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Speaker 1: This is what the flux i'mb and It's Wednesday, the

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Speaker 1: twenty ninth of October. Today, Brett and Justin will be

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Speaker 1: doing a deep dive interview with Eliza Owen, head of

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Speaker 1: research Atqautality formerly known as core Logic, to talk about

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Speaker 1: all things property in twenty twenty five, the first home

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Speaker 1: guarantee scheme, and her topics in twenty twenty six. But

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Speaker 1: before that, here are the three top business news stories

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Speaker 1: from Australia and around the world. The Australian Competition and

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Speaker 1: Consumer Commission, also known as a trible C, is suing

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Speaker 1: Microsoft in the federal court for allegedly misleading millions of

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Speaker 1: customers into paying significantly more for Copilot, Microsoft's AI platform.

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Speaker 1: The ah Triple C alleges that Microsoft concealed the option

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Speaker 1: to reduce or stay on a less expensive plan that

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Speaker 1: does not include Copilot. In other news, Audi sales jumped

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Speaker 1: by one billion dollars last year and paid out a

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Speaker 1: five hundred million dollar dividend to its Austrian parent company.

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Speaker 1: And finally, Amazon has announced they will be cutting thirty

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Speaker 1: thousand corporate jobs, which is nearly ten percent of their

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Speaker 1: corporate workforce. It will be Amazon's largest layoff since cutting

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Speaker 1: twenty seven thousand jobs in twenty twenty two. That's it

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Speaker 1: from me today. I'll pass it over to Breton Justin

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Speaker 1: for the insightful conversation with Eliza Owen.

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Speaker 2: Thanks b. Today we're joined by Eliza Owen, head of

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Speaker 2: research at Cotality formerly known as core Logic, and Eliza

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Speaker 2: is widely regarded as one of Australia's sharpest minds in

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Speaker 2: the property game. She's the go to guru when it

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Speaker 2: comes to decoding housing trends, spotting shifts in the market,

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Speaker 2: and also helping us understand what all those charts and

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Speaker 2: numbers actually mean for every day Aussies. So anyone unfamiliar

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Speaker 2: with Cotality, it's the country's leading property data and analytics company.

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Speaker 2: They track every sale, every suburb and every shift in

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Speaker 2: the market. So Eliza's here today to help us unpack

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Speaker 2: the wild ride that's been twenty twenty five's housing market

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Speaker 2: and also maybe crystal ball with some predictions into twenty

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Speaker 2: twenty six as well. So Eliza, welcome to what the

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Speaker 2: flux in conversation.

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Speaker 3: Great to be here. Thank you so much for having me.

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Speaker 2: So if you had to sum up twenty twenty five

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Speaker 2: in property so far. What sort of year has it

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Speaker 2: been for Australia's housing market.

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Speaker 3: Oh, it might sound a bit weird, but I feel

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Speaker 3: like this year in the property market has been like

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Speaker 3: an old car that you're trying to start up on

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Speaker 3: a cold morning. She's taken a while to warm up.

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Speaker 3: And through the first half of the year we were

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Speaker 3: seeing the monthly growth in home values across Australia was

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Speaker 3: averaging about half a percent, but through the start of

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Speaker 3: spring it's really started to ramp up, with growth now

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Speaker 3: tracking atzero point eight percent through September and August. I

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Speaker 3: think it comes down to the fact that over the

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Speaker 3: course of the year you've had three interest rate reductions

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Speaker 3: leading into the spring selling season, but you also had

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Speaker 3: a little bit of recovery in confidence that was smashed

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Speaker 3: through April with the Trump tariff turmoil. You had some

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Speaker 3: geopolitical uncertainty as well, and housing markets, especially Australia's housing

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Speaker 3: market is generally pretty resilient to that kind of thing,

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Speaker 3: but you do need time for that confidence to recover,

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Speaker 3: and I think it's taken a little while for buyers

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Speaker 3: and sellers to warm up, come back to the market

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Speaker 3: and we're starting to see that momentum.

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Speaker 2: Now the engine's raving again.

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Speaker 3: That's right, We've gotta going, Eliza.

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Speaker 2: We love talking about winners and losers across everything in

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Speaker 2: the property in finance world. So have we seen any

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Speaker 2: clear winners or losers this year so far? If it's

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Speaker 2: like different cities who came out on top and who struggled.

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Speaker 3: So interestingly, it is those kind of mid size capitals

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Speaker 3: that continue to lead growth in Australia's property market. So

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Speaker 3: if we look through the year to date results ending

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Speaker 3: September thirty, the strongest rates of capital growth have been

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Speaker 3: across Brisbane up seven point four percent, and that was

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Speaker 3: followed closely by Perth, which has risen just under seven

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Speaker 3: percent over the course of the year. The big standout

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Speaker 3: is Darwin. Darwin has had this extraordinary uplift of over

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Speaker 3: thirteen percent in the year to date. Amazing, it is wild,

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Speaker 3: but it's coming off the back of quite a few

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Speaker 3: years of underperformance. Obviously, there was a big downturn in

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Speaker 3: values between twenty fourteen and twenty twenty, so I think

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Speaker 3: this could almost just be the result of having room

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Speaker 3: to grow. Investors in particular seeing the capital growth opportunity

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Speaker 3: there and we've really seen a big uplift almost or

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Speaker 3: over over the past year, investor alone secured across the

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Speaker 3: territory have more than doubled and so that's one of

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Speaker 3: the clear drivers of capital growth across that market.

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Speaker 2: Fascinating And in terms of the East Coast of Australia,

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Speaker 2: are there any standout suburbs.

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Speaker 3: That you've seen, Well, I'm a Sydney cider, so I

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Speaker 3: tracked the data pretty closely there and Sydney is kind

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Speaker 3: of hampered by the fact that it's Australia's least affordable market.

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Speaker 3: The in dwelling value is about one point two mil,

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Speaker 3: medium house value is now over one point five mil.

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Speaker 3: So really growth has been most concentrated in the outer

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Speaker 3: suburbs of Sydney, cheaper markets of Sydney where people can

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Speaker 3: still get a house for under a mill, and also

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Speaker 3: areas that are subject to development. So some of the

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Speaker 3: biggest increases or biggest sales that we've seen over the

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Speaker 3: course of the year so far have been in suburbs

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Speaker 3: like Saint Mary's where there's a lot of up zoning

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Speaker 3: and anticipation of the airport metro line, and also Sydney's

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Speaker 3: Metro West, where you've got areas like Burwood, Strathfield, Concord

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Speaker 3: seeing a lot of up zoning and development as well.

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Speaker 2: And what about Melbourne, You've seen any top performing suburbs there.

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Speaker 3: So it's kind of a similar story in Melbourne. Some

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Speaker 3: of the western suburbs have been the fastest growing over

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Speaker 3: the course of the year. Melbourne as a whole has

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Speaker 3: been on the weaker side. I hesitate to call it

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Speaker 3: a loser because I feel like this has been we

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Speaker 3: get it. I love Melbourne. It is such a cool city.

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Speaker 3: And not only that, but this has been a pretty

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Speaker 3: broad based uplift through twenty twenty five because you've had

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Speaker 3: blunt tools like interest rate reductions, higher real wages growth

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Speaker 3: as inflation is falling. So that's also supported to turn

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Speaker 3: around in the Melbourne market, which is up about three

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Speaker 3: percent year to date, but obviously it's smaller than other capitals.

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Speaker 3: And in terms of suburbs to look out for, obviously

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Speaker 3: we've got the expansion of the first Home guarantee, which

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Speaker 3: is probably going to unlock a little bit more demand

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Speaker 3: to the outer northern suburbs. So areas like Epping, for example,

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Speaker 3: where you've got properties that are still under the price

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Speaker 3: thresholds for the scheme, but not quite in those more attractive,

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Speaker 3: pricier northern suburbs.

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Speaker 4: And Eliza, Wo'd love to ask you about younger buyers, say,

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Speaker 4: those in their twenties or their thirties. Have we seen

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Speaker 4: them cracking into the market yet or has affordability continued

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Speaker 4: to keep first home buyers out of the market.

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Speaker 3: Yeah, so it might be surprising to learn that the

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Speaker 3: average age of a first home buyer is closer to

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Speaker 3: thirty four, or at least that was the latest data

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Speaker 3: reported by the ABS in twenty nineteen for buyers in

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Speaker 3: their twenties. I think you have to be really savvy

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Speaker 3: or really wealthy to crack into the property market. Unfortunately,

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Speaker 3: affordability is still such a challenge, but the expansion of

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Speaker 3: the first home guarantee could work out in the favor

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Speaker 3: of many individual first home buyers if they can qualify

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Speaker 3: for both the scheme and the loan. I think as

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Speaker 3: an individual, it could definitely make sense to take advantage

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Speaker 3: of that, especially if you are in the rental market,

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Speaker 3: which has just become so expensive over the past five years.

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Speaker 3: Generally speaking, if you look at new housing loans secured

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Speaker 3: first home buyers make up a little under a fifth

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Speaker 3: of the market nationally, so there's still a relatively small

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Speaker 3: segment of the market that gets priced out quite a bit.

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Speaker 4: Interesting and the First Home Owner Guarantee, it's been quite

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Speaker 4: a big talking point. It's obviously officially live. Now, would

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Speaker 4: you be able to explain to our this and is

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Speaker 4: what the scheme is and from your perspective, how much

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Speaker 4: impact you think it'll actually have.

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Speaker 2: Yes.

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Speaker 3: So, the First Home Guarantee, it was actually first introduced

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Speaker 3: back in twenty twenty as the first Home Loan Deposit scheme,

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Speaker 3: and what it does is for eligible borrowers and participating lenders,

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Speaker 3: you can get a home loan with as little as

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Speaker 3: a five percent deposit, but the government will guarantee you

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Speaker 3: up to twenty percent of the loan. Doesn't mean they're

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Speaker 3: paying that gap for you. It just means you can

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Speaker 3: take out more debt. But the government kind of goes

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Speaker 3: guarran tor and what that means is that you can

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Speaker 3: avoid paying lenders mortgage insurance and what that or otherwise

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Speaker 3: known as el am I, and that's a cost saving

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Speaker 3: of tens of thousands of dollars essentially on your upfront cost.

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Speaker 3: So some people put that lender's mortgage insurance on the

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Speaker 3: loan as well, but essentially it's a bit of a

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Speaker 3: leg up over the deposit hurdle. But you also need

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Speaker 3: to remember that the flip side of that is you're

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Speaker 3: taking on more debt, so it can be very beneficial

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Speaker 3: in terms of the savings on the rental market, the

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Speaker 3: savings online. There's mortgage insurance, but you will be paying

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Speaker 3: more interests over the life of the loan. The difference

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Speaker 3: between that initial first homelane deposit scheme that we saw

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Speaker 3: in twenty twenty and what we're seeing over the past

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Speaker 3: month is that the government has essentially unleashed the scheme

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Speaker 3: a bit more so. It used to be that you

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Speaker 3: could only take advantage if you were earning up to

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Speaker 3: one hundred and twenty five thousand as an individual two

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Speaker 3: one hundred and fifty thousand as a couple. Those income

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Speaker 3: caps gone. It used to be that there were only

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Speaker 3: up to thirty five thousand places a year for the

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Speaker 3: first home buy a guarantee. That limit gone. So the

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Speaker 3: only cap left on the scheme now is the price

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Speaker 3: points of this scheme, and they've pretty much been set

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Speaker 3: to median house values in each city. So to your question,

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Speaker 3: bred in terms of how popular will it be, how

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Speaker 3: much impact will it actually have? I think it will

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Speaker 3: be very popular. So Westpac put out a housing report

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Speaker 3: in April estimating that there could be around four hundred

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Speaker 3: thousand people who would qualify for the scheme. But just

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Speaker 3: because you qualify for the scheme doesn't mean you qualify

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Speaker 3: for the mortgage. You still have to show that you

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Speaker 3: can service that loan. You still have to show you

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Speaker 3: can service a loan if interest rates go up by

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Speaker 3: three percentage points, So that might filter out a lot

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Speaker 3: of people who apply for the scheme that don't actually

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Speaker 3: end up qualifying for the mortgage.

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Speaker 4: That's really interesting. So I suppose in your view, do

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Speaker 4: you think programs like this are going to actually help

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Speaker 4: young buyers or are they being drowned out because of

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Speaker 4: the rising prices of the scheme.

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Speaker 3: Yeah, So the problem with this scheme is really that

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Speaker 3: it's adding to housing demand. It's opening up more access

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Speaker 3: to finance. Whatever scheme you have that does that is

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Speaker 3: ultimately going to push up housing values. So you might

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Speaker 3: be able to utilize this scheme up to the value

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Speaker 3: of say a million dollars in Sydney, but what you

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Speaker 3: get for a million dollars is then probably going to

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Speaker 3: reduce because it's going to be driving up demand to

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Speaker 3: the price thresh hold of this scheme. The other issue

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Speaker 3: is that you're encouraging young people to take on more debt.

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Speaker 3: And again, if you're an individual in the rental market,

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Speaker 3: that could still work out because you might pay more

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Speaker 3: on the life of the loan and interest, but you

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Speaker 3: might save years in a really expensive rental market. So

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Speaker 3: I guess the answer is, Look, if you're an individual

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Speaker 3: who qualifies for the scheme and the mortgage, it's going

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Speaker 3: to work out well for you. But society from a

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Speaker 3: societal perspective, From a systematic perspective, I don't think it

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Speaker 3: really addresses housing affordability interest.

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Speaker 2: Eliza has totality done any research around what the forecast

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Speaker 2: could look like or the impact from this scheme.

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Speaker 3: I think it's really hard to know what the impact

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Speaker 3: might look like because we don't know how many people

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Speaker 3: are going to be qualifying for the scheme and the mortgage.

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Speaker 3: But our guess is that it will push up demand

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Speaker 3: to the value of the caps on the scheme on

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Speaker 3: the prices associated with this scheme.

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Speaker 2: So in Sydney that's what one point five meli, in

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Speaker 2: Melbourne that's nine point fifty. So you think prices will

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Speaker 2: be pushed to those caps because there's obviously that guarantee

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Speaker 2: around it.

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Speaker 3: Yes, that's right. So in Sydney it's gone up to

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Speaker 3: one point five mil and that's that's the highest cap

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Speaker 3: associated with the cities and regions.

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Speaker 2: It's a decent amount.

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Speaker 3: Yeah, so it's pretty much the median house value across Sydney.

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Speaker 3: But it's interesting because I mean, the market moves quite quickly,

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Speaker 3: fiscal policy doesn't tend to be as dynamics, so I

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Speaker 3: wonder how long it'll be before Housing Australia has to

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Speaker 3: get these thresholds updated again to help more people get

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Speaker 3: into the housing market.

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Speaker 2: So let's turn to twenty twenty six. Pull out the

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Speaker 2: crystal ball. What are your expectations of twenty twenty six

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Speaker 2: and do you see any particular markets that are priming

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Speaker 2: right now to accelerate and boom in twenty next year.

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Speaker 3: That's a great question. So I feel like for twenty

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Speaker 3: twenty six you've got slightly more headwinds for the market

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Speaker 3: just because we're not going to see the continuation of

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Speaker 3: rate reductions, even with recent inflation data, that's been thrown

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Speaker 3: a little more into uncertainty the kind of final landing

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Speaker 3: of the cash rate. So twenty twenty five, falling interest

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Speaker 3: rates meant more borrowing capacity, meant rising values, that's not

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Speaker 3: a certain in twenty twenty six. Added to that are

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Speaker 3: affordability constraints as housing values have continued to rise, and

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Speaker 3: so the markets will probably see thrive or shine in

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Speaker 3: that context. Maybe are those ones that have been a

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Speaker 3: little bit undervalued in the past few years, So Melbourne

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Speaker 3: where prices is still below their record highs. Yeah, and

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Speaker 3: Hobart as well. So Hobart home values are still about

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Speaker 3: ten percent below their highs from twenty twenty two, and

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Speaker 3: that underperformance could actually be its affordability advantage in twenty

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Speaker 3: twenty six.

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Speaker 2: And are there any particular cities or suburbs that you're

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Speaker 2: willing to make a big caller.

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Speaker 3: I think yeah, from the city perspective, probably more Hobart,

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Speaker 3: Darwin and Melbourne, just because they're low record highs and

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Speaker 3: have mail room to grow. From a suburb perspective, I

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Speaker 3: guess maybe just a continuation of what we've seen in

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Speaker 3: the past. You know looking out for those areas that

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Speaker 3: are benefiting from up zoning. Usually in the short term

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Speaker 3: what you see is an uplift in house and land value,

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Speaker 3: in particular because of the uplifting yield that up zoning creates.

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Speaker 3: So I think again for the West of Sydney it's

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Speaker 3: going to be that kind of aeratropolis that continues to

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Speaker 3: benefit from that.

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Speaker 2: Awesome Eliza, thanks so much for all of your insights.

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Speaker 2: It's always great to hear from the property gurus themselves

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Speaker 2: and looking forward to a big twenty twenty six from

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Speaker 2: Melbourne Hobart Darwin and for the Flush family as well.

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Speaker 2: Hearing about the first Homeowner Guarantee is really really interesting

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Speaker 2: because I think it's going to be impactful for a

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Speaker 2: lot of our community. So a big thank you for

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Speaker 2: coming on the show. We'll definitely have to check in

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Speaker 2: with you next year.

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Speaker 3: Thanks guys all the best, Thanks for having me.