing yes, we did after that
federal election, after thatfederal election let's remember
that federal election housingwas very much front and centre.
What was on the election wasnegative gearing.
Yes, it was on the block.
It was on the block and thatcreated a lot of uncertainty in
the housing market in the leadup to that election, so that
(12:01):
also created a bit of a slowdownin the market as well.
And, to your point, what thisshows is that interest rates are
not the be-all and end-all inthe housing market, and I think
that's the point you're tryingto make.
Moving forward to today, yes,we've got a high cash rate but,
as mentioned, we've had higherinflationary rates as well,
combined with the fact we've gotvery strong migration and a
(12:25):
real shortage of properties onthe supply side.
And these are the reasons why Ibelieve a combination of a rate
cut plus strong populationgrowth is going to drive
dwelling prices up, despite thefact that, in absolute terms,
we've got a higher interest,nominal interest rate than what
we had back in 2019.
Speaker 1 (12:44):
Yeah, great answer, louis.
Thank you's.
You know explaining a lot inone go there, but that's a great
outline, thank you.
Speaker 2 (12:51):
You're welcome.
Speaker 1 (12:52):
What would you say?
Percentage terms?
Wages are up by the same periodas well, because they're
obviously higher than they werein 2020.
Speaker 2 (13:00):
Yes, so back in 2019, wages were essentially running
ahead of inflation at the time,but just only by a little bit.
We've actually been in a periodwhere wages has been falling
behind inflation Up until fairlyrecently.
There's been a couple of wageannouncements which suggest that
real wages might actually startpicking up again.
(13:22):
Maybe might actually startpicking up again, maybe.
But yeah, back then we had asituation where real wages were
moving forward a little bit morethan what we've had of late.
Speaker 1 (13:32):
So coming out of COVID, I don't like to keep
going back to COVID, but it isgood to look at history to help
people understand how the marketworks.
Clearly, inflation was wellabove the cash rate.
Speaker 2 (13:43):
Yes, that's right.
Speaker 1 (13:44):
Where now we've got a cash rate of 3.85%, which is
comfortably above the cash rate.
Yes, that's right we're nowwe've got a cash rate of 3.85%,
which is comfortably above theinflation rate, both underlying
and the headline rate.
So what role does that play inthe RBA's thinking on things?
Speaker 2 (13:57):
So when you have a real positive interest rate,
like what we have now, where thecash rates are higher than
inflation, that puts a bit of adampener on the economy, you're
actually trying to slow theeconomy down.
In that scenario, what the RBAnow wants to do is they want to
loosen the economy up a bit, andso this is the reason why
(14:17):
they're dropping the cash rate,and I believe what they'll do is
try to drop the cash rate downto a level which is on par with
the current inflation rate.
Speaker 1 (14:27):
Okay, so that's where you think it'll settle.
Speaker 2 (14:30):
I think it's potentially going to settle at
that time.
Now they may take some time.
If there is significant turmoilin the global equities market,
they may well move quicker.
If the equity market staysstable and Yelp looks reasonably
stable for the global economy,they'll do this at a more slower
pace.
Speaker 1 (14:50):
Obviously, many people have been punished by the
rate setting of the RBA andcaught on the wrong side of the
trade, unfortunately, as theycarried too much debt into an
aggressive rate hiking cycle.
But notwithstanding thosepeople that would give the RBA
an F for fail, how do you thinkthe RBA have managed the last
(15:11):
five years?
Speaker 2 (15:12):
Oh, I wouldn't wanna be a central bank, and I think
I've said this on your programbefore.
I think it's one of the mostdifficult jobs you can possibly
have, because really it's allabout trying to forecast the
future.
Speaker 1 (15:21):
Yes.
Speaker 2 (15:22):
And there is so much uncertainty that that's really
really difficult to do.
I think, on balance, the RBAhas done a reasonable job.
Let's think about it.
We've been through the plague.
We've been through significantgeopolitical uncertainty and in
the end, the economy has notfallen in the heap when it could
have Absolutely, and that is inpart credit to the RBA to being
(15:45):
responsive to what's beenoccurring in the national
domestic economy.
Speaker 1 (15:50):
Yeah, high pressure position, no doubt, but I think
they've managed it admirably.
Once I've agreed witheverything they've done at every
point, I think they probablycould have started cutting late
last year myself, but all in all, I think they've managed the
economy pretty well.
Speaker 2 (16:03):
I think the biggest mistake they made was, you know,
the grand announcement by Loweof no interest rate rises.
Until when was it 2024.
You know, there was no wayanyone could possibly predict
that and yet he came out withthat.
I'm sure he, if he had his timeagain, he again, he would take
(16:25):
those words back.
Speaker 1 (16:26):
Well, he tried to walk it back, but it wasn't very
successful.
Speaker 2 (16:28):
It wasn't very successful, that's right.
Speaker 1 (16:30):
Louis mortgage arrears.
Have we seen some relief therein the bank's books with people
managing the rate cuts that havealready come through?
Is that an improving scenarioin the data?
Speaker 2 (16:41):
It's really early days before we can definitively
say that arrears have turned acorner, Keeping in mind they
never reached alarming levels.
As you know, we measuredistress listings activity and
we note that on our index we'reseeing less properties being
(17:02):
selling under distressconditions here in New South
Wales and Victoria compared towhere we were, say, about 12
months ago, and it's beenfalling in Queensland as well.
So on that measure, I wouldsuggest that we will see
officially a level of arrearswhich will be falling on the
bank's books.
Speaker 1 (17:22):
Look, I think that data there segues with what we
saw as real estate agents Latelast year.
We saw mortgage holders orhomeowners tapping the mat and
walking in and saying I can'tafford to continue to hang on to
this property.
Invariably it was investmentproperties being sold off.
Yes, agents across the industrywere reporting landlords
(17:46):
dumping out of investmentproperties, taking the equity,
putting it against their homeloan.
And what made the rental markettougher is that nine times out
of 10, when you sold a rentalproperty off your books, you
sold it to an owner-occupier,shrinking the rental pool.
But we started noticing thenumber of people, or the volume
of people, who were outliningthemselves as having mortgage
(18:08):
stress started to reduceimmediately when they cut rates
in February.
So again, it's just showing theRBA really we're in tune with
the economy and not everyonewill be happy with their
management, but they did do itpretty well, didn't?
Speaker 2 (18:23):
they, I think, in the scheme of things that they've
done, they've done quite wellmoving along now to something
slightly different.
Speaker 1 (18:30):
The a triple c if we bring up our next slide here,
the a triple c have launched aninvestigation into the rea group
.
I know that you're very deeplyconnected to the industry and
you um get you know, take a lotof perspectives from different
people within the industry andyou get you know, take a lot of
perspectives from differentpeople within the industry.
What, what do you make of thisinvestigation?
Speaker 2 (18:50):
I think I'm glad to see the investigation.
I think re I carry a lot ofmarket dominance.
When you have a situation wherean end consumer home seller is
paying you know what six,000 toput a listing on a website, or
more, that's pretty crazy.
(19:13):
That shows market dominance andthere's no question.
It's undisputed.
Rea have said it themselvesthey're number one in the space
by far and I would agree withthat.
So I'm glad the investigationis going ahead.
I'm looking forward to seeingwhat the ACCC comes out with.
Speaker 1 (19:30):
Yeah, the Real Estate Institute of New South Wales
have opened sent a link to theirmembers asking them to pass
comment straight through to theACCC as to their experience with
with the company.
There's probably two pointsthat really get under my skin
about the way the company hastreated us as real estate agents
.
The first is Australia is byfar and away the most expensive
(19:53):
market in the world to run aninternet ad.
Speaker 2 (19:56):
Yes, it is, that's right Now.
Speaker 1 (19:58):
It could be argued that the website is better than
some of its global peers.
I accept that too to somedegree, but you've just outlined
some costs there which are justcompletely unjustifiable.
The industry made a strategicmistake in the early days.
They said increases from REAdon't concern us, because we do
vendor paid advertising here inAustralia where, globally, the
(20:22):
real estate agent advertises thehouse on behalf of the vendor
and the vendor pays for theadvertising and the commission
in one go at the point of salewhere agents have got this
vendor paid advertising modelwhich allows them to get the
money upfront off the vendor.
So when it was affordable, noone was really concerned about
what these websites were up to.
(20:43):
But fast forward 20 years andwe're at a situation where
they're essentially sending realestate agents broke.
Speaker 2 (20:49):
Well, we must look at it that we're talking about
here a publicly listed companywho has to, for their
shareholders, record profitgrowth year on year on year.
They need to do that.
If they don't do that, thestock price falls.
So there's a lot of pressure togrow revenue.
Now, when you get to the pointwhere you have such a huge
(21:11):
market share as what REA have inthe country, you cannot grow
that market share any further.
So how do you generate revenuegrowth?
You lift prices and since theyhold such a dominant position,
they have that power to liftprices.
Hence the reason why the ACCCare looking into this matter.
Speaker 1 (21:30):
And then the other one that I know gets under a lot
of real estate agents' skin ispostcode pricing, and that's the
equivalent of Qantas' airfares,for example, might be far
higher on routes where they'renot competing with Virgin and
Rex, but when they are competingwith Virgin and Rex they've got
much more manageable pricingscale.
(21:52):
And the REA Group are hittingreal estate agents where there's
a lack of competition, namelyDomain.
Speaker 2 (21:59):
Yes.
Speaker 1 (22:01):
So it can be more expensive to run an ad in
Western Sydney, where domain isnot as strong than it is in the
inner city, where domain holds apresence and is keeping
realestatecom or the REA groupon an even keel to some degree.
And I'm sure these are all ofthe things that the ACCC will be
looking at.
Speaker 2 (22:18):
I'm sure they will be .
I'm sure they will also belooking at, when we speak of
postcode by postcode, whetheradvertising prices are high
simply because a postcode's inan affluent area.
Speaker 1 (22:29):
Well, that's definitely going on.
Speaker 2 (22:31):
Well why?
I mean, it doesn't make anysense.
The cost of doing an ad wouldbe the same whether it's in
Double Bay or in penrith.
Okay, so that's the part whichI find uh dubious, to say the
least oh, it's, it's, it'sdubious, unfortunately.
Speaker 1 (22:51):
Um, the real estate industry walked themselves off
the cliff on this one, yeah, andthey are the ones that are
squealing loudest now, and it'sgreat, and I'm not saying the
people that are taking the fightup on behalf of the real estate
industry are to blame.
It's great that they are takingthe fight up, but there's no
doubt that the real estateindustry had a once in a
lifetime opportunity to unhookitself from this vendor paid
(23:14):
advertising model, being at themercy of media companies that
just keep jacking prices up.
They got off the hook when wewent from print to digital and
then, just through nature,jumped back on the hawk, and 20
years later, the prices areunsustainable and we're in a
world of pain.
Speaker 2 (23:33):
Correct.
Look, the issue we face hereand this directly feeds into our
affordability issues, and thisdirectly feeds into our
affordability issues is thatwhenever you buy and sell a
property in Australia, thetransaction costs overall are
quite high.
That's a combination of stampduty costs, advertising costs
and so forth.
(23:53):
What this lends itself into isproperty owners sitting on a
property not willing to transactEmpty nesters, for example,
property not willing to transactempty nesters, for example, not
willing to downsize because thetransaction costs are huge.
They'll end up spending$150,000, for example, in just
doing the transaction costs, andthat's real money down the
(24:15):
drain.
And so, with very hightransaction costs, this creates
a more illiquid marketplace, andthat's what we need to try and
resolve if we're going toresolve our fundamental
affordability issues in thiscountry.
Speaker 1 (24:30):
Well said, louis.
Moving along infrastructure thenew infrastructure that
Sydney's experienced in the lastfew years is taking hold now.
The metro is, you know, amighty piece of infrastructure
and Sydney siders are learningtheir way around the tunnels etc
.
Is that changing the waypricing in the city is
(24:52):
performing, making previousdifficult to access or isolated
suburbs that are suddenly moreconveniently accessible back
into key arterial roads?
Is that impacting on prices?
Speaker 2 (25:05):
I think it's early days, yet Sydney has shown a
history of this.
I'll never forget when the M2opened up in the early 1990s and
we essentially saw massiveoutperformance in the lead up to
the opening of the M2 and postthe M2 in Sydney's north west,
because that was the area whichdirectly benefited from the
(25:27):
opening of that arterial road.
I think with the expansion ofSydney's metro we will see
localities which are close by bepositively influenced by that.
For example and this is alittle bit out there and I don't
recommend anyone take advantageof this, this view or this tip
(25:49):
I think North Sydney, inSydney's lower North Shore, may
well outperform over the mediumto long term because it's become
quite a hub, a transport hubwhere you've got the normal
railway line there, plus a metro, plus you've got a great bus
system and I think potentiallyyou could see some
(26:11):
outperformance there.
But we will see outperformance,I think, in Sydney's west as
well, for reasons I mentionedearlier, but also because we're
getting closer and closer to theopening of the second airport
yes, indeed, and I think that'sgoing to see a bit of a mini
economic boom in Sydney's south,west and west.
Speaker 1 (26:29):
Even if you're not into public transport, the way
Sydney's roads and traffic flowis at the moment, it's nearly
for want of a better word it'snearly forcing you, or inspiring
you, to get onto the publictransport system, isn't it?
Because traffic jams, you know,I had to go west one Saturday
(26:50):
night a few weeks ago and therewas four lanes of traffic from
Haberfield M4 to St Clair.
Wow, ok, on a Saturday night,now it was vivid.
I don't do that run regularly,or very regularly at all, of a
Saturday evening, but I justcouldn't believe it and I'll
never forget.
When Chris Minns became Premier, the Friday before the election
(27:14):
day, I was in the radiolistening to a Liberal Minister
talking about what greatinfrastructure they had left the
city with and why they weredeservative another term.
And it just so happened that Iwas on the m4 heading west on
that morning as well, and againit was bumper to bumper traffic
from Haberfield back past theold underland there at Walgrove
Road quite clearly that messagedidn't really come through to
(27:36):
those or stuck on the motorway.
Speaker 2 (27:37):
That and I just looked at.
Speaker 1 (27:39):
I looked at those people heading east and said you
know they would be nearlyfalling out of the car door
listening to this message,because nothing's changed for
them.
They're in bumper to bumpertraffic still, just with an
extra lane of it Once again.
Speaker 2 (27:50):
I hate to harp on this.
We can put in, and we have putin, great infrastructure.
But if we keep growing the waywe are, in terms of underlying
population growth, sydney's beenup at 2% per annum Okay, that
infrastructure hits capacityreal quick.
Now I don't know if you've beentaking the metro of late.
(28:11):
I do from time to time.
I can tell you first thing inthe morning.
All those metro trains areabsolutely jam-packed.
You cannot get on them.
Speaker 1 (28:20):
That's the point I was getting to.
All the infrastructure thatwe've been through, the
construction fatigue, all theconstruction that the city has
experienced is for the nextgeneration, not the last,
correct, and I think people arestarting to work that one out,
aren't they?
Speaker 2 (28:34):
Indeed they are.
Speaker 1 (28:35):
Now, louis, just finally wrapping up today.
Thanks for your wrap-up.
Most importantly, we bring upour next slide here, the.
The mighty Bears are back.
You mentioned North Sydney, sothe one forecast that everyone
wants from you today is when theBears are back in 2027, how are
they going to perform?
Speaker 2 (28:51):
Oh, my goodness, who knows?
Well, hopefully, because I am along-term Bears supporter
they're going to do really well.
They're going to do really wellindeed.
Speaker 1 (29:03):
Personally, I'd love to see more games at North
Sydney Oval.
The forecast is one game a year.
Speaker 2 (29:07):
To begin with, I think that the plan is they want
to upgrade the facilities atNorth Sydney Oval.
Personally, I don't think theyneed to do that.
It's a great oval as it is andyou it can fit an absolute
capacity of about 15,000, which,if you get 15,000 to an NRL
game, that's not a bad day forthe caretakers.
(29:29):
So yeah, but it's great to seethem back.
I've been going to the localsuburban games the New South
Wales Cup and there's been agood base of supporters, or bear
supporters, attending thosegames every weekend, even though
it's a reserve game.
Speaker 1 (29:47):
That's good grassroots support there.
Speaker 2 (29:49):
It's definitely the bears have still got good
grassroots support.
So if it doesn't work over inWestern Australia I think the
bears will still stick aroundand they will come back to North
Sydney Oval.
But hopefully it does work overin WA.
Speaker 1 (30:02):
I think it will.
The rugby league's prettystrong over there.
Speaker 2 (30:06):
I just recall what happened back in the Super
League days where it didn't workback then.
Speaker 1 (30:11):
Well, I think the whole game abused itself then,
unfortunately for the WesternReds at the time.
But no, it was great to see theBears come back.
What an iconic foundationalteam Indeed.
So no, it was great to see theBears come back.
What an iconic foundationalteam.
Speaker 2 (30:22):
Indeed.
Speaker 1 (30:23):
So long live the Bears.
Speaker 2 (30:24):
Long live the Bears.
Speaker 1 (30:25):
Louis, thanks for the wrap today.
We look forward to catching upat the end of the year to see
how the market performs.
I don't think it's any surpriseto anyone that it's got some
monumental challenges in thenext six months, geopolitically
and locally, and it'll beinteresting to see how it all
washes through.
Absolutely, peter.
I look forward to catching upin six months geopolitically and
locally, and it'll beinteresting to see how it all
washes through.
Speaker 2 (30:42):
Absolutely, peter.
I look forward to catching upin six months time.
Speaker 1 (30:45):
Good on you, thanks, louis, and thank you for joining
us today on Talking Property.
We look forward to catching upwith you in December.
Welcome to Talking Property Today.
I'm joined by SQM Research'sManaging Director, Louis
Christopher, as we preview thesecond half of the Sydney
property market.
Louis, thanks as always forjoining us.
Good to be with you once again.
Louis, what are you predictingfor the second half of the 2025
market in Sydney?
Speaker 2 (00:23):
I believe we'll see a rally in the Sydney housing
market.
I think that's already beenhappening, albeit on a slower
rate, but I think the rate'sgoing to accelerate, based on a
rate cut in July, more certaintyfor the economy going forward
as well, given the fact thefederal election's well and
(00:46):
truly out of the way.
So, yeah, the expectation iswe'll see a rally which will be
fairly wide across the Sydneymarket, but I think for the
outer ring of Sydney inparticular, it's going to be a
fairly strong rally.
Speaker 1 (01:00):
Let's go straight to the rate cut on the 8th of July.
Some people will be watchingthis after the 8th of July.
Some people will be watchingthis after the 8th of July and
the fact will be known.
But do you think it'll be 0.25or will they go more
aggressively?
Speaker 2 (01:12):
It'll be at least 0.25.
It could be 0.5 depending onwhat equity markets do at the
time.
Into the lead up, as we know,we've got a lot of geopolitical
uncertainty that it'll be atleast 0.25.
Speaker 1 (01:24):
Louis, when I read the statements from the RBA this
year and I'll bring up ourfirst slide for today's
discussion.
The RBA have many messagessuccinctly articulated in these
statements, but something that Inoticed in the last three is
this constant preparedness formajor global events that could
(01:46):
impact on the Australian economy, as outlined in our slide here.
What do you make of thesecomments from the RBA in their
statements?
Speaker 2 (01:55):
Oh, no doubt they're becoming increasingly dovish for
the outlook of interest ratecuts and they see interest rate
cuts as a way to create a bufferfor the Australian economy if
the economic geopoliticalturbulence we're seeing gets
worse.
Their fear would be that withthe rise of tariffs and the rise
(02:16):
of more and more conflict, thatis going to see a slowdown in
economic growth, driven by aslowdown in global confidence
towards a global economy.
And so they believe theresponse to that will be to cut
rates now, sooner rather thanlater, to create that buffer for
(02:37):
the Australian economy.
Speaker 1 (02:38):
Now, at the time of recording, trump has sidestepped
Albo at the G7 and headed backto Washington to deal with the
Middle East crisis, and Albo wasgoing to take Trump on about
the tariffs on Australia.
You would suspect and look forrelief in that meeting.
If tariffs, as they're proposedby the US government, land on
(03:01):
the Australian economy, whatdoes that look like for
Australians?
Speaker 2 (03:04):
My understanding of what's and it has been a fluid
situation, but my understandingis that Australia would have a
10% broad tariff rate appliedacross its goods and services.
That is considerably lesscompared to what the US was
applying towards, say, forexample, europe towards China,
(03:24):
towards most other countries.
So, relatively speaking, itshouldn't hit us directly that
hard.
The real potential impact isthe indirect effects of a global
economic slowdown due to othercountries being hit hard by
tariffs.
Speaker 1 (03:41):
So we're thinking, when you say the property
market's going to rally in thesecond half of the year, we're
thinking the housing market willbe immune from those factors
and that home buyers won't becaught up in them and they will
respond very favourably,provided employment holds, to
rate cuts.
Speaker 2 (04:00):
That's a key assumption, peter.
Yes.
So if we were to see a scenariowhere we had an absolute
economic route worldwide,creating rapid increases in
unemployment, we would not beimmune to that wave.
So, assuming that unemploymentdoesn't rise rapidly, I think
the combination of rate cutsplus very strong population
(04:22):
growth will drive housing pricesup, not just in Sydney, but in
most capital cities for thesecond half of 2025.
Speaker 1 (04:30):
When we come to the Sydney market, the prestige end
of the market through this ratehiking cycle was clearly the
strongest.
Will that continue to performwell and be the best performer
in the market, or will we seemore life at the bottom end of
the market?
I believe we'll see more lifeat the bottom end in the market,
or will we see more life at thebottom end of the market?
Speaker 2 (04:45):
I believe we'll see more life at the bottom end of
the market.
We will see more first homebuyers enter into the market.
Let's keep in mind that we'restill in a rental crisis.
Rents are still very elevated,so there's a lot of incentive
for renters to turn themselvesinto first home buyers and,
given the incentives driven bythe federal government out there
(05:06):
for renters to do just that,combined with the rate cuts, I
think we'll see a wave offirst-home buyers entering into
the Sydney market.
And, of course, for manyfirst-home buyers, their first
property will be a propertywhich will have to be a very
affordable property.
So it may well be a unit, a oneor two bedroom unit, perhaps in
(05:26):
the middle to outer ring ofSydney.
And it's one of the reasons whywe think the outer ring of
Sydney is going to be theoutperforming area or the
outperforming ring for thesecond half of 2025 and into
2026.
Speaker 1 (05:39):
So affordable housing with still relatively easily
accessible back into the cityfor work, etc.
Correct, yeah, and inpercentage terms, what would you
expect that segment of themarket to move by Louis?
Speaker 2 (05:53):
I think for this current calendar year.
Let's keep in mind we do ourforecasts for calendar year by
calendar year.
So we have for our forecast forthis calendar year housing
prices overall to rise by up toabout 6% in terms of the year
and year change.
I think Sydney's outer west islikely to do more than that.
(06:14):
I don't think it'll hit doubledigits for this year, but I
think the probabilities of adouble digit increase are
increasing for 2026.
So good times ahead.
Good times are ahead, providedthe Middle East doesn't blow up
to the point where the wholeworld goes down with it.
Speaker 1 (06:31):
Okay, well, let's come to that.
Our next slide is about theMiddle East.
David Taylor is an ABCjournalist too.
I follow his commentary andit's pretty reasonable.
Like all of us, he has a slant.
That's okay, reasonable.
You know, like all of us, hehas a slant, that's OK.
But he put this post out whenthe Iran-Israel conflict really
escalated.
What would you make of thisview that Taylor's taken here?
Speaker 2 (06:54):
Yeah, look, it was one of the fears that I had,
which we actually wrote up aboutin our 2024 report.
Yes, About this scenario whereIran blocks the Straits of Homs,
which means that oil supply isseverely constrained worldwide,
which pushes up oil prices,petrol prices, energy prices
(07:16):
overall and creates thisstagflationary event worldwide.
It is definitely a risk.
I think the US will do all intheir power to stop something
like that from happening.
Speaker 1 (07:28):
This scenario that he's outlined here is
essentially a rerun of whathappened in the 70s, wasn't it?
Speaker 2 (07:33):
That is correct.
Now, keep in mind, in the 1970s, it wasn't just Iran that was
creating this shortage of oil,it was OPEC overall.
So we're just talking about thecountry of Iran.
Now Iran, of course, is a major, major, major oil supplier, so
they can certainly have animpact upon the market and they
(07:54):
can certainly have an impact interms of the oil tankers that
run in and out of the Straits ofHoms, which basically import
oil not just from Iran but fromother countries around the area,
including, for example, saudiArabia.
So, no question, it is a risk.
I think the United States wouldforesee this risk and I think
(08:15):
that's when they would bring intheir military power to stop
such an event taking place.
Speaker 1 (08:22):
Because of the havoc it would create on the global
economy if they didn't.
Speaker 2 (08:26):
That's exactly right.
So, for example, they could runtheir naval convoys through the
strait and keep it open thatway, right?
So I think that there aremeasures that can occur which
perhaps might not be able tostop it immediately, but might
be able to stop it within acouple of weeks if Iran were to
take that action.
Speaker 1 (08:47):
Okay.
So, moving on from the MiddleEast, that's a big story and
it's very, very difficult, asyou say, at this fluid stage to
work out where it's going to.
I do want to talk historicalinterest rates, louis, and I
accept your point that the RBAcutting rates will be good for
the property market.
I feel that on a day-to-daybasis as a real estate agent.
But I do want to go back intime.
(09:09):
People somehow believe that thereduction in interest rates
during COVID caused the propertyboom.
People are actually shockedwhen you tell them that how low
the cash rate was before COVIDwas even a thing.
And if we look at our slidehere, in February 2020, the cash
rate was at 0.75%.
It was already at emergencylevels.
(09:31):
It was a decent property marketthen, but it was by no means
booming to the degree that itwent on to boom in 2021.
And when I look at this againnow, five years after, the fact
tells me that, yes, okay, we'vegot a 0.65 reduction in the cash
rate, but the true catalyst forthat wild boom in 2021 was all
(09:53):
the free money that governmentpumped into the economy.
Um, because, at the end of theday, the the cash rate only
moved from 0.75 to 0.1.
The rba didn't have scope atthat time to aggressively cut
rates to see us through covert.
So what's your thoughts nowthat when we bring up our next
slide, we come to um may 2025,we've got a cash rate of 3.85,
(10:20):
down from a high of point four,point three, five in this cycle
and we might go to you know, wemight go to what three point six
on July 8.
Why is that having such a bigimpact on property prices?
Speaker 2 (10:34):
hmm well, if we wind ourselves back to 2019, we must
remember back then migrationrates were not as strong.
The population growth rate ofAustralia was considerably lower
than what we have now, sounderlying demand for
accommodation, while it wasgrowing, was just not growing at
such a great clip that we havenow.
(10:55):
So that's one thing to keep inmind.
Second, the inflation rate thatwe had at the time was a lot
lower than what we've beenexperiencing in recent years, so
the RBA was struggling to tryand create some type of
inflation.
The concern was deflation atthe time, hence the reason why
interest rates were so low.
(11:16):
So the real interest rate thatwas running at the time was
actually quite it was stillpositive, but we were still
running real positive interestrates, and that was putting a
little bit of a drag on theeconomy.
And when you have a bit of adrag on the economy combined
with, say, lower migrationlevels, housing prices struggle
in that environment.
Keeping in mind, though, in thesecond half of 2019 we did
(11:38):
start to see a recovery in thehousing yes, we did after that
federal election, after thatfederal election let's remember
that federal election housingwas very much front and centre.
What was on the election wasnegative gearing.
Yes, it was on the block.
It was on the block and thatcreated a lot of uncertainty in
the housing market in the leadup to that election, so that
(12:01):
also created a bit of a slowdownin the market as well.
And, to your point, what thisshows is that interest rates are
not the be-all and end-all inthe housing market, and I think
that's the point you're tryingto make.
Moving forward to today, yes,we've got a high cash rate but,
as mentioned, we've had higherinflationary rates as well,
combined with the fact we've gotvery strong migration and a
(12:25):
real shortage of properties onthe supply side.
And these are the reasons why Ibelieve a combination of a rate
cut plus strong populationgrowth is going to drive
dwelling prices up, despite thefact that, in absolute terms,
we've got a higher interest,nominal interest rate than what
we had back in 2019.
Speaker 1 (12:44):
Yeah, great answer, louis.
Thank you's.
You know explaining a lot inone go there, but that's a great
outline, thank you.
Speaker 2 (12:51):
You're welcome.
Speaker 1 (12:52):
What would you say?
Percentage terms?
Wages are up by the same periodas well, because they're
obviously higher than they werein 2020.
Speaker 2 (13:00):
Yes, so back in 2019, wages were essentially running
ahead of inflation at the time,but just only by a little bit.
We've actually been in a periodwhere wages has been falling
behind inflation Up until fairlyrecently.
There's been a couple of wageannouncements which suggest that
real wages might actually startpicking up again.
(13:22):
Maybe might actually startpicking up again, maybe.
But yeah, back then we had asituation where real wages were
moving forward a little bit morethan what we've had of late.
Speaker 1 (13:32):
So coming out of COVID, I don't like to keep
going back to COVID, but it isgood to look at history to help
people understand how the marketworks.
Clearly, inflation was wellabove the cash rate.
Speaker 2 (13:43):
Yes, that's right.
Speaker 1 (13:44):
Where now we've got a cash rate of 3.85%, which is
comfortably above the cash rate.
Yes, that's right we're nowwe've got a cash rate of 3.85%,
which is comfortably above theinflation rate, both underlying
and the headline rate.
So what role does that play inthe RBA's thinking on things?
Speaker 2 (13:57):
So when you have a real positive interest rate,
like what we have now, where thecash rates are higher than
inflation, that puts a bit of adampener on the economy, you're
actually trying to slow theeconomy down.
In that scenario, what the RBAnow wants to do is they want to
loosen the economy up a bit, andso this is the reason why
(14:17):
they're dropping the cash rate,and I believe what they'll do is
try to drop the cash rate downto a level which is on par with
the current inflation rate.
Speaker 1 (14:27):
Okay, so that's where you think it'll settle.
Speaker 2 (14:30):
I think it's potentially going to settle at
that time.
Now they may take some time.
If there is significant turmoilin the global equities market,
they may well move quicker.
If the equity market staysstable and Yelp looks reasonably
stable for the global economy,they'll do this at a more slower
pace.
Speaker 1 (14:50):
Obviously, many people have been punished by the
rate setting of the RBA andcaught on the wrong side of the
trade, unfortunately, as theycarried too much debt into an
aggressive rate hiking cycle.
But notwithstanding thosepeople that would give the RBA
an F for fail, how do you thinkthe RBA have managed the last
(15:11):
five years?
Speaker 2 (15:12):
Oh, I wouldn't wanna be a central bank, and I think
I've said this on your programbefore.
I think it's one of the mostdifficult jobs you can possibly
have, because really it's allabout trying to forecast the
future.
Speaker 1 (15:21):
Yes.
Speaker 2 (15:22):
And there is so much uncertainty that that's really
really difficult to do.
I think, on balance, the RBAhas done a reasonable job.
Let's think about it.
We've been through the plague.
We've been through significantgeopolitical uncertainty and in
the end, the economy has notfallen in the heap when it could
have Absolutely, and that is inpart credit to the RBA to being
(15:45):
responsive to what's beenoccurring in the national
domestic economy.
Speaker 1 (15:50):
Yeah, high pressure position, no doubt, but I think
they've managed it admirably.
Once I've agreed witheverything they've done at every
point, I think they probablycould have started cutting late
last year myself, but all in all, I think they've managed the
economy pretty well.
Speaker 2 (16:03):
I think the biggest mistake they made was, you know,
the grand announcement by Loweof no interest rate rises.
Until when was it 2024.
You know, there was no wayanyone could possibly predict
that and yet he came out withthat.
I'm sure he, if he had his timeagain, he again, he would take
(16:25):
those words back.
Speaker 1 (16:26):
Well, he tried to walk it back, but it wasn't very
successful.
Speaker 2 (16:28):
It wasn't very successful, that's right.
Speaker 1 (16:30):
Louis mortgage arrears.
Have we seen some relief therein the bank's books with people
managing the rate cuts that havealready come through?
Is that an improving scenarioin the data?
Speaker 2 (16:41):
It's really early days before we can definitively
say that arrears have turned acorner, Keeping in mind they
never reached alarming levels.
As you know, we measuredistress listings activity and
we note that on our index we'reseeing less properties being
(17:02):
selling under distressconditions here in New South
Wales and Victoria compared towhere we were, say, about 12
months ago, and it's beenfalling in Queensland as well.
So on that measure, I wouldsuggest that we will see
officially a level of arrearswhich will be falling on the
bank's books.
Speaker 1 (17:22):
Look, I think that data there segues with what we
saw as real estate agents Latelast year.
We saw mortgage holders orhomeowners tapping the mat and
walking in and saying I can'tafford to continue to hang on to
this property.
Invariably it was investmentproperties being sold off.
Yes, agents across the industrywere reporting landlords
(17:46):
dumping out of investmentproperties, taking the equity,
putting it against their homeloan.
And what made the rental markettougher is that nine times out
of 10, when you sold a rentalproperty off your books, you
sold it to an owner-occupier,shrinking the rental pool.
But we started noticing thenumber of people, or the volume
of people, who were outliningthemselves as having mortgage
(18:08):
stress started to reduceimmediately when they cut rates
in February.
So again, it's just showing theRBA really we're in tune with
the economy and not everyonewill be happy with their
management, but they did do itpretty well, didn't?
Speaker 2 (18:23):
they, I think, in the scheme of things that they've
done, they've done quite wellmoving along now to something
slightly different.
Speaker 1 (18:30):
The a triple c if we bring up our next slide here,
the a triple c have launched aninvestigation into the rea group
.
I know that you're very deeplyconnected to the industry and
you um get you know, take a lotof perspectives from different
people within the industry andyou get you know, take a lot of
perspectives from differentpeople within the industry.
What, what do you make of thisinvestigation?
Speaker 2 (18:50):
I think I'm glad to see the investigation.
I think re I carry a lot ofmarket dominance.
When you have a situation wherean end consumer home seller is
paying you know what six,000 toput a listing on a website, or
more, that's pretty crazy.
(19:13):
That shows market dominance andthere's no question.
It's undisputed.
Rea have said it themselvesthey're number one in the space
by far and I would agree withthat.
So I'm glad the investigationis going ahead.
I'm looking forward to seeingwhat the ACCC comes out with.
Speaker 1 (19:30):
Yeah, the Real Estate Institute of New South Wales
have opened sent a link to theirmembers asking them to pass
comment straight through to theACCC as to their experience with
with the company.
There's probably two pointsthat really get under my skin
about the way the company hastreated us as real estate agents
.
The first is Australia is byfar and away the most expensive
(19:53):
market in the world to run aninternet ad.
Speaker 2 (19:56):
Yes, it is, that's right Now.
Speaker 1 (19:58):
It could be argued that the website is better than
some of its global peers.
I accept that too to somedegree, but you've just outlined
some costs there which are justcompletely unjustifiable.
The industry made a strategicmistake in the early days.
They said increases from REAdon't concern us, because we do
vendor paid advertising here inAustralia where, globally, the
(20:22):
real estate agent advertises thehouse on behalf of the vendor
and the vendor pays for theadvertising and the commission
in one go at the point of salewhere agents have got this
vendor paid advertising modelwhich allows them to get the
money upfront off the vendor.
So when it was affordable, noone was really concerned about
what these websites were up to.
(20:43):
But fast forward 20 years andwe're at a situation where
they're essentially sending realestate agents broke.
Speaker 2 (20:49):
Well, we must look at it that we're talking about
here a publicly listed companywho has to, for their
shareholders, record profitgrowth year on year on year.
They need to do that.
If they don't do that, thestock price falls.
So there's a lot of pressure togrow revenue.
Now, when you get to the pointwhere you have such a huge
(21:11):
market share as what REA have inthe country, you cannot grow
that market share any further.
So how do you generate revenuegrowth?
You lift prices and since theyhold such a dominant position,
they have that power to liftprices.
Hence the reason why the ACCCare looking into this matter.
Speaker 1 (21:30):
And then the other one that I know gets under a lot
of real estate agents' skin ispostcode pricing, and that's the
equivalent of Qantas' airfares,for example, might be far
higher on routes where they'renot competing with Virgin and
Rex, but when they are competingwith Virgin and Rex they've got
much more manageable pricingscale.
(21:52):
And the REA Group are hittingreal estate agents where there's
a lack of competition, namelyDomain.
Speaker 2 (21:59):
Yes.
Speaker 1 (22:01):
So it can be more expensive to run an ad in
Western Sydney, where domain isnot as strong than it is in the
inner city, where domain holds apresence and is keeping
realestatecom or the REA groupon an even keel to some degree.
And I'm sure these are all ofthe things that the ACCC will be
looking at.
Speaker 2 (22:18):
I'm sure they will be .
I'm sure they will also belooking at, when we speak of
postcode by postcode, whetheradvertising prices are high
simply because a postcode's inan affluent area.
Speaker 1 (22:29):
Well, that's definitely going on.
Speaker 2 (22:31):
Well why?
I mean, it doesn't make anysense.
The cost of doing an ad wouldbe the same whether it's in
Double Bay or in penrith.
Okay, so that's the part whichI find uh dubious, to say the
least oh, it's, it's, it'sdubious, unfortunately.
Speaker 1 (22:51):
Um, the real estate industry walked themselves off
the cliff on this one, yeah, andthey are the ones that are
squealing loudest now, and it'sgreat, and I'm not saying the
people that are taking the fightup on behalf of the real estate
industry are to blame.
It's great that they are takingthe fight up, but there's no
doubt that the real estateindustry had a once in a
lifetime opportunity to unhookitself from this vendor paid
(23:14):
advertising model, being at themercy of media companies that
just keep jacking prices up.
They got off the hook when wewent from print to digital and
then, just through nature,jumped back on the hawk, and 20
years later, the prices areunsustainable and we're in a
world of pain.
Speaker 2 (23:33):
Correct.
Look, the issue we face hereand this directly feeds into our
affordability issues, and thisdirectly feeds into our
affordability issues is thatwhenever you buy and sell a
property in Australia, thetransaction costs overall are
quite high.
That's a combination of stampduty costs, advertising costs
and so forth.
(23:53):
What this lends itself into isproperty owners sitting on a
property not willing to transactEmpty nesters, for example,
property not willing to transactempty nesters, for example, not
willing to downsize because thetransaction costs are huge.
They'll end up spending$150,000, for example, in just
doing the transaction costs, andthat's real money down the
(24:15):
drain.
And so, with very hightransaction costs, this creates
a more illiquid marketplace, andthat's what we need to try and
resolve if we're going toresolve our fundamental
affordability issues in thiscountry.
Speaker 1 (24:30):
Well said, louis.
Moving along infrastructure thenew infrastructure that
Sydney's experienced in the lastfew years is taking hold now.
The metro is, you know, amighty piece of infrastructure
and Sydney siders are learningtheir way around the tunnels etc
.
Is that changing the waypricing in the city is
(24:52):
performing, making previousdifficult to access or isolated
suburbs that are suddenly moreconveniently accessible back
into key arterial roads?
Is that impacting on prices?
Speaker 2 (25:05):
I think it's early days, yet Sydney has shown a
history of this.
I'll never forget when the M2opened up in the early 1990s and
we essentially saw massiveoutperformance in the lead up to
the opening of the M2 and postthe M2 in Sydney's north west,
because that was the area whichdirectly benefited from the
(25:27):
opening of that arterial road.
I think with the expansion ofSydney's metro we will see
localities which are close by bepositively influenced by that.
For example and this is alittle bit out there and I don't
recommend anyone take advantageof this, this view or this tip
(25:49):
I think North Sydney, inSydney's lower North Shore, may
well outperform over the mediumto long term because it's become
quite a hub, a transport hubwhere you've got the normal
railway line there, plus a metro, plus you've got a great bus
system and I think potentiallyyou could see some
(26:11):
outperformance there.
But we will see outperformance,I think, in Sydney's west as
well, for reasons I mentionedearlier, but also because we're
getting closer and closer to theopening of the second airport
yes, indeed, and I think that'sgoing to see a bit of a mini
economic boom in Sydney's south,west and west.
Speaker 1 (26:29):
Even if you're not into public transport, the way
Sydney's roads and traffic flowis at the moment, it's nearly
for want of a better word it'snearly forcing you, or inspiring
you, to get onto the publictransport system, isn't it?
Because traffic jams, you know,I had to go west one Saturday
(26:50):
night a few weeks ago and therewas four lanes of traffic from
Haberfield M4 to St Clair.
Wow, ok, on a Saturday night,now it was vivid.
I don't do that run regularly,or very regularly at all, of a
Saturday evening, but I justcouldn't believe it and I'll
never forget.
When Chris Minns became Premier, the Friday before the election
(27:14):
day, I was in the radiolistening to a Liberal Minister
talking about what greatinfrastructure they had left the
city with and why they weredeservative another term.
And it just so happened that Iwas on the m4 heading west on
that morning as well, and againit was bumper to bumper traffic
from Haberfield back past theold underland there at Walgrove
Road quite clearly that messagedidn't really come through to
(27:36):
those or stuck on the motorway.
Speaker 2 (27:37):
That and I just looked at.
Speaker 1 (27:39):
I looked at those people heading east and said you
know they would be nearlyfalling out of the car door
listening to this message,because nothing's changed for
them.
They're in bumper to bumpertraffic still, just with an
extra lane of it Once again.
Speaker 2 (27:50):
I hate to harp on this.
We can put in, and we have putin, great infrastructure.
But if we keep growing the waywe are, in terms of underlying
population growth, sydney's beenup at 2% per annum Okay, that
infrastructure hits capacityreal quick.
Now I don't know if you've beentaking the metro of late.
(28:11):
I do from time to time.
I can tell you first thing inthe morning.
All those metro trains areabsolutely jam-packed.
You cannot get on them.
Speaker 1 (28:20):
That's the point I was getting to.
All the infrastructure thatwe've been through, the
construction fatigue, all theconstruction that the city has
experienced is for the nextgeneration, not the last,
correct, and I think people arestarting to work that one out,
aren't they?
Speaker 2 (28:34):
Indeed they are.
Speaker 1 (28:35):
Now, louis, just finally wrapping up today.
Thanks for your wrap-up.
Most importantly, we bring upour next slide here, the.
The mighty Bears are back.
You mentioned North Sydney, sothe one forecast that everyone
wants from you today is when theBears are back in 2027, how are
they going to perform?
Speaker 2 (28:51):
Oh, my goodness, who knows?
Well, hopefully, because I am along-term Bears supporter
they're going to do really well.
They're going to do really wellindeed.
Speaker 1 (29:03):
Personally, I'd love to see more games at North
Sydney Oval.
The forecast is one game a year.
Speaker 2 (29:07):
To begin with, I think that the plan is they want
to upgrade the facilities atNorth Sydney Oval.
Personally, I don't think theyneed to do that.
It's a great oval as it is andyou it can fit an absolute
capacity of about 15,000, which,if you get 15,000 to an NRL
game, that's not a bad day forthe caretakers.
(29:29):
So yeah, but it's great to seethem back.
I've been going to the localsuburban games the New South
Wales Cup and there's been agood base of supporters, or bear
supporters, attending thosegames every weekend, even though
it's a reserve game.
Speaker 1 (29:47):
That's good grassroots support there.
Speaker 2 (29:49):
It's definitely the bears have still got good
grassroots support.
So if it doesn't work over inWestern Australia I think the
bears will still stick aroundand they will come back to North
Sydney Oval.
But hopefully it does work overin WA.
Speaker 1 (30:02):
I think it will.
The rugby league's prettystrong over there.
Speaker 2 (30:06):
I just recall what happened back in the Super
League days where it didn't workback then.
Speaker 1 (30:11):
Well, I think the whole game abused itself then,
unfortunately for the WesternReds at the time.
But no, it was great to see theBears come back.
What an iconic foundationalteam Indeed.
So no, it was great to see theBears come back.
What an iconic foundationalteam.
Speaker 2 (30:22):
Indeed.
Speaker 1 (30:23):
So long live the Bears.
Speaker 2 (30:24):
Long live the Bears.
Speaker 1 (30:25):
Louis, thanks for the wrap today.
We look forward to catching upat the end of the year to see
how the market performs.
I don't think it's any surpriseto anyone that it's got some
monumental challenges in thenext six months, geopolitically
and locally, and it'll beinteresting to see how it all
washes through.
Absolutely, peter.
I look forward to catching upin six months geopolitically and
locally, and it'll beinteresting to see how it all
washes through.
Speaker 2 (30:42):
Absolutely, peter.
I look forward to catching upin six months time.
Speaker 1 (30:45):
Good on you, thanks, louis, and thank you for joining
us today on Talking Property.
We look forward to catching upwith you in December.
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