1 00:00:05,920 --> 00:00:07,920 Speaker 1: Welcome to Fear and Greed Q and A, where we 2 00:00:07,960 --> 00:00:11,520 Speaker 1: ask and answer questions about business, investing, economics, politics and more. 3 00:00:11,560 --> 00:00:14,640 Speaker 1: I'm Michael Thompson, and today it is all about property. 4 00:00:14,640 --> 00:00:17,960 Speaker 1: House prices in Australia's capital cities are rising at their 5 00:00:18,000 --> 00:00:22,000 Speaker 1: fastest pace in nearly four years, according to domain's September 6 00:00:22,079 --> 00:00:24,880 Speaker 1: quarter house price report, which is out today. Records are 7 00:00:24,920 --> 00:00:28,320 Speaker 1: being said in Sydney, Brisbane, Adelaide and Perth and Melbourne's 8 00:00:28,360 --> 00:00:32,519 Speaker 1: growth is accelerating or reaccelerating. Doctor Nicola Powell is the 9 00:00:32,600 --> 00:00:35,360 Speaker 1: chief of Research and Economics at Domain. Nicola, welcome back 10 00:00:35,400 --> 00:00:36,559 Speaker 1: to Fear and Greed Q and A. 11 00:00:36,960 --> 00:00:38,320 Speaker 2: Hi Michael, thanks for having me. 12 00:00:39,080 --> 00:00:42,400 Speaker 1: Now, we previously and we've talked in the past about 13 00:00:42,440 --> 00:00:45,239 Speaker 1: where we had a two and a three speed market 14 00:00:45,479 --> 00:00:47,040 Speaker 1: at one point there where we had kind of the 15 00:00:47,080 --> 00:00:50,519 Speaker 1: mid tier cities climbing so fast, a lot faster than 16 00:00:50,520 --> 00:00:54,240 Speaker 1: say Sydney, we had Melbourne going backwards. Are we now 17 00:00:54,360 --> 00:00:58,200 Speaker 1: seeing a leveling out here or at least more consistency 18 00:00:58,240 --> 00:00:59,080 Speaker 1: within the growth. 19 00:01:00,040 --> 00:01:02,160 Speaker 2: It is an interesting question because I think what we've 20 00:01:02,160 --> 00:01:05,640 Speaker 2: got now is all capital cities are rising, that is, 21 00:01:05,680 --> 00:01:07,840 Speaker 2: apart from camber units that's the only one that kind 22 00:01:07,840 --> 00:01:10,039 Speaker 2: of bucked that trend. But we have got this kind 23 00:01:10,080 --> 00:01:13,319 Speaker 2: of unison of uplift which we weren't seeing previously. There 24 00:01:13,360 --> 00:01:15,600 Speaker 2: was much more stagnant conditions in some of our other 25 00:01:15,600 --> 00:01:18,720 Speaker 2: capital cities the way I would describe it. Now, those 26 00:01:18,800 --> 00:01:21,399 Speaker 2: prices are rising across all of our cities, but we're 27 00:01:21,400 --> 00:01:25,760 Speaker 2: starting to see growth diverge. So we're seeing some of 28 00:01:25,800 --> 00:01:28,800 Speaker 2: our cities. So we know that Perth Adelaide as an example, 29 00:01:28,920 --> 00:01:32,240 Speaker 2: were the over performers. They continue to see strong rates 30 00:01:32,240 --> 00:01:35,160 Speaker 2: of growth. They are still growing, but they're losing a 31 00:01:35,160 --> 00:01:37,440 Speaker 2: little bit of momentum, so they're growing at a slower 32 00:01:37,440 --> 00:01:39,880 Speaker 2: pace than they once were. But as you mentioned in 33 00:01:39,920 --> 00:01:43,200 Speaker 2: your intro, you've got other capital cities that are now reawakening. 34 00:01:43,200 --> 00:01:45,959 Speaker 2: They're re emerging. Sydney and Melbourne are the two that 35 00:01:46,040 --> 00:01:49,120 Speaker 2: jump out where they've seen the strongest growth. For Sydney 36 00:01:49,200 --> 00:01:51,400 Speaker 2: is the strongest growth in about two years. For Melbourne 37 00:01:51,400 --> 00:01:54,200 Speaker 2: it's the strongest growth in about four years. And we've 38 00:01:54,240 --> 00:01:58,840 Speaker 2: seen an acceleration in Brisbane pricing too. So while we 39 00:01:58,920 --> 00:02:02,120 Speaker 2: do have a unison in terms of uplift, I would 40 00:02:02,160 --> 00:02:04,400 Speaker 2: say that that growth is now diverging, and we're at 41 00:02:04,480 --> 00:02:07,400 Speaker 2: slightly different stages of the property cycle depending upon which 42 00:02:07,440 --> 00:02:08,120 Speaker 2: city you're in. 43 00:02:08,880 --> 00:02:11,360 Speaker 1: Okay, we want to take a closer look at a 44 00:02:11,360 --> 00:02:14,560 Speaker 1: couple of the cities. Then we'll start with Sydney, because 45 00:02:14,560 --> 00:02:17,760 Speaker 1: some of these figures are enormous. A median house price 46 00:02:17,760 --> 00:02:20,400 Speaker 1: of more than one point seventy five million dollars is 47 00:02:20,480 --> 00:02:22,799 Speaker 1: up three point four percent for the quarter. The thing 48 00:02:22,840 --> 00:02:27,280 Speaker 1: that shocked me though, was the forecast that basically at 49 00:02:27,560 --> 00:02:31,000 Speaker 1: the annual growth rate, if that continues, Sydney will pass 50 00:02:31,040 --> 00:02:36,480 Speaker 1: a two million dollar median by twenty twenty seven. And 51 00:02:37,040 --> 00:02:39,639 Speaker 1: it got me wondering can it keep going? Is there 52 00:02:39,680 --> 00:02:43,280 Speaker 1: a limit? Is there a realistic cap at which prices 53 00:02:43,440 --> 00:02:46,919 Speaker 1: just level off, or is it just the sky's the limit? 54 00:02:46,960 --> 00:02:48,000 Speaker 1: It can just keep going. 55 00:02:48,120 --> 00:02:50,520 Speaker 2: Look, I don't think the sky's the limit. I mean, obviously, 56 00:02:50,720 --> 00:02:53,680 Speaker 2: you know, we continue to see prices rise faster than 57 00:02:53,720 --> 00:02:57,720 Speaker 2: wage growth, So obviously wage income disposable income is one 58 00:02:57,760 --> 00:03:01,760 Speaker 2: of the things that does keep back the amount of 59 00:03:01,800 --> 00:03:03,800 Speaker 2: price growth. That will hold back the amount of price 60 00:03:03,840 --> 00:03:06,680 Speaker 2: growth that we have. But I think ultimately what you've 61 00:03:06,680 --> 00:03:10,799 Speaker 2: got is Sydney is just it's in a kind of 62 00:03:10,880 --> 00:03:14,760 Speaker 2: league of its own. You know, affordability in Sydney is 63 00:03:14,960 --> 00:03:18,560 Speaker 2: very poor. But what you do have is there is 64 00:03:18,639 --> 00:03:23,120 Speaker 2: strong interest in Sydney, particularly from overseas buyers. There's limited 65 00:03:23,160 --> 00:03:26,120 Speaker 2: homes that are ocean front. They're always going to command 66 00:03:26,200 --> 00:03:29,720 Speaker 2: a premium. You've got this huge premium for land in 67 00:03:29,760 --> 00:03:34,640 Speaker 2: Sydney relative to other capital cities, and ultimately the geographical 68 00:03:34,800 --> 00:03:38,640 Speaker 2: boundary of Sydney, the way that the just the land makeup, 69 00:03:39,280 --> 00:03:43,480 Speaker 2: it's locked right, It's got Blue Mountains, Ocean National Park. 70 00:03:43,760 --> 00:03:47,560 Speaker 2: This limits the sprawl for Sydney, whereas Melbourne doesn't have that, 71 00:03:47,600 --> 00:03:50,000 Speaker 2: and Melbourne's always going to have this edge of affordability 72 00:03:50,000 --> 00:03:52,800 Speaker 2: because it can sprawl endlessly as long as infrastructure can 73 00:03:52,880 --> 00:03:56,200 Speaker 2: keep up. But I think there's this element that continues 74 00:03:56,240 --> 00:03:59,760 Speaker 2: to power Sydney along is people that have equity currently 75 00:03:59,800 --> 00:04:03,240 Speaker 2: in home, big chunk of home owners already in the 76 00:04:03,240 --> 00:04:06,920 Speaker 2: Sydney market, unlocking that equity growth that they've already seen, 77 00:04:06,960 --> 00:04:09,520 Speaker 2: and that in itself helps to repel the market along too. 78 00:04:10,200 --> 00:04:13,520 Speaker 1: Okay, it really is quite an interesting scenario, as you say, 79 00:04:13,520 --> 00:04:17,279 Speaker 1: about being landlocked, and it does limit the capacity for 80 00:04:17,360 --> 00:04:21,560 Speaker 1: new supply. Can we talk about Brisbane then? Now? Being 81 00:04:22,200 --> 00:04:26,559 Speaker 1: Australia's second most expensive city. Why what is it really 82 00:04:26,600 --> 00:04:29,120 Speaker 1: that's put the rocket under Brisbane's house prices Over the 83 00:04:29,200 --> 00:04:29,719 Speaker 1: last few. 84 00:04:29,640 --> 00:04:34,280 Speaker 2: Years, Brisbane has been quite a remarkable city to watch. 85 00:04:34,680 --> 00:04:37,240 Speaker 2: You would know more than anyone. It wasn't that long 86 00:04:37,320 --> 00:04:40,520 Speaker 2: ago where we had a significant oversupply of units in 87 00:04:40,560 --> 00:04:43,440 Speaker 2: Brisboine Like I feel that wasn't that long ago, but 88 00:04:43,920 --> 00:04:47,200 Speaker 2: it has changed so dramatically. So Brisbane is now Australia's 89 00:04:47,200 --> 00:04:51,080 Speaker 2: second most expensive capital city for the first time on record, 90 00:04:51,160 --> 00:04:54,839 Speaker 2: both for house prices and for unit prices, which is 91 00:04:54,880 --> 00:04:59,080 Speaker 2: a massive shift now. Ultimately, Brisbane has a chronic undersupply 92 00:04:59,240 --> 00:05:02,599 Speaker 2: of housing. Ultimately, building has not been able to keep 93 00:05:02,640 --> 00:05:06,440 Speaker 2: pace of population growth. We know that there's got the Games, 94 00:05:06,480 --> 00:05:10,159 Speaker 2: so there's lots of infrastructure spending two going on that 95 00:05:10,200 --> 00:05:13,800 Speaker 2: creates jobs. I think the lifestyle jobs creation is drawing 96 00:05:13,839 --> 00:05:16,560 Speaker 2: people to the region. But one way I like to 97 00:05:16,560 --> 00:05:21,040 Speaker 2: look at it that really contextualizes the amount of population 98 00:05:21,200 --> 00:05:26,040 Speaker 2: growth in Queensland. We still have net interstate migration running 99 00:05:26,080 --> 00:05:29,200 Speaker 2: four times faster than the twenty tens, and we have 100 00:05:29,279 --> 00:05:32,960 Speaker 2: net overseas migration on average running three times faster than 101 00:05:33,000 --> 00:05:35,719 Speaker 2: the twenty tens in Queensland, so you know, it's got 102 00:05:35,839 --> 00:05:39,960 Speaker 2: strong rates of population growth still. And the thing with Brisbane, 103 00:05:41,000 --> 00:05:44,599 Speaker 2: it's seen an acceleration of growth. So while we've got 104 00:05:44,640 --> 00:05:49,080 Speaker 2: Adelaide and Perth seeing a deceleration, they're growing but not 105 00:05:49,120 --> 00:05:51,400 Speaker 2: as fast. It's the opposite in Brisbane, it continues to 106 00:05:51,440 --> 00:05:52,080 Speaker 2: push higher. 107 00:05:53,000 --> 00:05:56,520 Speaker 1: On the topic of Brisbane, what kind of impact does 108 00:05:56,560 --> 00:05:59,240 Speaker 1: something like the Olympics have when you know that there 109 00:05:59,320 --> 00:06:02,240 Speaker 1: is going to be a lot of spending in terms 110 00:06:02,279 --> 00:06:06,400 Speaker 1: of infrastructure over the coming years, how much does something 111 00:06:06,520 --> 00:06:11,160 Speaker 1: like that actually flow through to general property prices? 112 00:06:11,839 --> 00:06:14,839 Speaker 2: Look, it absolutely does. I think when you have huge 113 00:06:14,880 --> 00:06:20,599 Speaker 2: amounts of infrastructure spending, facilities and amenities, the word I like 114 00:06:20,640 --> 00:06:23,680 Speaker 2: to use is it leaves a legacy. And I think 115 00:06:23,720 --> 00:06:26,960 Speaker 2: that that legacy is in the makeup of its housing, 116 00:06:27,160 --> 00:06:30,520 Speaker 2: the makeup of the infrastructure, the amenities that are on offer. 117 00:06:30,920 --> 00:06:34,120 Speaker 2: It changes the shape of suburbs and I think that's 118 00:06:34,160 --> 00:06:36,480 Speaker 2: exactly what we're seeing at the moment. I mean, you know, 119 00:06:36,640 --> 00:06:39,240 Speaker 2: Brisbane has a timeline, or Southeast queens Lamp has a 120 00:06:39,240 --> 00:06:42,360 Speaker 2: timeline and it has to deliver these projects by the 121 00:06:42,400 --> 00:06:45,000 Speaker 2: time that the Olympics are here. And I think in 122 00:06:45,080 --> 00:06:47,919 Speaker 2: terms of the infrastructure delivery. If one state or territory 123 00:06:48,000 --> 00:06:49,040 Speaker 2: is going to be able to do that, it's going 124 00:06:49,080 --> 00:06:51,800 Speaker 2: to be Queen's Land because it has to. So it 125 00:06:51,880 --> 00:06:54,360 Speaker 2: is going to leave that imprint on housing and look 126 00:06:54,360 --> 00:06:57,400 Speaker 2: at if you want to know the impact of infrastructure uplift. 127 00:06:57,400 --> 00:07:01,240 Speaker 2: We've got a piece being released next week around Sydney's 128 00:07:01,240 --> 00:07:05,040 Speaker 2: Northwest connect so we've actually modeled the impact of price 129 00:07:05,480 --> 00:07:08,080 Speaker 2: and that would be an interesting one for us to 130 00:07:08,520 --> 00:07:09,880 Speaker 2: pick apart. Maybe next week. 131 00:07:10,080 --> 00:07:12,840 Speaker 1: Absolutely, we'll keep an eye out for that one. At Melbourne, 132 00:07:13,040 --> 00:07:15,720 Speaker 1: just briefly, you have mentioned a couple of times the 133 00:07:15,720 --> 00:07:18,920 Speaker 1: fact that it is reaccelerating. Now. We talked last year 134 00:07:19,160 --> 00:07:23,840 Speaker 1: about the opportunities that existed in Melbourne, particularly save for investors, 135 00:07:24,160 --> 00:07:29,240 Speaker 1: while prices were depressed slightly. Has the train left the 136 00:07:29,280 --> 00:07:30,000 Speaker 1: station now? 137 00:07:30,400 --> 00:07:35,080 Speaker 2: Oh, look close to. It's only got ten thousand dollars 138 00:07:35,160 --> 00:07:38,000 Speaker 2: left and it's in a new record high, so fully recovered. 139 00:07:38,520 --> 00:07:40,840 Speaker 2: We knew that this recovery was going to be a 140 00:07:40,920 --> 00:07:44,160 Speaker 2: slow one and it has been. It has been more subdued, 141 00:07:44,600 --> 00:07:47,760 Speaker 2: but only ten thousand dollars separates Melbourne house prices from 142 00:07:47,760 --> 00:07:50,800 Speaker 2: a new record high. They grew two point two percent 143 00:07:50,880 --> 00:07:54,240 Speaker 2: over the quarter. It's a clear acceleration of growth, the 144 00:07:54,280 --> 00:07:57,720 Speaker 2: strongest quarterly growth in four years, and we're expecting a 145 00:07:57,720 --> 00:07:59,640 Speaker 2: new record for Melbourne to be achieved by the end 146 00:07:59,680 --> 00:08:02,920 Speaker 2: of the year. I actually think Melbourne's a really interesting 147 00:08:02,960 --> 00:08:05,720 Speaker 2: city at the moment because I think there's this element 148 00:08:05,720 --> 00:08:09,080 Speaker 2: of urgency in Melbourne more so than any other capital city, 149 00:08:09,440 --> 00:08:13,440 Speaker 2: and that urgency is created by the value that it presents, 150 00:08:13,480 --> 00:08:16,240 Speaker 2: and that value is being diminished as time ticks on. 151 00:08:16,640 --> 00:08:19,960 Speaker 2: Buyers are realizing that it's coming out in higher clearance rates, 152 00:08:20,000 --> 00:08:24,120 Speaker 2: it's coming out on overall stock now reducing, and it's 153 00:08:24,160 --> 00:08:25,760 Speaker 2: coming out in higher price growth too. 154 00:08:26,680 --> 00:08:29,559 Speaker 1: Okay, look, by going through a few of the different cities, 155 00:08:29,600 --> 00:08:31,440 Speaker 1: we've actually kind of picked apart a few of the 156 00:08:31,600 --> 00:08:36,920 Speaker 1: reasons why different cities are accelerating at different rates. But 157 00:08:37,040 --> 00:08:39,160 Speaker 1: broadly we know that some of the main drivers here. 158 00:08:39,160 --> 00:08:43,920 Speaker 1: We've had three interest rate cuts, Supply broadly is still 159 00:08:43,960 --> 00:08:47,120 Speaker 1: low combined, I would imagine they would be the main driver. 160 00:08:47,200 --> 00:08:50,160 Speaker 1: But what do you expect to see now with the 161 00:08:50,200 --> 00:08:52,880 Speaker 1: government's expanded First Home by a scheme. It came into 162 00:08:52,920 --> 00:08:54,960 Speaker 1: effect at the start of this month, so we're only 163 00:08:55,000 --> 00:08:57,640 Speaker 1: put it three weeks into it at this stage too 164 00:08:57,679 --> 00:08:59,480 Speaker 1: early to say what effect it's having. 165 00:09:00,360 --> 00:09:03,760 Speaker 2: So industry feedback so far that we're having is actually 166 00:09:04,280 --> 00:09:07,800 Speaker 2: we've seen non first home buyers actually fast track their 167 00:09:07,840 --> 00:09:11,240 Speaker 2: purchase before the expansion, So those that are sitting below 168 00:09:11,320 --> 00:09:15,680 Speaker 2: that property price cap, so investors or current homeowners that 169 00:09:15,720 --> 00:09:18,520 Speaker 2: are wanting to purchase, say below Sydney's property price cap, 170 00:09:18,559 --> 00:09:21,160 Speaker 2: which was going to be expanded to one point five million, 171 00:09:22,160 --> 00:09:24,920 Speaker 2: have wanted to buy before the first October to get 172 00:09:24,960 --> 00:09:28,200 Speaker 2: so they're not competing, so they're not competing precisely. So 173 00:09:28,240 --> 00:09:30,200 Speaker 2: I think it did have an impact on other bier 174 00:09:30,280 --> 00:09:33,440 Speaker 2: segments earlier, and I think obviously now we're in that 175 00:09:33,480 --> 00:09:36,040 Speaker 2: final quarter of the year, we've now got the expanded 176 00:09:36,080 --> 00:09:39,760 Speaker 2: scheme in place. It is going to support buyer demand 177 00:09:39,800 --> 00:09:42,360 Speaker 2: from first home buyers, it is going to support price growth. 178 00:09:42,440 --> 00:09:47,280 Speaker 2: So it's another dynamic that is providing a little bit 179 00:09:47,320 --> 00:09:51,840 Speaker 2: of an extra spark to housing momentum. As you mentioned, 180 00:09:51,840 --> 00:09:56,080 Speaker 2: we've got that spark coming from greater boring capacities, and 181 00:09:56,200 --> 00:09:58,000 Speaker 2: what you tend to see as a reduction in the 182 00:09:58,040 --> 00:10:01,000 Speaker 2: cache rat is amplified throughout BIGCA housing markets such as 183 00:10:01,000 --> 00:10:03,720 Speaker 2: Sydney and Melbourne much quicker, and that's exactly what we're 184 00:10:03,800 --> 00:10:06,760 Speaker 2: currently seeing. We've also seen a rise in real incomes, 185 00:10:06,800 --> 00:10:08,640 Speaker 2: which I think is helping. We've still got a tight 186 00:10:08,720 --> 00:10:11,920 Speaker 2: jobs market and we've got a better sentiment. You know, 187 00:10:11,960 --> 00:10:15,840 Speaker 2: the outlook is better coming from Australians than it was 188 00:10:15,840 --> 00:10:18,640 Speaker 2: twelve months ago, and that also helps to play out 189 00:10:18,679 --> 00:10:21,880 Speaker 2: positively well. You know, if sentiment is rising, We're not 190 00:10:22,000 --> 00:10:25,800 Speaker 2: quite into positive territory, but it is rising. That tends 191 00:10:25,840 --> 00:10:27,920 Speaker 2: to play out well for our housing market and you 192 00:10:27,960 --> 00:10:31,080 Speaker 2: see higher levels of turnover. So there's lots of things 193 00:10:31,120 --> 00:10:33,720 Speaker 2: going on that I think individually are kind of driving 194 00:10:33,760 --> 00:10:36,400 Speaker 2: a little bit more momentum into Australia's property. 195 00:10:36,720 --> 00:10:38,679 Speaker 1: All right, good place to leave it. Nicola, thank you 196 00:10:38,679 --> 00:10:39,840 Speaker 1: for talking to Fear and Greed. 197 00:10:40,000 --> 00:10:40,400 Speaker 2: Thank you. 198 00:10:40,720 --> 00:10:43,599 Speaker 1: That was doctor Nicola Powell, head of Research and Economics 199 00:10:43,640 --> 00:10:45,800 Speaker 1: at DOMAIN. If you've got something that you'd like to know, 200 00:10:45,840 --> 00:10:47,880 Speaker 1: something you'd like us to delve into, then send three 201 00:10:47,880 --> 00:10:51,760 Speaker 1: your question on LinkedIn, Instagram, Facebook, or at Fearandgreed dot 202 00:10:51,800 --> 00:10:54,080 Speaker 1: com dot au. I'm Michael Thompson and this is Fear 203 00:10:54,120 --> 00:10:54,920 Speaker 1: and Greed Q and a