December 18, 2025 • 42 mins
SQM Research's Louis Christopher offers an insightful breakdown on the State of the Market in Sydney for 2025. We unpack why Sydney’s 2025 property market rose overall yet lost steam late in the year.
• three rate cuts then a CPI shock reframing expectations
• supply targets missing by a wide margin
• electricity prices driving inflation and sentiment
• APRA’s soft investor caps in hotter non‑Sydney markets
• migration outpacing new dwellings and lifting rents
• vacancies near 1% and rental affordability strain
• data integrity issues with auction benchmarks
• underquoting eroding trust and fair competition
• first‑home buyer schemes and high‑LVR risk
• late‑year weakness in mid and top‑end Sydney
• unemployment risk and the spectre of stagflation
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_00 (00:05):
Welcome to Talking Property.
Today I'm joined by Australia'sbest property analyst, Louis
Christopher, as we dissect the2025 Sydney property market.
Louis, thanks for joining us.
Nice to be here once again, justbefore Christmas, of course.
Indeed.
It was a good year for property,Louis.
SPEAKER_02 (00:20):
Overall, housing prices were up for most capital
cities, if not all capitalcities, I think, for the year.
So yeah, it was a relativelygood market for home sellers,
property owners.
They certainly had their wealthincrease.
Not so great, of course, forrenters trying to uh tenants
(00:43):
trying to turn themselves intofirst-time buyers to an extent
because prices have gone up alittle bit more once again.
So just stretching theaffordability.
The interest rate cuts, ofcourse, helped the market.
And look, we still recordedeconomic growth overall for the
country, albeit relatively sloweconomic growth.
SPEAKER_00 (01:03):
Indeed.
Well, look, much happenedthroughout the year, and I think
you can, you know, by Decemberyou can forget inadvertently
what happened earlier in theyear.
So let's take a look at ourfirst slide today at the issues
that shaped the market.
So three interest rate cuts inFebruary, May, and August.
The market was thinking a fourthcut may have been coming on
Melbourne Cup Day, but thatquickly changed, didn't it?
SPEAKER_02 (01:25):
That's right, because we had some adverse CPI
numbers come out, uh, which weresuggesting that uh inflation was
a little bit more elevated thanwhat we all thought would be the
case.
SPEAKER_00 (01:34):
The Albanese government, as we know, were
re-elected in May.
That was important because theybrought forward uh their first
uh uh homeowner scheme thatyou've just alluded to that was
stimulatory uh for the market.
Um, did the Albanese governmentdo anything else post-election
that you felt weighed or orimpacted positively on the
market?
SPEAKER_02 (01:54):
Well, we all know that they are endeavoring to
increase supply uh of dwellings.
Their target of 1.2 milliondwellings by mid-2029 uh still
stands.
Uh however, the run raterequired on that continues to
rise uh because they're notmeeting their year-on-year
(02:16):
targets at this point in time.
So to meet that target, you haveto build about 240,000 dwellings
a year, and it looks like forthis year we'll be building or
completing roughly around165,000 dwellings.
SPEAKER_00 (02:30):
So well behind the run rate required as you.
SPEAKER_02 (02:32):
Absolutely.
And so what that means, ofcourse, is the run rate required
goes up if they're going to meettheir target by 2029.
SPEAKER_00 (02:38):
We saw inflation falling nicely during the year
and then suddenly it jumpedagain.
Yes.
Do you think that was governmentdriven or global driven or a bit
of both?
What caused the inflation rateto pop essentially lately?
SPEAKER_02 (02:50):
The number one reason why inflation popped was
electricity prices.
Okay.
The latest read shows thatelectricity prices across the
country rose by 37% the last 12months, which is just a huge
number.
SPEAKER_00 (03:02):
Price of energy is in everything.
SPEAKER_02 (03:03):
Yeah, absolutely it is.
Uh so that's been the primarydriver of why we've got a little
bit higher inflation than whatwe all hoped.
Uh, what's driven that?
Uh look, I think it is acombination of global factors
plus domestic factors in theform of the country attempting
to get to net zero.
Uh, and that has meant thatthere's been less investment in
(03:27):
coal-powered uh uh plants, whichhas affected our base load
supply and capacity.
SPEAKER_00 (03:34):
Do you feel that the Trump tariffs and everything
that was going on there that wastalked about a great deal
earlier in the year, um did thatplay any role in in global
inflation later in the year?
SPEAKER_02 (03:44):
I can't comment about global inflation where
it's had an impact yet.
It it doesn't appear so.
Uh, but when we look at what'shappening with domestic
inflation, the the core reasonwhy we've had a CPI increase
once again has been electricity,overall housing costs, less so
(04:05):
imports, from what I can see.
It's mainly to do with energycosts.
SPEAKER_00 (04:09):
Yeah, and there's no no end in sight.
SPEAKER_02 (04:11):
Not at this point.
That said, though, uh one of theprimary reasons why it went up
by 37 percent is that rebatescame off.
You recall that the federalgovernment had rebates on on
electricity, and thatartificially lowered the
electricity price.
Then the rebates came off, andso there was this huge jump.
SPEAKER_00 (04:30):
It fed straight through the inflation rate.
SPEAKER_02 (04:32):
That's right.
So I I don't think we'll seeelectricity prices rise again by
say another 37 percent for 2026,uh, because you this adjustment
to exclude the rebates willeventually wear through the
system.
SPEAKER_00 (04:46):
Uh coming back to our slide, late in the year, um
APRA intervened in the mortgagelending market.
Just tell us about what uh APRAwas up to there.
SPEAKER_02 (04:55):
Yeah, so look, it it over long and short of it, APRA
is just looking to try and puton caps on investor activity.
But these caps are nowhere nearas aggressive as what we had in
2017 and 2018.
And the truth is that these capshave not been hit by any of the
major banks.
(05:15):
So they're trying to minimizehigher risk lending.
Uh and I don't think we're goingto see a material impact upon
the market because of thesecaps.
Because I just don't see thembeing actually the thresholds
that they've actually set up, Idon't think we'll actually hit.
SPEAKER_00 (05:33):
And am I correct in saying that this was probably
aimed at cooling markets otherthan Sydney and Melbourne?
Because we're not seeing rampantinvestor activity and
speculation in Sydney.
I know they're definitely not inMelbourne, but you do have
markets like Perth, Brisbane,and Adelaide that correct me if
I'm wrong, they're running atdouble-digit growth.
SPEAKER_02 (05:53):
Yeah, that's exactly right, plus a number of coastal
regions around Australia, plusDarwin that's been rising at
that rate as well.
Uh so yeah, it's true.
Sydney and Melbourne are not inany type of boom or anything
like that.
It's been uh the other cities uhwhich uh potentially has forced
APRA's hand.
SPEAKER_00 (06:13):
Louis, coming to migration, um the IPA um is our
source here.
468,000,390,000 net migrationinto Australia in the 12 months
to September 30, 2025.
What impact does that have onhousing?
SPEAKER_02 (06:30):
That's an estimate at this point in time.
I generally like to go off theuh ABS immigration numbers, and
that they're showing a littlebit of a slower rate than that,
but nevertheless, it is at alevel that is above what we had
prior to COVID.
Uh and so if that number turnsout to be correct uh for 2025,
(06:51):
that means that the overallpopulation would have expanded
by about 580,000 people.
Uh we, as mentioned, we'veprobably built about 165,000
dwellings this year, uh, andtherefore those two numbers just
don't mix very well at all.
Uh, demand would be definitelyhigher than supply.
(07:11):
Now, I happen to believe that uhpopulation the population growth
rate is actually moderating.
So the ABS's numbers aresuggesting a more of a
moderation than what that numberwould suggest.
SPEAKER_00 (07:23):
Is the government listening?
Less people want to come here,we just don't have the capacity
to house the numbers that we'retalking about.
SPEAKER_02 (07:29):
I'm not sure if the government's listening, but
selling the people is speakingup.
I mean, if you look at recent uhpolls, uh you're you're seeing
the vast majority of Australiansfrom various demographics uh
speaking up and saying, look,our migration growth rate is
just too strong.
And it is, quite frankly.
SPEAKER_00 (07:48):
When it comes to housing, where does that play
out most predominantly?
Is it in the rental market?
Uh is it um in the sales market?
Is it in the homeless rate?
Is it a mixture of all of those?
Because homelessness inAustralia is is a growing and
serious issue, isn't it?
SPEAKER_02 (08:03):
It is, it is.
So you can see it on the groundif you decide to walk through a
CBD one evening.
Firstly, you see it in therental market because net
overseas arrivals are migration,generally speaking, they will
rent first.
And they generally come toSydney and Melbourne first, and
then they flow out to the otherset cities.
It's been an issue for therental market.
(08:24):
It's one of the main reasons whywe still keep recording rental
vacancy rates across the countryat just above 1%.
SPEAKER_00 (08:31):
Which is historical lows, yeah.
SPEAKER_02 (08:33):
That's right.
So you what you wanted as amarket equilibrium is a rental
vacancy rate somewhere betweentwo and three percent.
SPEAKER_00 (08:39):
Uh, just before we move on to your forecast for
2025 and take a deeper lookthere, everyone expected the RBA
to cut rates in July.
They didn't.
There was an uproar.
They went on to cut for thethird and final time in 2025 in
August.
Given what has happened sincethen, and you outlined the
energy rebates and the role thatthat played, um, I know it's a
(09:00):
little bit unfair in hindsightand retrospectively, but did the
RBA cut once too many in 2025?
SPEAKER_02 (09:08):
That's a good question.
Uh I don't I I think they'veactually got it right overall.
Uh look, if they lift rates in2026 and early 2026, then we'll
be able to look back inhindsight.
And and then, yes, I thinkyou'll be right to say, look,
yeah, they cut one time toomany.
But I think when you look at theoverall economy, I mean it's a
(09:29):
mixed bag out there.
That is the reality of it.
You've got lower um lower jobads than what we had this time
last year, uh, as one example.
So employment growth is desdefinitely slowing.
SPEAKER_00 (09:42):
Yeah, we've got a few slides coming up on
employment.
Actually, I do want to dig in onemployment.
Our final point on that slidewas the unemployment rate in
2025 peaked at 4.5 and thendropped back again the next
month.
But employment is an issue,isn't it?
SPEAKER_02 (09:56):
It is an issue, that's right.
And one of our uh uh assumptionswe've got behind our uh model,
behind our models of 26 is thatunemployment will actually trend
upwards.
SPEAKER_00 (10:06):
So these were your four scenarios coming into 2025.
Correct me if I'm wrong, butvery quickly we came down to one
scenario being scenario three.
SPEAKER_02 (10:15):
We did, and that was in February.
So we notified our audience thatwe were down to one scenario,
scenario three, that was veryquick.
I'm glad it happened early.
Yeah, that's that's uh whatwe've been uh basing ourselves
off.
SPEAKER_00 (10:27):
So predominantly a Sydney audience today, and and
you feel based on scenariothree, with the rate cut coming
in the March quarter, populationgrowth around that half a
million a year into the country,Sydney put on six percent where
inflation averaged around threepercent.
Yeah.
So it was double the rate ofinflation.
SPEAKER_02 (10:43):
Yeah, that is correct.
SPEAKER_00 (10:45):
Yeah.
So is the fact that the houseprices uh off a high base are
doubling the rate of inflationfor for the year, is that a
ultimately a positive thing orotherwise for for for the
economy and and and households?
SPEAKER_02 (10:58):
Well, I guess it depends on who you are.
If you're an existing propertyowner, fantastic, happy days.
If you're not in the housingmarket, you're being left
behind.
SPEAKER_00 (11:07):
And that's what's happening in in our country at
the moment, is it, is that thehaves of of are getting further
in front than the have nots, whowho are just finding it very,
very difficult to keep up,essentially.
SPEAKER_02 (11:19):
That's exactly right.
If it keeps going, it's going tocreate uh in an increasing
amount of social incohesion.
SPEAKER_00 (11:27):
Would you say we're on that path now?
SPEAKER_02 (11:28):
And it's it's we've been on this path for a long
time, in my view.
And you can tell that by thehome ownership rates because
they've been falling away over along time now.
Uh I think this is going to be amajor problem uh on our hands
when we have home ownershiprates fall below 60%.
Yeah.
Uh so they're just hoveringabove 60% now.
(11:49):
They below they fall below 60%,and I think that'll have major
ramifications for elections.
SPEAKER_00 (11:56):
I was going to touch on politics uh with all of this
because as the years gone on,these issues are becoming more
acute.
The government of the dayrepresents a larger and larger
component of the economy.
That's right.
Um, there's more people that aregoing from the private sector to
the public sector.
Um, cost of living is istrending up, and people's
(12:17):
lifestyle per capita, uh,generally speaking, is going
backwards.
But the Labour Party werere-elected with a thumping uh
majority, and if you look at thecurrent polls, um they're
essentially wiping the LiberalParty off the map.
SPEAKER_02 (12:32):
They are for now, that's exactly right, but I
think they've got some majoreconomic challenges where the
voting population could easilychange their view on the Labour
Party.
SPEAKER_00 (12:43):
I did note uh Wayne Swann's uh post-election
analysis, and he said that oursupport is far and wide, but
it's not very deep, so let's notget ahead of ourselves.
Yeah, probably probably fairlydecent message for him to be
telling um the party.
SPEAKER_02 (13:00):
Look, I I think that's a fair call.
I mean, let's remember the uhelection prior to 2007, where
Howard the Howard government hadcontrol of both sides of the
House.
And in the 2007 election, theycompletely lost government.
That's right.
Yeah.
So it can happen very quickly.
SPEAKER_00 (13:17):
You know, John Howard openly says that uh
there's no point controllingboth sides of Parliament and
using it.
Yes.
Uh so he did use it and itbackfired on him.
So it will be interesting in2026 to see whether uh the
Albanese government stayscentered or it does push further
ideologically.
SPEAKER_02 (13:35):
Look, I I think if we see unemployment continue to
rise and get up beyond 5percent, if we continue to
continue to see stickinginflation uh with ongoing surges
in energy prices, that scenarioI think the voting population
(13:56):
will have little patience for.
And especially over and abovethat, if immigration levels keep
surging, that will not beacceptable to the public.
And they'll vote.
SPEAKER_00 (14:07):
There is a name for that scenario of just outlined
stagflation, isn't it?
Correct.
Everyone talks inflation,deflation, disinflation, and
stagflation is the one that'sconstantly overlooked.
SPEAKER_02 (14:17):
And it's the one that the central bankers get
most concerned about becausethey're kind of stuck in a in a
in a corner.
Correct.
Uh if they lift interest rates,unemployment will go up further,
they'll enter into recession.
If they cut rates, inflationwill likely go up.
Uh so it's a it's a bad scenariofor any central banker.
SPEAKER_00 (14:35):
Indeed, it is.
Louis, let's have a look atunderquoting.
As we can see here, 25 New SouthWales agencies are under fire
for underquoting.
Out on the field, so being alittle bit more micro now in our
analysis, we all year have hadhome buyers walking into house
and saying, What's the guide forthis property?
And we'd tell them the guide.
So let's say we would say theguide's 1.5.
(14:56):
They were saying things to uslike, Well, I wouldn't pay 1.8
for this place.
It's like, hang on, the guide'sone five, why would you say uh
you wouldn't pay 1.8 for it?
So well, that's what happens inthe marketplace.
So buyers are absolutelyconditioned to disbelieve the
price guide that they're quoted,whether it's accurate or not,
and they're adding 10, 15, 20,in some cases 25% to what they
(15:20):
think the property will go forabove the agent's price guide
based on their experiences inthe market.
It's been a red button, hot hotbutton issue all year.
Have you got any data that tellsus what properties tend to sell
for above the agent's priceguides across the board?
SPEAKER_02 (15:38):
Look, I don't have data at my fingertips on this,
but I can tell you we've beenmonitoring underquoting since
last year.
And the first quarter of us aremonitoring this, I think was the
June quarter 24.
And I recall we found over 4,000instances in one quarter alone
(16:00):
of absolute underquoting.
So this was a situation wherethe price guide was X, the
property would pass in, and thenthe private treaty asking price
when it was posted was more than10% of the original auction
price guide.
We found 4,000 instances of thatin one quarter across New South
Wales.
SPEAKER_00 (16:20):
So the Sydney Morning Herald and the Melbourne
Age went really, really deep onthis issue throughout the year.
Yeah.
And that was their findings aswell, is that the most certain
and obvious example ofunderquoting is a property that
uh sells well above the agent'sprice, as fails to sell well
above the agent's price guideand then is advertised for a
number completely disconnectedto what the price was during the
(16:42):
campaign.
Correct.
Yeah.
So at the moment there's there'sone real estate agent which we
don't need to name that's that'sbeen absolutely front and center
as being uh uh the profile, youknow, the the the high profile
casualty of the stategovernment's war on
underquoting.
Uh is that fair or is thatmessaging to the rest of the
industry what they're doing tothis particular fellow?
SPEAKER_02 (17:04):
I can't comment on that particular agent, but what
I can tell you is that throughthe data, what we have found are
regular culprits.
Yes.
Uh just people who are doing itand groups and shops that are
doing it time and time and timeagain.
SPEAKER_00 (17:21):
And hence these 25 agencies have been highlighted
here and they're probably doinga deep dive on them.
SPEAKER_02 (17:26):
Like I said, look, best wouldn't be wise for me to
comment specifically.
Uh, but all I will say is thatwe are monitoring uh the
underquoting through data uhmonitoring.
We are sending on our data ontothe government, onto the
Department of Fair Trade.
And I know that's just one oftheir tools that they use in
this space, and I know thatthey've been more and more
(17:47):
active in this space in recentyears than where they were, say,
five years ago, ten years ago.
They have data, they havemultiple points of evidence now
uh to catch out these people whodo this.
SPEAKER_00 (18:01):
Yeah, they do.
Look, we uh have beeninvestigated for underquoting
consumers are unhappy with whata property sells for above the
price guide.
There's only one instance in2025.
Um the Department of Fair Tradeseemed to have a set criteria at
how they come at the agent, andone of those is uh you know a
multi-point explainer.
Um, the agent needs to send theagency agreement or
(18:24):
communication with the vendor orcommunication with prospective
uh buyers, how is the offerprocess handled?
Um they signed us away and gaveus a clean bill of slate on that
one complaint.
But um what they are looking todo in that example is have the
agent self-incriminate.
One of the ways the uh agent'sself-incriminating is fudging
the paperwork.
(18:44):
Yeah.
Where they retrospectively uhare under investigation and they
go, when they pull all theirpaperwork out, they go, This
doesn't look good, and theystart doctoring doctors.
SPEAKER_02 (18:52):
Well, they've got to be very, very careful about that
because they they're digging amajor hole for themselves.
Oh, it's not.
They could be just done if theyget caught doing that, they
could be caught breakingmultiple laws that are far more
serious laws to break, otherthan just underquoting.
Yeah.
Right?
You are not meant to fudgedocuments.
That is a very, very seriousmatter.
(19:15):
Yeah.
Uh look, I'm not the expert interms of how serious it is, but
uh all I know is that over inthe financial services sector,
if you get caught doing that,there are criminal possibilities
for that in terms of criminallaws being broken.
SPEAKER_00 (19:31):
And rightly so.
So that so the agent, uh themost high pro high-profile um uh
agent caught up in all of thisat the moment stands accused of
that very act.
Yeah.
There's one area, uh, Louis,that the regulator is not
pushing into in terms ofcontrolling underquoting, and
it's a contentious point I'mgoing to make.
(19:52):
When when they were looking tooutlaw dummy bidding, the
Department of Fair Trading tookpowers upon themselves to.
Be able to penalize vendors whowere caught dummy bidding.
Now, as part of thisinvestigation with The Age and
the Herald, they recorded a realestate agent at a high-profile
firm in Melbourne coaching avendor on how to underquote and
(20:16):
why they should underquote andthe benefit in doing so.
And it was blatant.
And the agent was uhsubsequently sacked from uh his
position when the age gave thisrecording to to his superiors,
and they said that's not who whowe are, and and and this
person's got to go, and I'll letothers decide whether that's a
company wide culture or or thisparticular agent.
(20:40):
But should vendors who knowinglyparticipate in underquoting
should they should they be inthe firing line?
Because they're as equallyresponsible for misleading home
buyers as what real estateagents are if they go along with
it?
SPEAKER_02 (20:54):
Yes, I do.
I I think if uh uh vendors areknowingly doing it, they're
going along with it, they'rejust as uh guilty as the agents
themselves.
Let's represent let's rememberthe agents representing the
owner.
Yes.
Yeah, so so there's a lot oflaws surrounding uh principal
(21:16):
and agency relationships.
Uh and so yeah, the the ownerreally is just as culpable.
And in some respects, um the thethere is an obligation on the
owner to see exactly what isgoing on.
So I don't think it's enough forthe owner to say, oh, I didn't
know what was going on.
(21:38):
Uh they ought to beunderstanding what the agent's
doing.
SPEAKER_00 (21:41):
Yeah, now the Department of Fair Trade gave
agents plenty of scope to runtheir auctions.
Yeah.
Anything up to 10% was kind offair game.
Some days it'll go the full 10%above, some days it might only
go 5% above, and and the vendorwill have to lower their price
to get the sale and all the restof it.
But we are talking here aboutagents and vendors who
(22:02):
systematically, not once off,but systematically underquote by
20, 25 percent.
They'll shamelessly put a priceguide of 2.2 on a property uh
with a reserve of 2.8 or 3million.
That's what we're talking abouthere, aren't we?
SPEAKER_02 (22:16):
Well, it goes back to your opening comment on this.
Home buyers out there arestarting to take this into
account.
This is concerning because whatit does is that it reduces
confidence in the system ofbuying and selling property
overall.
It reduces confidence in what Icall the asset class of real
(22:36):
estate.
That's no good for anyone overthe long term.
Uh, you want more participants,you want liquidity in the
market.
Uh by having more distrust inthe market, you're gonna see
less sales activity.
That's gonna create supplyissues.
Um, you know, it's just no goodfor anyone trying to do a hard
uh day's job in this business.
SPEAKER_00 (22:57):
Well, that's the point I was going to make to
close this off is that agentswho tell the truth can't
survive.
If you've got two$2 millionproperties on the market, one's
with agent B who's quotingauction guide of$1.6 and another
agent who's quoting$2 millionfor their$2 million house, I can
tell you that the honest uh thehonest Joe is going to have no
one at their inspection andthey're all going to be down the
(23:20):
road of the$1.6 millionopportunity.
SPEAKER_02 (23:23):
Yeah, that that's exactly right.
And so you know that createsfrustration amongst honest
agents.
They then end up having twooptions.
They leave the industry, or it'slike you can't if you can't beat
them, join them.
SPEAKER_00 (23:36):
Yeah, that's right.
I don't know if you realizethis, but Graham Samuel's son
down in Melbourne, the ACCC.
It was the ACCC Graham Samuel.
Yeah, his son was done forunderquoting, a real estate
agent.
SPEAKER_02 (23:46):
Yeah.
SPEAKER_00 (23:47):
He probably started as an honest Joe.
SPEAKER_02 (23:49):
Yeah.
SPEAKER_00 (23:49):
And ended up getting nailed for underquoting because
that's the industry that he'splaying.
SPEAKER_02 (23:53):
That's the industry, and that's what we've got to uh
stamp out.
We've got to stamp out as muchas many bad things as possible
in the industry.
And you know, as you know, oneof my bugbears is auction
clearance rates, but we won't gothere today.
SPEAKER_00 (24:05):
Oh, we might actually.
Let's bring it up.
Fair enough.
Let's get right into it.
That uh brings us up to our nextslide here, Louie.
Um I'll just slowly go throughthis because there's a few
levels on this today.
This is domains Sydney, and I'llcome back to the importance of
the word Sydney.
Sydney auction clearance ratefor the last weekend in November
(24:26):
2025.
Now, as is customary, um, everySaturday evening when you look
at these results, there were1,500 um auctions scheduled, but
only 993 were reported, givingus, as we can see there, a
clearance rate of 63 percent.
This happens every Saturdaynight.
This is not a one-off for thosethat are uh not following this
(24:47):
as closely as you and I, Louis.
There's a massive unreportedamount each week.
So much so that is there aconsistency now in the clearance
rate of the unreporteds, if thatmakes sense.
SPEAKER_02 (25:01):
When I've looked at this in the past, uh I would
suggest to you that circus 70percent of what's unreported are
failed results on the day.
70 percent.
Yeah.
Now they may sell a couple ofdays afterwards, but that's not
the point.
Right.
On the day, you know, sellingunder the hammer, uh 70% of
unreported, in my view, overall,as an average, are failed
(25:25):
campaigns.
SPEAKER_00 (25:26):
Okay, so that would cause future vendors and
prospective vendors to view thewhole sale process differently
if that was all factored backinto the equation, wouldn't it?
SPEAKER_02 (25:37):
Potentially, but there's another way I like to
look at it.
Yep.
Um the benchmark where agentscompare their own personal
auction clearance rate uh versusthe stated mainstream media
auction clearance rate, that'sthe problem.
So if you're an agent, let's sayyour genuine clearance rate is
say 55%, okay?
(25:59):
And the benchmark is saying, oh,we did 65%, 70% on that day,
you're going to think you're notdoing a good enough job.
You're you're you you got you'reunderperforming compared to
benchmark.
But the the problem is not theagent, it's the benchmark.
SPEAKER_00 (26:14):
Oh, indeed, yes.
SPEAKER_02 (26:15):
The benchmark is the issue.
And strangely enough, weactually get a lot of support
from various real estate agentswith our auction clearance rate
series.
Because they know, number one,we're collecting all the
results.
SPEAKER_00 (26:26):
It can be relied upon.
SPEAKER_02 (26:27):
It can be relied upon, and then it's a better
benchmark for the industry touse.
It's as simple as that.
It's a complete benchmark, itdoesn't have to be revised every
week.
And we're getting more and moresupport for it.
SPEAKER_00 (26:39):
Oh, good.
Well, as you should, becauseit's a legitimate number.
SPEAKER_02 (26:42):
The only issue is that it's not as timely.
It doesn't come out on aSaturday night.
We need more time to get all theresults in.
It comes out Tuesday afternoon,as you're aware.
So timeliness is always one inthis game when it comes to
reporting of housing data.
But there's a trade-off betweentimeliness versus accuracy.
SPEAKER_00 (27:01):
Oh, well, let me talk to you about one of those
trade-offs now, if I may.
Keeping in mind, I said this isDomain's Sydney auction
clearance rate.
And if we can go to our nextslide here and look at what
constitutes part of Domain'sSydney auction clearance rate on
this particular weekend, andthis happens every weekend,
Armadale.
Now, how far out of Sydney isArmadale, Louis?
(27:24):
It's a long, long way out.
It would be closer to Brisbanethan than Armadale, it would be,
absolutely.
These results formed part ofDomain's Sydney auction
clearance result of 63 percenton that particular weekend.
SPEAKER_02 (27:36):
Yeah.
SPEAKER_00 (27:37):
Coming over again, Salamander Bay.
PRD didn't have a particularlystrong day on this day.
Salamander Bay, what's that, twohours out of Sydney?
SPEAKER_02 (27:46):
I would have thought so.
SPEAKER_00 (27:47):
Yeah.
That's in the Sydney auctionclearance rate.
Yeah.
And the reason this is importantis that the main's data, as we
know, talking about timeliness,is picked up by the mainstream
media and then disseminatedthrough all of its channels.
There's Channel 9 channels andprobably some other media picks
it up as well.
Yeah.
And everybody's making, drawingconclusions and making decisions
(28:09):
based on data that's that'shorrendously poor.
In this weekend, the propertydid actually sell.
Ballinar, if you can believe it,was counted in the Sydney
auction clearance rates todomain.
Now, you're uh what are you twohours out of Brisbane when
you're in Ballinar, I think thepeople of Ballinar would be
shocked.
SPEAKER_02 (28:26):
So is this happening each week?
Like have you noticed thisbefore?
It's not an aberration.
SPEAKER_00 (28:30):
It's not an aberration, it's just something
a data error.
It's just something that's beengetting under my skin for a long
time.
That's really odd.
And the reason I'm raising it,because I want to now start this
we're talking about the mediacycle here and the timeliness.
Yes.
But more and more people aremaking decisions around AI.
And this thing about AI'sintelligence is a nonsense.
(28:51):
AI is not an intelligence.
It's just drawing on existinginformation.
So if you're saying to AI, giveme some intel about the real
estate market so I can make somedecisions, it's drawing on this
sort of dodgy data.
SPEAKER_02 (29:05):
That is true.
That is true.
It would be interesting to seewhether domain are using AI to
compile it.
This could be a classic AImistake to include all these
auctions across New South Airsas though they're part of
Sydney.
But then again, I think AI isactually smarter than that.
So I I it's a it's a questionworthy of posing to domain why
they're doing it.
SPEAKER_00 (29:25):
So if we if we bring up some suburbs in Sydney, now
not every suburb performed asstrong as these, but just to
give people an idea of how thedata discussion can be blown off
track, Ashfield, which is reallystrong at the moment, like
Ashfield has had a good year,you can see we're running at 100
percent there.
If we go across to Kingsgrove,100 percent.
So the auction clearance rate umfor homeowners in Kingsgrove is
(29:48):
is colored by what's happeningin Salamander Bay.
Bring up our our next slidehere.
I recently uh uh saw Terry Ryderof Hotspotting speak, and he
gave a to a terrific speech.
But one of uh uh the points thathe made is in the data companies
how they come up withdrastically different
conclusions as to how certainmarketplaces are performing at
(30:09):
the same time.
SPEAKER_02 (30:10):
Ah, yes, yes.
SPEAKER_00 (30:11):
Yeah, so can can you give us some insights into
what's happening here, Louis,that we get so so much to
disparate.
SPEAKER_02 (30:17):
Yeah, look, there's various methodologies out there
in terms of trying to calculatehousing price indexes.
I've had disputes in the past onthe most quoted methodology
being the one that comes fromQuartality, previously known as
Core Logic, with their dailyhousing price series.
And I found some issues with ita long time ago, which I think
(30:37):
they addressed some of them, uh,but uh I still have issues with
it today because fundamentallyyou cannot measure housing
prices on a daily basis becauseof the lags in the data.
There are various methodologiesout there.
Domain has their series,CoreLogic has their series, Prop
Track has their series.
(30:58):
We've decided in terms of whatwe publish out there, we want to
be a little bit different.
We just want to publish askingprices, so we do measure median
house prices based on actualsales as well, of course.
Uh and yeah, you see some hugevariations.
Often the variations um comefrom smaller cities.
Uh so you know I often see hugevariation in terms of what's
(31:22):
reported for the city of Darwin.
Yeah, or Hobart.
There's a five year old.
Hobart, that's another one as anexample.
Sometimes Perth can be right offuh in terms of the various
methodologies uh that arequoted.
SPEAKER_00 (31:34):
Uh so the smaller the sample, the easier it is to
have it distorted.
SPEAKER_02 (31:38):
To have a distortion.
That's exactly right.
Now let's think about Darwin fora moment.
I mean, it is quite a smallcity.
SPEAKER_00 (31:44):
So just on that point, I think people should
know this can happen in suburbanSydney as well.
If you've got a waterfront.
If you've got a waterfront uhpeninsula and and three
waterfronts tend to, forwhatever reason, trade within a
short time frame, that'll sendthe median price up, then it'll
be all advertised on all of theuh the real estate articles.
SPEAKER_02 (32:03):
Well well, Peter, what you will find is that you
will rarely see anything from uswhere we publish the top ten
best performing suburbs for acapital city.
We don't put those stories out.
And there's one good reason forthat, is because the data just
can't properly measure changesfrom one period to the next
(32:25):
accurately and consistentlybecause of the small sample data
set you get out of a out of asuburb.
And so you will see suburbsreported, you know, up 40%,
okay, when the when the medianincrease across city might be
up, say six percent.
But I can assure you that thatsuburb has not risen by 40% in
(32:45):
value.
All that's happened, all that'shappened is that in one period
the the bottom end of the marketsold a little bit more than the
top end of the market, and thenthe next corresponding period
the reverse has happened.
And so the median artificially,median price artificially jumps
up, but the real market hasn'tmoved by that much at all.
SPEAKER_00 (33:04):
So can can we say that you're a data purist versus
a media company that's got adata company on the sideline
that's looking forsensationalism in the property
market?
SPEAKER_02 (33:15):
I'd like to think that, yes, that's exactly right.
Um I mean, look, property datais it is definitely challenging.
It's very different to sayequities data, which is highly
standardized.
Let's think about it.
Every property is fundamentallyunique.
Even property A versus propertyB, right next to each other, a
(33:36):
say, for example, it's a semi,uh, three-bedroom semi, I
guarantee you you will finddifferences between the two if
you walk through in terms ofquality, wear and tear, and so
forth, which impact upon theprice.
SPEAKER_00 (33:48):
Yep, home buyers will tell you that every day of
the week.
SPEAKER_02 (33:51):
Exactly.
So so this is the thing.
Um, and and you know, our job isto try and standardize the data
as best we can, but it's it'snever going to be perfect.
Perfect, yeah.
The best way to do that ishaving a larger sample set.
When you have a larger sampleset of data, then you're you're
better tracking what's going onin that region uh compared to
(34:14):
say a street or just a suburb.
SPEAKER_00 (34:17):
So now that you've outlined the nuances and
challenges with data, would youbuy and sell real estate based
on uh the research provided byAI or the findings found by AI?
SPEAKER_02 (34:30):
Uh I would go certainly beyond AI.
SPEAKER_00 (34:34):
Because the consumers are being guided by it
increasingly.
I'm not saying it's wrong orwrong.
SPEAKER_02 (34:39):
I've seen, you know, you can look up, for example, a
property valuation from AI ifyou want to.
Uh a free property uh uh AIvaluation.
Uh now I just want to be on therecord, we do not uh our uh
automated valuations are notdriven by AI at all.
And uh I can't say they will befor the foreseeable future
because there are inherenterrors within AI data collection
(35:02):
and and calculations that I cansee.
So I think consumers, uh look, Iknow AI is extraordinarily
convenient to use.
You can just pop in the questioninto Google AI or into Grok.
Um, and look, they are gettingsmarter and smarter.
They've improved from where wewere, say, two years ago, uh,
(35:22):
but they're far from perfect.
Uh, and so you do need to doverification research over and
above what AI may or may nottell you.
SPEAKER_00 (35:33):
Just in closing off on AI, Louis, uh something
interesting that happened to uslast week.
We uh had a matter at NCAT, andthe member um who was overseeing
the situation said to allinvolved if your uh evidence is
produced by AI, we'll completelydismiss your case.
Oh wow, there you go.
So do not come in here withAI-generated garbage because
(35:57):
you'll go straight back out thereasonably easy to spot
actually.
Let's move on a few microsegments of the market um if you
don't mind.
First home buyers and the stategovernment introduced the home
guarantee scheme.
Uh it was introduced on October1.
Lots of uh sensationalistreporting like this here, Louis,
(36:18):
on our slide.
Um, what did the data tell us?
Is this an accurate headline?
SPEAKER_02 (36:23):
Clearance rates, in our view, did initially rise
when uh we saw the uh initiativeannounced in terms of the
change.
When it actually became actionon the ground, uh we didn't see
any material uh rise inclearance rates, and indeed,
auction clearance rates havebeen falling away in Sydney and
(36:44):
Melbourne in very recent weeks.
The scheme has encouraged firsthome buyers to enter into the
marketplace, but I wouldn't saythat in our largest capital
cities that it's moved the dialby March.
SPEAKER_00 (36:56):
That that was our experience.
October was like a shot in thearm, a shot of adrenaline, and
then the further we got throughand past October one, yeah, it
just seemed to have settled downa bit.
And uh, I think when you'retalking about Sydney real estate
and million-dollar properties,buying a million-dollar property
with five percent in is probablynot the wisest move.
SPEAKER_02 (37:15):
Yeah, highly, highly leveraged.
If the market starts to fall,you're going into negative
equity real quick.
SPEAKER_00 (37:22):
And it's not often that the real estate industry
puts a wise message out, butthere's many people in the
industry that have quite rightlypointed out that the seeds of
the subprime crisis in the US in2008 was government policy
putting people into housing whocouldn't ultimately afford it,
and it ended up causing a mass,obviously, mortgage meltdown, as
(37:43):
we know.
Now, this is quarantined tofirst home buyers only, and it's
not as widespread as what theLarge S was in America, but
government policy inducing orencouraging people into housing
that ultimately can't afford itis not is not smart, is it?
SPEAKER_02 (38:00):
No, it it it long term it is counterproductive, in
my view.
It can cause damage to theeconomy.
Uh it can put people intohousing, which really ultimately
shouldn't be there.
Uh so yeah, it it definitelyelevates the risks and creates
potentially more volatility inthe housing market as well.
Uh look, they're doing itbecause they're trying to uh
(38:23):
make housing more affordable,but it's not addressing the root
cause about why housing isunaffordable.
Which is undersupply.
SPEAKER_00 (38:32):
The root cause is understandable.
SPEAKER_02 (38:34):
Undersupply and rampant demand, driven by
excessive population growth.
SPEAKER_00 (38:38):
Yeah.
These were your forecasts forthe rental market on our next
slide here for 2025.
Sydney had a pretty good year?
SPEAKER_02 (38:45):
Yeah, look, Sydney had uh a pretty good year.
Rents rose in line withinflation, uh, gone at a day, so
we're getting rents, rentalincreases of 20% plus, which we
did when we were coming out ofCOVID.
Uh so this was actually not abad year for tenants per se,
though rents still remainelevated in real terms compared
(39:08):
to where we were prior to COVID.
SPEAKER_00 (39:10):
Yeah, no, no one's saying the Sydney rental
market's cheap, that's for sure.
SPEAKER_02 (39:14):
No one is saying the Sydney rental market is cheap,
that is correct.
Uh, you'll see that these uhmedian rents were got therefore
combined dwellings.
So if we were to look at, say,freestanding houses, the median
rent's above a thousand dollarsa week.
SPEAKER_00 (39:27):
Oh, yes, indeed.
Yeah, twelve hundred.
Yeah, I'd say that's what itfeels like in the environment.
That is correct.
Yeah.
Okay.
Louis, um, you just touched onit there about uh auction
clearance rate late in the year.
It feels like for the first timein quite a few years, the top
end or the upper echelons of theSydney market started to cool
late in the year.
Is that that's anecdotal, Reed?
(39:49):
Is is that supported in thedata?
SPEAKER_02 (39:51):
So on our auction clearance rate series, we're now
recording clearance rates inSydney are below 50 percent.
Uh and And last week we recordeda clearance rate which was lower
than the same corresponding weekin 2024.
It's the first week we'verecorded that in all of 2025.
(40:12):
And I like looking at whathappened this time last year
because then you don't have toworry about seasonality.
And let's let's face it, Peter,there's a lot of seasonality at
this time of year.
So yeah, it's uh Sydney in thelast few weeks of the selling
season uh has been weakening.
To me, when I look at the data,it does suggest that the middle
(40:34):
and top end of the market isjust looking more patchy uh
compared to the lower end of themarket or the more affordable
end of the market.
Uh and when I've seen that inthe past, it's generally
commensurate with a slowereconomy as well.
Uh so look, it's early days.
(40:54):
Um, if we were to see thispattern on the opening of the
new season in February 2026, uhthat will be uh a significant
cause for concern.
And City could be slowing uhmore quickly than what I
initially forecasted.
SPEAKER_00 (41:11):
Yeah, well look, just on the ground, what I would
say is coming into the MelbourneCup Day 10 days before, everyone
thought another rate hike was inwas in the pipeline, rate rate
cut, sorry, yeah uh was in theum was in the pipeline.
The data swung very quickly whenthat inflation rate quickly
moved up to 3.8%, and then uhmoney markets and even Michelle
(41:32):
Bullock herself started sayingif this continues, rate hikes
are very much back on theagenda.
Yeah, and and when we saw buyerbehaviour parallel what was
happening in in that space aswell, for what it's worth.
Yeah, it played a role inbuying.
SPEAKER_02 (41:45):
Yeah, I I think sentiment has changed.
There has been disappointmentabout the fact look it's looking
very unlikely we'll see any moreinterest rate cuts in the near
future.
SPEAKER_00 (41:55):
Louis, that's an outstanding wrap on the 2025
Sydney property market.
Thanks very much for your timetoday.
Thanks again, Peter.
We look forward to catching upwith you in 2026.
Indeed.
Thank you for your time today,and uh we look forward to
speaking with you next time onTalking Property.
Welcome to Talking Property.
Today I'm joined by Australia'sbest property analyst, Louis
Christopher, as we dissect the2025 Sydney property market.
Louis, thanks for joining us.
Nice to be here once again, justbefore Christmas, of course.
Indeed.
It was a good year for property,Louis.
SPEAKER_02 (00:20):
Overall, housing prices were up for most capital
cities, if not all capitalcities, I think, for the year.
So yeah, it was a relativelygood market for home sellers,
property owners.
They certainly had their wealthincrease.
Not so great, of course, forrenters trying to uh tenants
(00:43):
trying to turn themselves intofirst-time buyers to an extent
because prices have gone up alittle bit more once again.
So just stretching theaffordability.
The interest rate cuts, ofcourse, helped the market.
And look, we still recordedeconomic growth overall for the
country, albeit relatively sloweconomic growth.
SPEAKER_00 (01:03):
Indeed.
Well, look, much happenedthroughout the year, and I think
you can, you know, by Decemberyou can forget inadvertently
what happened earlier in theyear.
So let's take a look at ourfirst slide today at the issues
that shaped the market.
So three interest rate cuts inFebruary, May, and August.
The market was thinking a fourthcut may have been coming on
Melbourne Cup Day, but thatquickly changed, didn't it?
SPEAKER_02 (01:25):
That's right, because we had some adverse CPI
numbers come out, uh, which weresuggesting that uh inflation was
a little bit more elevated thanwhat we all thought would be the
case.
SPEAKER_00 (01:34):
The Albanese government, as we know, were
re-elected in May.
That was important because theybrought forward uh their first
uh uh homeowner scheme thatyou've just alluded to that was
stimulatory uh for the market.
Um, did the Albanese governmentdo anything else post-election
that you felt weighed or orimpacted positively on the
market?
SPEAKER_02 (01:54):
Well, we all know that they are endeavoring to
increase supply uh of dwellings.
Their target of 1.2 milliondwellings by mid-2029 uh still
stands.
Uh however, the run raterequired on that continues to
rise uh because they're notmeeting their year-on-year
(02:16):
targets at this point in time.
So to meet that target, you haveto build about 240,000 dwellings
a year, and it looks like forthis year we'll be building or
completing roughly around165,000 dwellings.
SPEAKER_00 (02:30):
So well behind the run rate required as you.
SPEAKER_02 (02:32):
Absolutely.
And so what that means, ofcourse, is the run rate required
goes up if they're going to meettheir target by 2029.
SPEAKER_00 (02:38):
We saw inflation falling nicely during the year
and then suddenly it jumpedagain.
Yes.
Do you think that was governmentdriven or global driven or a bit
of both?
What caused the inflation rateto pop essentially lately?
SPEAKER_02 (02:50):
The number one reason why inflation popped was
electricity prices.
Okay.
The latest read shows thatelectricity prices across the
country rose by 37% the last 12months, which is just a huge
number.
SPEAKER_00 (03:02):
Price of energy is in everything.
SPEAKER_02 (03:03):
Yeah, absolutely it is.
Uh so that's been the primarydriver of why we've got a little
bit higher inflation than whatwe all hoped.
Uh, what's driven that?
Uh look, I think it is acombination of global factors
plus domestic factors in theform of the country attempting
to get to net zero.
Uh, and that has meant thatthere's been less investment in
(03:27):
coal-powered uh uh plants, whichhas affected our base load
supply and capacity.
SPEAKER_00 (03:34):
Do you feel that the Trump tariffs and everything
that was going on there that wastalked about a great deal
earlier in the year, um did thatplay any role in in global
inflation later in the year?
SPEAKER_02 (03:44):
I can't comment about global inflation where
it's had an impact yet.
It it doesn't appear so.
Uh, but when we look at what'shappening with domestic
inflation, the the core reasonwhy we've had a CPI increase
once again has been electricity,overall housing costs, less so
(04:05):
imports, from what I can see.
It's mainly to do with energycosts.
SPEAKER_00 (04:09):
Yeah, and there's no no end in sight.
SPEAKER_02 (04:11):
Not at this point.
That said, though, uh one of theprimary reasons why it went up
by 37 percent is that rebatescame off.
You recall that the federalgovernment had rebates on on
electricity, and thatartificially lowered the
electricity price.
Then the rebates came off, andso there was this huge jump.
SPEAKER_00 (04:30):
It fed straight through the inflation rate.
SPEAKER_02 (04:32):
That's right.
So I I don't think we'll seeelectricity prices rise again by
say another 37 percent for 2026,uh, because you this adjustment
to exclude the rebates willeventually wear through the
system.
SPEAKER_00 (04:46):
Uh coming back to our slide, late in the year, um
APRA intervened in the mortgagelending market.
Just tell us about what uh APRAwas up to there.
SPEAKER_02 (04:55):
Yeah, so look, it it over long and short of it, APRA
is just looking to try and puton caps on investor activity.
But these caps are nowhere nearas aggressive as what we had in
2017 and 2018.
And the truth is that these capshave not been hit by any of the
major banks.
(05:15):
So they're trying to minimizehigher risk lending.
Uh and I don't think we're goingto see a material impact upon
the market because of thesecaps.
Because I just don't see thembeing actually the thresholds
that they've actually set up, Idon't think we'll actually hit.
SPEAKER_00 (05:33):
And am I correct in saying that this was probably
aimed at cooling markets otherthan Sydney and Melbourne?
Because we're not seeing rampantinvestor activity and
speculation in Sydney.
I know they're definitely not inMelbourne, but you do have
markets like Perth, Brisbane,and Adelaide that correct me if
I'm wrong, they're running atdouble-digit growth.
SPEAKER_02 (05:53):
Yeah, that's exactly right, plus a number of coastal
regions around Australia, plusDarwin that's been rising at
that rate as well.
Uh so yeah, it's true.
Sydney and Melbourne are not inany type of boom or anything
like that.
It's been uh the other cities uhwhich uh potentially has forced
APRA's hand.
SPEAKER_00 (06:13):
Louis, coming to migration, um the IPA um is our
source here.
468,000,390,000 net migrationinto Australia in the 12 months
to September 30, 2025.
What impact does that have onhousing?
SPEAKER_02 (06:30):
That's an estimate at this point in time.
I generally like to go off theuh ABS immigration numbers, and
that they're showing a littlebit of a slower rate than that,
but nevertheless, it is at alevel that is above what we had
prior to COVID.
Uh and so if that number turnsout to be correct uh for 2025,
(06:51):
that means that the overallpopulation would have expanded
by about 580,000 people.
Uh we, as mentioned, we'veprobably built about 165,000
dwellings this year, uh, andtherefore those two numbers just
don't mix very well at all.
Uh, demand would be definitelyhigher than supply.
(07:11):
Now, I happen to believe that uhpopulation the population growth
rate is actually moderating.
So the ABS's numbers aresuggesting a more of a
moderation than what that numberwould suggest.
SPEAKER_00 (07:23):
Is the government listening?
Less people want to come here,we just don't have the capacity
to house the numbers that we'retalking about.
SPEAKER_02 (07:29):
I'm not sure if the government's listening, but
selling the people is speakingup.
I mean, if you look at recent uhpolls, uh you're you're seeing
the vast majority of Australiansfrom various demographics uh
speaking up and saying, look,our migration growth rate is
just too strong.
And it is, quite frankly.
SPEAKER_00 (07:48):
When it comes to housing, where does that play
out most predominantly?
Is it in the rental market?
Uh is it um in the sales market?
Is it in the homeless rate?
Is it a mixture of all of those?
Because homelessness inAustralia is is a growing and
serious issue, isn't it?
SPEAKER_02 (08:03):
It is, it is.
So you can see it on the groundif you decide to walk through a
CBD one evening.
Firstly, you see it in therental market because net
overseas arrivals are migration,generally speaking, they will
rent first.
And they generally come toSydney and Melbourne first, and
then they flow out to the otherset cities.
It's been an issue for therental market.
(08:24):
It's one of the main reasons whywe still keep recording rental
vacancy rates across the countryat just above 1%.
SPEAKER_00 (08:31):
Which is historical lows, yeah.
SPEAKER_02 (08:33):
That's right.
So you what you wanted as amarket equilibrium is a rental
vacancy rate somewhere betweentwo and three percent.
SPEAKER_00 (08:39):
Uh, just before we move on to your forecast for
2025 and take a deeper lookthere, everyone expected the RBA
to cut rates in July.
They didn't.
There was an uproar.
They went on to cut for thethird and final time in 2025 in
August.
Given what has happened sincethen, and you outlined the
energy rebates and the role thatthat played, um, I know it's a
(09:00):
little bit unfair in hindsightand retrospectively, but did the
RBA cut once too many in 2025?
SPEAKER_02 (09:08):
That's a good question.
Uh I don't I I think they'veactually got it right overall.
Uh look, if they lift rates in2026 and early 2026, then we'll
be able to look back inhindsight.
And and then, yes, I thinkyou'll be right to say, look,
yeah, they cut one time toomany.
But I think when you look at theoverall economy, I mean it's a
(09:29):
mixed bag out there.
That is the reality of it.
You've got lower um lower jobads than what we had this time
last year, uh, as one example.
So employment growth is desdefinitely slowing.
SPEAKER_00 (09:42):
Yeah, we've got a few slides coming up on
employment.
Actually, I do want to dig in onemployment.
Our final point on that slidewas the unemployment rate in
2025 peaked at 4.5 and thendropped back again the next
month.
But employment is an issue,isn't it?
SPEAKER_02 (09:56):
It is an issue, that's right.
And one of our uh uh assumptionswe've got behind our uh model,
behind our models of 26 is thatunemployment will actually trend
upwards.
SPEAKER_00 (10:06):
So these were your four scenarios coming into 2025.
Correct me if I'm wrong, butvery quickly we came down to one
scenario being scenario three.
SPEAKER_02 (10:15):
We did, and that was in February.
So we notified our audience thatwe were down to one scenario,
scenario three, that was veryquick.
I'm glad it happened early.
Yeah, that's that's uh whatwe've been uh basing ourselves
off.
SPEAKER_00 (10:27):
So predominantly a Sydney audience today, and and
you feel based on scenariothree, with the rate cut coming
in the March quarter, populationgrowth around that half a
million a year into the country,Sydney put on six percent where
inflation averaged around threepercent.
Yeah.
So it was double the rate ofinflation.
SPEAKER_02 (10:43):
Yeah, that is correct.
SPEAKER_00 (10:45):
Yeah.
So is the fact that the houseprices uh off a high base are
doubling the rate of inflationfor for the year, is that a
ultimately a positive thing orotherwise for for for the
economy and and and households?
SPEAKER_02 (10:58):
Well, I guess it depends on who you are.
If you're an existing propertyowner, fantastic, happy days.
If you're not in the housingmarket, you're being left
behind.
SPEAKER_00 (11:07):
And that's what's happening in in our country at
the moment, is it, is that thehaves of of are getting further
in front than the have nots, whowho are just finding it very,
very difficult to keep up,essentially.
SPEAKER_02 (11:19):
That's exactly right.
If it keeps going, it's going tocreate uh in an increasing
amount of social incohesion.
SPEAKER_00 (11:27):
Would you say we're on that path now?
SPEAKER_02 (11:28):
And it's it's we've been on this path for a long
time, in my view.
And you can tell that by thehome ownership rates because
they've been falling away over along time now.
Uh I think this is going to be amajor problem uh on our hands
when we have home ownershiprates fall below 60%.
Yeah.
Uh so they're just hoveringabove 60% now.
(11:49):
They below they fall below 60%,and I think that'll have major
ramifications for elections.
SPEAKER_00 (11:56):
I was going to touch on politics uh with all of this
because as the years gone on,these issues are becoming more
acute.
The government of the dayrepresents a larger and larger
component of the economy.
That's right.
Um, there's more people that aregoing from the private sector to
the public sector.
Um, cost of living is istrending up, and people's
(12:17):
lifestyle per capita, uh,generally speaking, is going
backwards.
But the Labour Party werere-elected with a thumping uh
majority, and if you look at thecurrent polls, um they're
essentially wiping the LiberalParty off the map.
SPEAKER_02 (12:32):
They are for now, that's exactly right, but I
think they've got some majoreconomic challenges where the
voting population could easilychange their view on the Labour
Party.
SPEAKER_00 (12:43):
I did note uh Wayne Swann's uh post-election
analysis, and he said that oursupport is far and wide, but
it's not very deep, so let's notget ahead of ourselves.
Yeah, probably probably fairlydecent message for him to be
telling um the party.
SPEAKER_02 (13:00):
Look, I I think that's a fair call.
I mean, let's remember the uhelection prior to 2007, where
Howard the Howard government hadcontrol of both sides of the
House.
And in the 2007 election, theycompletely lost government.
That's right.
Yeah.
So it can happen very quickly.
SPEAKER_00 (13:17):
You know, John Howard openly says that uh
there's no point controllingboth sides of Parliament and
using it.
Yes.
Uh so he did use it and itbackfired on him.
So it will be interesting in2026 to see whether uh the
Albanese government stayscentered or it does push further
ideologically.
SPEAKER_02 (13:35):
Look, I I think if we see unemployment continue to
rise and get up beyond 5percent, if we continue to
continue to see stickinginflation uh with ongoing surges
in energy prices, that scenarioI think the voting population
(13:56):
will have little patience for.
And especially over and abovethat, if immigration levels keep
surging, that will not beacceptable to the public.
And they'll vote.
SPEAKER_00 (14:07):
There is a name for that scenario of just outlined
stagflation, isn't it?
Correct.
Everyone talks inflation,deflation, disinflation, and
stagflation is the one that'sconstantly overlooked.
SPEAKER_02 (14:17):
And it's the one that the central bankers get
most concerned about becausethey're kind of stuck in a in a
in a corner.
Correct.
Uh if they lift interest rates,unemployment will go up further,
they'll enter into recession.
If they cut rates, inflationwill likely go up.
Uh so it's a it's a bad scenariofor any central banker.
SPEAKER_00 (14:35):
Indeed, it is.
Louis, let's have a look atunderquoting.
As we can see here, 25 New SouthWales agencies are under fire
for underquoting.
Out on the field, so being alittle bit more micro now in our
analysis, we all year have hadhome buyers walking into house
and saying, What's the guide forthis property?
And we'd tell them the guide.
So let's say we would say theguide's 1.5.
(14:56):
They were saying things to uslike, Well, I wouldn't pay 1.8
for this place.
It's like, hang on, the guide'sone five, why would you say uh
you wouldn't pay 1.8 for it?
So well, that's what happens inthe marketplace.
So buyers are absolutelyconditioned to disbelieve the
price guide that they're quoted,whether it's accurate or not,
and they're adding 10, 15, 20,in some cases 25% to what they
(15:20):
think the property will go forabove the agent's price guide
based on their experiences inthe market.
It's been a red button, hot hotbutton issue all year.
Have you got any data that tellsus what properties tend to sell
for above the agent's priceguides across the board?
SPEAKER_02 (15:38):
Look, I don't have data at my fingertips on this,
but I can tell you we've beenmonitoring underquoting since
last year.
And the first quarter of us aremonitoring this, I think was the
June quarter 24.
And I recall we found over 4,000instances in one quarter alone
(16:00):
of absolute underquoting.
So this was a situation wherethe price guide was X, the
property would pass in, and thenthe private treaty asking price
when it was posted was more than10% of the original auction
price guide.
We found 4,000 instances of thatin one quarter across New South
Wales.
SPEAKER_00 (16:20):
So the Sydney Morning Herald and the Melbourne
Age went really, really deep onthis issue throughout the year.
Yeah.
And that was their findings aswell, is that the most certain
and obvious example ofunderquoting is a property that
uh sells well above the agent'sprice, as fails to sell well
above the agent's price guideand then is advertised for a
number completely disconnectedto what the price was during the
(16:42):
campaign.
Correct.
Yeah.
So at the moment there's there'sone real estate agent which we
don't need to name that's that'sbeen absolutely front and center
as being uh uh the profile, youknow, the the the high profile
casualty of the stategovernment's war on
underquoting.
Uh is that fair or is thatmessaging to the rest of the
industry what they're doing tothis particular fellow?
SPEAKER_02 (17:04):
I can't comment on that particular agent, but what
I can tell you is that throughthe data, what we have found are
regular culprits.
Yes.
Uh just people who are doing itand groups and shops that are
doing it time and time and timeagain.
SPEAKER_00 (17:21):
And hence these 25 agencies have been highlighted
here and they're probably doinga deep dive on them.
SPEAKER_02 (17:26):
Like I said, look, best wouldn't be wise for me to
comment specifically.
Uh, but all I will say is thatwe are monitoring uh the
underquoting through data uhmonitoring.
We are sending on our data ontothe government, onto the
Department of Fair Trade.
And I know that's just one oftheir tools that they use in
this space, and I know thatthey've been more and more
(17:47):
active in this space in recentyears than where they were, say,
five years ago, ten years ago.
They have data, they havemultiple points of evidence now
uh to catch out these people whodo this.
SPEAKER_00 (18:01):
Yeah, they do.
Look, we uh have beeninvestigated for underquoting
consumers are unhappy with whata property sells for above the
price guide.
There's only one instance in2025.
Um the Department of Fair Tradeseemed to have a set criteria at
how they come at the agent, andone of those is uh you know a
multi-point explainer.
Um, the agent needs to send theagency agreement or
(18:24):
communication with the vendor orcommunication with prospective
uh buyers, how is the offerprocess handled?
Um they signed us away and gaveus a clean bill of slate on that
one complaint.
But um what they are looking todo in that example is have the
agent self-incriminate.
One of the ways the uh agent'sself-incriminating is fudging
the paperwork.
(18:44):
Yeah.
Where they retrospectively uhare under investigation and they
go, when they pull all theirpaperwork out, they go, This
doesn't look good, and theystart doctoring doctors.
SPEAKER_02 (18:52):
Well, they've got to be very, very careful about that
because they they're digging amajor hole for themselves.
Oh, it's not.
They could be just done if theyget caught doing that, they
could be caught breakingmultiple laws that are far more
serious laws to break, otherthan just underquoting.
Yeah.
Right?
You are not meant to fudgedocuments.
That is a very, very seriousmatter.
(19:15):
Yeah.
Uh look, I'm not the expert interms of how serious it is, but
uh all I know is that over inthe financial services sector,
if you get caught doing that,there are criminal possibilities
for that in terms of criminallaws being broken.
SPEAKER_00 (19:31):
And rightly so.
So that so the agent, uh themost high pro high-profile um uh
agent caught up in all of thisat the moment stands accused of
that very act.
Yeah.
There's one area, uh, Louis,that the regulator is not
pushing into in terms ofcontrolling underquoting, and
it's a contentious point I'mgoing to make.
(19:52):
When when they were looking tooutlaw dummy bidding, the
Department of Fair Trading tookpowers upon themselves to.
Be able to penalize vendors whowere caught dummy bidding.
Now, as part of thisinvestigation with The Age and
the Herald, they recorded a realestate agent at a high-profile
firm in Melbourne coaching avendor on how to underquote and
(20:16):
why they should underquote andthe benefit in doing so.
And it was blatant.
And the agent was uhsubsequently sacked from uh his
position when the age gave thisrecording to to his superiors,
and they said that's not who whowe are, and and and this
person's got to go, and I'll letothers decide whether that's a
company wide culture or or thisparticular agent.
(20:40):
But should vendors who knowinglyparticipate in underquoting
should they should they be inthe firing line?
Because they're as equallyresponsible for misleading home
buyers as what real estateagents are if they go along with
it?
SPEAKER_02 (20:54):
Yes, I do.
I I think if uh uh vendors areknowingly doing it, they're
going along with it, they'rejust as uh guilty as the agents
themselves.
Let's represent let's rememberthe agents representing the
owner.
Yes.
Yeah, so so there's a lot oflaws surrounding uh principal
(21:16):
and agency relationships.
Uh and so yeah, the the ownerreally is just as culpable.
And in some respects, um the thethere is an obligation on the
owner to see exactly what isgoing on.
So I don't think it's enough forthe owner to say, oh, I didn't
know what was going on.
(21:38):
Uh they ought to beunderstanding what the agent's
doing.
SPEAKER_00 (21:41):
Yeah, now the Department of Fair Trade gave
agents plenty of scope to runtheir auctions.
Yeah.
Anything up to 10% was kind offair game.
Some days it'll go the full 10%above, some days it might only
go 5% above, and and the vendorwill have to lower their price
to get the sale and all the restof it.
But we are talking here aboutagents and vendors who
(22:02):
systematically, not once off,but systematically underquote by
20, 25 percent.
They'll shamelessly put a priceguide of 2.2 on a property uh
with a reserve of 2.8 or 3million.
That's what we're talking abouthere, aren't we?
SPEAKER_02 (22:16):
Well, it goes back to your opening comment on this.
Home buyers out there arestarting to take this into
account.
This is concerning because whatit does is that it reduces
confidence in the system ofbuying and selling property
overall.
It reduces confidence in what Icall the asset class of real
(22:36):
estate.
That's no good for anyone overthe long term.
Uh, you want more participants,you want liquidity in the
market.
Uh by having more distrust inthe market, you're gonna see
less sales activity.
That's gonna create supplyissues.
Um, you know, it's just no goodfor anyone trying to do a hard
uh day's job in this business.
SPEAKER_00 (22:57):
Well, that's the point I was going to make to
close this off is that agentswho tell the truth can't
survive.
If you've got two$2 millionproperties on the market, one's
with agent B who's quotingauction guide of$1.6 and another
agent who's quoting$2 millionfor their$2 million house, I can
tell you that the honest uh thehonest Joe is going to have no
one at their inspection andthey're all going to be down the
(23:20):
road of the$1.6 millionopportunity.
SPEAKER_02 (23:23):
Yeah, that that's exactly right.
And so you know that createsfrustration amongst honest
agents.
They then end up having twooptions.
They leave the industry, or it'slike you can't if you can't beat
them, join them.
SPEAKER_00 (23:36):
Yeah, that's right.
I don't know if you realizethis, but Graham Samuel's son
down in Melbourne, the ACCC.
It was the ACCC Graham Samuel.
Yeah, his son was done forunderquoting, a real estate
agent.
SPEAKER_02 (23:46):
Yeah.
SPEAKER_00 (23:47):
He probably started as an honest Joe.
SPEAKER_02 (23:49):
Yeah.
SPEAKER_00 (23:49):
And ended up getting nailed for underquoting because
that's the industry that he'splaying.
SPEAKER_02 (23:53):
That's the industry, and that's what we've got to uh
stamp out.
We've got to stamp out as muchas many bad things as possible
in the industry.
And you know, as you know, oneof my bugbears is auction
clearance rates, but we won't gothere today.
SPEAKER_00 (24:05):
Oh, we might actually.
Let's bring it up.
Fair enough.
Let's get right into it.
That uh brings us up to our nextslide here, Louie.
Um I'll just slowly go throughthis because there's a few
levels on this today.
This is domains Sydney, and I'llcome back to the importance of
the word Sydney.
Sydney auction clearance ratefor the last weekend in November
(24:26):
2025.
Now, as is customary, um, everySaturday evening when you look
at these results, there were1,500 um auctions scheduled, but
only 993 were reported, givingus, as we can see there, a
clearance rate of 63 percent.
This happens every Saturdaynight.
This is not a one-off for thosethat are uh not following this
(24:47):
as closely as you and I, Louis.
There's a massive unreportedamount each week.
So much so that is there aconsistency now in the clearance
rate of the unreporteds, if thatmakes sense.
SPEAKER_02 (25:01):
When I've looked at this in the past, uh I would
suggest to you that circus 70percent of what's unreported are
failed results on the day.
70 percent.
Yeah.
Now they may sell a couple ofdays afterwards, but that's not
the point.
Right.
On the day, you know, sellingunder the hammer, uh 70% of
unreported, in my view, overall,as an average, are failed
(25:25):
campaigns.
SPEAKER_00 (25:26):
Okay, so that would cause future vendors and
prospective vendors to view thewhole sale process differently
if that was all factored backinto the equation, wouldn't it?
SPEAKER_02 (25:37):
Potentially, but there's another way I like to
look at it.
Yep.
Um the benchmark where agentscompare their own personal
auction clearance rate uh versusthe stated mainstream media
auction clearance rate, that'sthe problem.
So if you're an agent, let's sayyour genuine clearance rate is
say 55%, okay?
(25:59):
And the benchmark is saying, oh,we did 65%, 70% on that day,
you're going to think you're notdoing a good enough job.
You're you're you you got you'reunderperforming compared to
benchmark.
But the the problem is not theagent, it's the benchmark.
SPEAKER_00 (26:14):
Oh, indeed, yes.
SPEAKER_02 (26:15):
The benchmark is the issue.
And strangely enough, weactually get a lot of support
from various real estate agentswith our auction clearance rate
series.
Because they know, number one,we're collecting all the
results.
SPEAKER_00 (26:26):
It can be relied upon.
SPEAKER_02 (26:27):
It can be relied upon, and then it's a better
benchmark for the industry touse.
It's as simple as that.
It's a complete benchmark, itdoesn't have to be revised every
week.
And we're getting more and moresupport for it.
SPEAKER_00 (26:39):
Oh, good.
Well, as you should, becauseit's a legitimate number.
SPEAKER_02 (26:42):
The only issue is that it's not as timely.
It doesn't come out on aSaturday night.
We need more time to get all theresults in.
It comes out Tuesday afternoon,as you're aware.
So timeliness is always one inthis game when it comes to
reporting of housing data.
But there's a trade-off betweentimeliness versus accuracy.
SPEAKER_00 (27:01):
Oh, well, let me talk to you about one of those
trade-offs now, if I may.
Keeping in mind, I said this isDomain's Sydney auction
clearance rate.
And if we can go to our nextslide here and look at what
constitutes part of Domain'sSydney auction clearance rate on
this particular weekend, andthis happens every weekend,
Armadale.
Now, how far out of Sydney isArmadale, Louis?
(27:24):
It's a long, long way out.
It would be closer to Brisbanethan than Armadale, it would be,
absolutely.
These results formed part ofDomain's Sydney auction
clearance result of 63 percenton that particular weekend.
SPEAKER_02 (27:36):
Yeah.
SPEAKER_00 (27:37):
Coming over again, Salamander Bay.
PRD didn't have a particularlystrong day on this day.
Salamander Bay, what's that, twohours out of Sydney?
SPEAKER_02 (27:46):
I would have thought so.
SPEAKER_00 (27:47):
Yeah.
That's in the Sydney auctionclearance rate.
Yeah.
And the reason this is importantis that the main's data, as we
know, talking about timeliness,is picked up by the mainstream
media and then disseminatedthrough all of its channels.
There's Channel 9 channels andprobably some other media picks
it up as well.
Yeah.
And everybody's making, drawingconclusions and making decisions
(28:09):
based on data that's that'shorrendously poor.
In this weekend, the propertydid actually sell.
Ballinar, if you can believe it,was counted in the Sydney
auction clearance rates todomain.
Now, you're uh what are you twohours out of Brisbane when
you're in Ballinar, I think thepeople of Ballinar would be
shocked.
SPEAKER_02 (28:26):
So is this happening each week?
Like have you noticed thisbefore?
It's not an aberration.
SPEAKER_00 (28:30):
It's not an aberration, it's just something
a data error.
It's just something that's beengetting under my skin for a long
time.
That's really odd.
And the reason I'm raising it,because I want to now start this
we're talking about the mediacycle here and the timeliness.
Yes.
But more and more people aremaking decisions around AI.
And this thing about AI'sintelligence is a nonsense.
(28:51):
AI is not an intelligence.
It's just drawing on existinginformation.
So if you're saying to AI, giveme some intel about the real
estate market so I can make somedecisions, it's drawing on this
sort of dodgy data.
SPEAKER_02 (29:05):
That is true.
That is true.
It would be interesting to seewhether domain are using AI to
compile it.
This could be a classic AImistake to include all these
auctions across New South Airsas though they're part of
Sydney.
But then again, I think AI isactually smarter than that.
So I I it's a it's a questionworthy of posing to domain why
they're doing it.
SPEAKER_00 (29:25):
So if we if we bring up some suburbs in Sydney, now
not every suburb performed asstrong as these, but just to
give people an idea of how thedata discussion can be blown off
track, Ashfield, which is reallystrong at the moment, like
Ashfield has had a good year,you can see we're running at 100
percent there.
If we go across to Kingsgrove,100 percent.
So the auction clearance rate umfor homeowners in Kingsgrove is
(29:48):
is colored by what's happeningin Salamander Bay.
Bring up our our next slidehere.
I recently uh uh saw Terry Ryderof Hotspotting speak, and he
gave a to a terrific speech.
But one of uh uh the points thathe made is in the data companies
how they come up withdrastically different
conclusions as to how certainmarketplaces are performing at
(30:09):
the same time.
SPEAKER_02 (30:10):
Ah, yes, yes.
SPEAKER_00 (30:11):
Yeah, so can can you give us some insights into
what's happening here, Louis,that we get so so much to
disparate.
SPEAKER_02 (30:17):
Yeah, look, there's various methodologies out there
in terms of trying to calculatehousing price indexes.
I've had disputes in the past onthe most quoted methodology
being the one that comes fromQuartality, previously known as
Core Logic, with their dailyhousing price series.
And I found some issues with ita long time ago, which I think
(30:37):
they addressed some of them, uh,but uh I still have issues with
it today because fundamentallyyou cannot measure housing
prices on a daily basis becauseof the lags in the data.
There are various methodologiesout there.
Domain has their series,CoreLogic has their series, Prop
Track has their series.
(30:58):
We've decided in terms of whatwe publish out there, we want to
be a little bit different.
We just want to publish askingprices, so we do measure median
house prices based on actualsales as well, of course.
Uh and yeah, you see some hugevariations.
Often the variations um comefrom smaller cities.
Uh so you know I often see hugevariation in terms of what's
(31:22):
reported for the city of Darwin.
Yeah, or Hobart.
There's a five year old.
Hobart, that's another one as anexample.
Sometimes Perth can be right offuh in terms of the various
methodologies uh that arequoted.
SPEAKER_00 (31:34):
Uh so the smaller the sample, the easier it is to
have it distorted.
SPEAKER_02 (31:38):
To have a distortion.
That's exactly right.
Now let's think about Darwin fora moment.
I mean, it is quite a smallcity.
SPEAKER_00 (31:44):
So just on that point, I think people should
know this can happen in suburbanSydney as well.
If you've got a waterfront.
If you've got a waterfront uhpeninsula and and three
waterfronts tend to, forwhatever reason, trade within a
short time frame, that'll sendthe median price up, then it'll
be all advertised on all of theuh the real estate articles.
SPEAKER_02 (32:03):
Well well, Peter, what you will find is that you
will rarely see anything from uswhere we publish the top ten
best performing suburbs for acapital city.
We don't put those stories out.
And there's one good reason forthat, is because the data just
can't properly measure changesfrom one period to the next
(32:25):
accurately and consistentlybecause of the small sample data
set you get out of a out of asuburb.
And so you will see suburbsreported, you know, up 40%,
okay, when the when the medianincrease across city might be
up, say six percent.
But I can assure you that thatsuburb has not risen by 40% in
(32:45):
value.
All that's happened, all that'shappened is that in one period
the the bottom end of the marketsold a little bit more than the
top end of the market, and thenthe next corresponding period
the reverse has happened.
And so the median artificially,median price artificially jumps
up, but the real market hasn'tmoved by that much at all.
SPEAKER_00 (33:04):
So can can we say that you're a data purist versus
a media company that's got adata company on the sideline
that's looking forsensationalism in the property
market?
SPEAKER_02 (33:15):
I'd like to think that, yes, that's exactly right.
Um I mean, look, property datais it is definitely challenging.
It's very different to sayequities data, which is highly
standardized.
Let's think about it.
Every property is fundamentallyunique.
Even property A versus propertyB, right next to each other, a
(33:36):
say, for example, it's a semi,uh, three-bedroom semi, I
guarantee you you will finddifferences between the two if
you walk through in terms ofquality, wear and tear, and so
forth, which impact upon theprice.
SPEAKER_00 (33:48):
Yep, home buyers will tell you that every day of
the week.
SPEAKER_02 (33:51):
Exactly.
So so this is the thing.
Um, and and you know, our job isto try and standardize the data
as best we can, but it's it'snever going to be perfect.
Perfect, yeah.
The best way to do that ishaving a larger sample set.
When you have a larger sampleset of data, then you're you're
better tracking what's going onin that region uh compared to
(34:14):
say a street or just a suburb.
SPEAKER_00 (34:17):
So now that you've outlined the nuances and
challenges with data, would youbuy and sell real estate based
on uh the research provided byAI or the findings found by AI?
SPEAKER_02 (34:30):
Uh I would go certainly beyond AI.
SPEAKER_00 (34:34):
Because the consumers are being guided by it
increasingly.
I'm not saying it's wrong orwrong.
SPEAKER_02 (34:39):
I've seen, you know, you can look up, for example, a
property valuation from AI ifyou want to.
Uh a free property uh uh AIvaluation.
Uh now I just want to be on therecord, we do not uh our uh
automated valuations are notdriven by AI at all.
And uh I can't say they will befor the foreseeable future
because there are inherenterrors within AI data collection
(35:02):
and and calculations that I cansee.
So I think consumers, uh look, Iknow AI is extraordinarily
convenient to use.
You can just pop in the questioninto Google AI or into Grok.
Um, and look, they are gettingsmarter and smarter.
They've improved from where wewere, say, two years ago, uh,
(35:22):
but they're far from perfect.
Uh, and so you do need to doverification research over and
above what AI may or may nottell you.
SPEAKER_00 (35:33):
Just in closing off on AI, Louis, uh something
interesting that happened to uslast week.
We uh had a matter at NCAT, andthe member um who was overseeing
the situation said to allinvolved if your uh evidence is
produced by AI, we'll completelydismiss your case.
Oh wow, there you go.
So do not come in here withAI-generated garbage because
(35:57):
you'll go straight back out thereasonably easy to spot
actually.
Let's move on a few microsegments of the market um if you
don't mind.
First home buyers and the stategovernment introduced the home
guarantee scheme.
Uh it was introduced on October1.
Lots of uh sensationalistreporting like this here, Louis,
(36:18):
on our slide.
Um, what did the data tell us?
Is this an accurate headline?
SPEAKER_02 (36:23):
Clearance rates, in our view, did initially rise
when uh we saw the uh initiativeannounced in terms of the
change.
When it actually became actionon the ground, uh we didn't see
any material uh rise inclearance rates, and indeed,
auction clearance rates havebeen falling away in Sydney and
(36:44):
Melbourne in very recent weeks.
The scheme has encouraged firsthome buyers to enter into the
marketplace, but I wouldn't saythat in our largest capital
cities that it's moved the dialby March.
SPEAKER_00 (36:56):
That that was our experience.
October was like a shot in thearm, a shot of adrenaline, and
then the further we got throughand past October one, yeah, it
just seemed to have settled downa bit.
And uh, I think when you'retalking about Sydney real estate
and million-dollar properties,buying a million-dollar property
with five percent in is probablynot the wisest move.
SPEAKER_02 (37:15):
Yeah, highly, highly leveraged.
If the market starts to fall,you're going into negative
equity real quick.
SPEAKER_00 (37:22):
And it's not often that the real estate industry
puts a wise message out, butthere's many people in the
industry that have quite rightlypointed out that the seeds of
the subprime crisis in the US in2008 was government policy
putting people into housing whocouldn't ultimately afford it,
and it ended up causing a mass,obviously, mortgage meltdown, as
(37:43):
we know.
Now, this is quarantined tofirst home buyers only, and it's
not as widespread as what theLarge S was in America, but
government policy inducing orencouraging people into housing
that ultimately can't afford itis not is not smart, is it?
SPEAKER_02 (38:00):
No, it it it long term it is counterproductive, in
my view.
It can cause damage to theeconomy.
Uh it can put people intohousing, which really ultimately
shouldn't be there.
Uh so yeah, it it definitelyelevates the risks and creates
potentially more volatility inthe housing market as well.
Uh look, they're doing itbecause they're trying to uh
(38:23):
make housing more affordable,but it's not addressing the root
cause about why housing isunaffordable.
Which is undersupply.
SPEAKER_00 (38:32):
The root cause is understandable.
SPEAKER_02 (38:34):
Undersupply and rampant demand, driven by
excessive population growth.
SPEAKER_00 (38:38):
Yeah.
These were your forecasts forthe rental market on our next
slide here for 2025.
Sydney had a pretty good year?
SPEAKER_02 (38:45):
Yeah, look, Sydney had uh a pretty good year.
Rents rose in line withinflation, uh, gone at a day, so
we're getting rents, rentalincreases of 20% plus, which we
did when we were coming out ofCOVID.
Uh so this was actually not abad year for tenants per se,
though rents still remainelevated in real terms compared
(39:08):
to where we were prior to COVID.
SPEAKER_00 (39:10):
Yeah, no, no one's saying the Sydney rental
market's cheap, that's for sure.
SPEAKER_02 (39:14):
No one is saying the Sydney rental market is cheap,
that is correct.
Uh, you'll see that these uhmedian rents were got therefore
combined dwellings.
So if we were to look at, say,freestanding houses, the median
rent's above a thousand dollarsa week.
SPEAKER_00 (39:27):
Oh, yes, indeed.
Yeah, twelve hundred.
Yeah, I'd say that's what itfeels like in the environment.
That is correct.
Yeah.
Okay.
Louis, um, you just touched onit there about uh auction
clearance rate late in the year.
It feels like for the first timein quite a few years, the top
end or the upper echelons of theSydney market started to cool
late in the year.
Is that that's anecdotal, Reed?
(39:49):
Is is that supported in thedata?
SPEAKER_02 (39:51):
So on our auction clearance rate series, we're now
recording clearance rates inSydney are below 50 percent.
Uh and And last week we recordeda clearance rate which was lower
than the same corresponding weekin 2024.
It's the first week we'verecorded that in all of 2025.
(40:12):
And I like looking at whathappened this time last year
because then you don't have toworry about seasonality.
And let's let's face it, Peter,there's a lot of seasonality at
this time of year.
So yeah, it's uh Sydney in thelast few weeks of the selling
season uh has been weakening.
To me, when I look at the data,it does suggest that the middle
(40:34):
and top end of the market isjust looking more patchy uh
compared to the lower end of themarket or the more affordable
end of the market.
Uh and when I've seen that inthe past, it's generally
commensurate with a slowereconomy as well.
Uh so look, it's early days.
(40:54):
Um, if we were to see thispattern on the opening of the
new season in February 2026, uhthat will be uh a significant
cause for concern.
And City could be slowing uhmore quickly than what I
initially forecasted.
SPEAKER_00 (41:11):
Yeah, well look, just on the ground, what I would
say is coming into the MelbourneCup Day 10 days before, everyone
thought another rate hike was inwas in the pipeline, rate rate
cut, sorry, yeah uh was in theum was in the pipeline.
The data swung very quickly whenthat inflation rate quickly
moved up to 3.8%, and then uhmoney markets and even Michelle
(41:32):
Bullock herself started sayingif this continues, rate hikes
are very much back on theagenda.
Yeah, and and when we saw buyerbehaviour parallel what was
happening in in that space aswell, for what it's worth.
Yeah, it played a role inbuying.
SPEAKER_02 (41:45):
Yeah, I I think sentiment has changed.
There has been disappointmentabout the fact look it's looking
very unlikely we'll see any moreinterest rate cuts in the near
future.
SPEAKER_00 (41:55):
Louis, that's an outstanding wrap on the 2025
Sydney property market.
Thanks very much for your timetoday.
Thanks again, Peter.
We look forward to catching upwith you in 2026.
Indeed.
Thank you for your time today,and uh we look forward to
speaking with you next time onTalking Property.
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