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Speaker 1: Louis Christopher, Well, go into property insights.

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Speaker 2: Mate. Good to be with you, Mark.

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Speaker 1: I think it's about like I think it quickly said,

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Speaker 1: outside of it. I think the last time I saw

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Speaker 1: you were, as you said, it was twenty nineteen, but

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Speaker 1: I don't evenmember what it was for, but it was

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Speaker 1: some sort of summit that were asked.

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Speaker 2: To down in the housing some of the canbra yeah,

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Speaker 2: talking about Labour's negative gearing policy that they were bringing.

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Speaker 1: But the Libs were in at the time. That's right,

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Speaker 1: the Libs, because I think it was might have been

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Speaker 1: Josh or it might have been the Prime Minister. Actually

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Speaker 1: I think it was. They're both there, yeah, And I

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Speaker 1: remember sitting there thinking to myself, this guy talks a

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Speaker 1: lot of sense. You that is what I'm talking about.

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Speaker 1: And so one of the reasons I wanted to invite

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Speaker 1: you on today was to sort of look at your insights,

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Speaker 1: but probably more importantly from the very beginning, to introduce SQM, which,

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Speaker 1: by the way, I'm dying to know what SQM stands for,

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Speaker 1: which is your business SQM research. It's an economic sort

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Speaker 1: of research hub around housing industrates and various other things.

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Speaker 1: What does ESCUUM stand for?

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Speaker 2: It's the abbreviation for square.

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Speaker 1: Meter square meter because you like measuring things? Is that

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Speaker 1: what it is you've got? It's all that measurement. And

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Speaker 1: what's your background? First? Where you where'd you get this

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Speaker 1: sort of skill from?

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Speaker 2: Yeah, well, I've always had a passion for investment markets,

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Speaker 2: not just property, but shares, funds, various assa classes. I

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Speaker 2: think that passion arose through my grandparents, who actually raised me.

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Speaker 2: I'm a double orphan, you see, and what does a

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Speaker 2: double awp me? It means you lose both your mother.

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Speaker 1: And I'm sorry to hear that.

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Speaker 2: It's all right, it's all right. I regard it myself

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Speaker 2: as being actually very lucky because my grandparents did raise me,

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Speaker 2: and they raised me the right way. And my grandfather

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Speaker 2: was an accountant, So in my younger years I had

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Speaker 2: all these financial reports all around me from the ages

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Speaker 2: of five onwards, and my granddad used to take me

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Speaker 2: down to the Sydney Stock Exchanges. It was known then

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Speaker 2: when I remember from cry system. So I had this

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Speaker 2: exposure at a very young age. What drove me towards

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Speaker 2: this area wasn't just that exposure, was actually true a

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Speaker 2: really negative experience, particularly on the property front, So when

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Speaker 2: my grandfather passed away and I was fourteenth at a time,

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Speaker 2: it was just my grandmother raising me at that time,

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Speaker 2: and she was ripped off on a bad property deal

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Speaker 2: by very dodgy property manager on the Gold Coast. And

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Speaker 2: I was too young to try and stop it. But

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Speaker 2: I could see it, but she couldn't see it. And

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Speaker 2: if only we had more information, better information about what

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Speaker 2: the market was doing, she wouldn't have been ripped off.

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Speaker 2: And she wasn't rich. She was just a middle class

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Speaker 2: person just trying to get by, trying to raise a grandson.

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Speaker 2: But to see that firsthand, really it really shook me

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Speaker 2: and it stayed on my mind for a long time.

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Speaker 2: I think the combination of loving investment markets but wanted

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Speaker 2: to do better by commuter consumers in terms of having

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Speaker 2: better information is what I'm all about.

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Speaker 1: And so SQM was born. How old is that business

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Speaker 1: now going?

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Speaker 2: I launched that in two thousand and.

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Speaker 1: Six, Oh wow, some more recent than twenty eight years older.

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Speaker 2: Yeah. So before then, I was head of research of

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Speaker 2: a company you may have heard of, caught Australian property monitsors. Yeah,

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Speaker 2: so they're still around. They're still around their own to

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Speaker 2: one hundred percent by Domain these days, right, okay, But

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Speaker 2: back then they were only fifty percent owned by Domain,

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Speaker 2: and so we had a lot of independence in terms

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Speaker 2: of being able to put out option clearance rates and

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Speaker 2: so forth. So I was their head of research and

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Speaker 2: then their general manager for about six years, and then

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Speaker 2: Domain bought it and nothing on Domain. But I just

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Speaker 2: didn't like that culture, and by that time I was

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Speaker 2: keen to get out there and run my own shape

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Speaker 2: and so we got Eskewan going from scratch.

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Speaker 1: So what okay, now, just to give him a bit

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Speaker 1: of a broadsheet on SQM, what is SQM interested in

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Speaker 1: today and what is it delivering in terms of perhaps

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Speaker 1: metrics or measurements or analytics to the marketplace. Yeah.

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Speaker 2: So there's actually two main businesses. Firstly, the one that

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Speaker 2: mums and dads know what's best for is that we

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Speaker 2: provide property data, so we compete with core Logic and

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Speaker 2: prop Track and of course to main my old company,

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Speaker 2: so we compete with them. And then on the other side,

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Speaker 2: the side which is less known by mums and dads,

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Speaker 2: is that we actually issue ratings on managed funds. So

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Speaker 2: if you know morning Star on sect Zenith, we compete

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Speaker 2: with them on that.

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Speaker 1: Front, right, So you're in another asset, completely different asset

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Speaker 1: class exactly. So if we go and have a look

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Speaker 1: at the more less, more consumable, more consumer orientated asset class,

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Speaker 1: which is real estate, do you cover the whole of

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Speaker 1: the country, Yes, we do, So what are you looking at?

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Speaker 1: What are the sort of some of the things you

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Speaker 1: look at from week to week.

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Speaker 2: We have our own series and auction clearance rates, which

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Speaker 2: predominantly focused on Sitney and Melbourne. But that's a most

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Speaker 2: timely measurement of the markets. I'm sure you're well aware.

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Speaker 2: We measure advertised rents. In fact, we were the first

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Speaker 2: to put out a series based on online listings quite

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Speaker 2: some years back. We measure asking prices as well, So

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Speaker 2: what vendors are doing in the.

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Speaker 1: Market place on sale on rents, you do them full sale.

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Speaker 2: Full rents and then of course sold. So we also

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Speaker 2: have medium house passes based on actual sold records, and

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Speaker 2: we have license agreements with each state VG. We'll tell

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Speaker 2: you general.

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Speaker 1: General right okay, So okay, so if it must be

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Speaker 1: pretty interesting then so if someone like you sort of

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Speaker 1: gets to see trends, so trends are important from our

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Speaker 1: data point of view. I mean, it's that point men,

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Speaker 1: Now what happened last week. I'm sort of interesting, but

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Speaker 1: I'm more interested in trends, And so it was an

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Speaker 1: audience more interest in the trends, or there should be

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Speaker 1: more interested in and trends. What are the some of

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Speaker 1: the more interesting trends you saw, say, let's say during COVID,

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Speaker 1: or maybe not at the beginning of COVID, but you know,

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Speaker 1: sort of as COVID progressed it and there was lots

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Speaker 1: of money freed up into the system. What are the

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Speaker 1: sort of trends in relation to property that you.

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Speaker 2: Saw that the outbreak of COVID and the housing market

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Speaker 2: was most interesting. So the first thing that happened was

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Speaker 2: at auction clearance rates collapsed. And this was before the

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Speaker 2: federal government announced any stimulus all to try and salvage

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Speaker 2: the economy. So all the leading indicators were suggesting the

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Speaker 2: housing market was about to have a major correction. It didn't,

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Speaker 2: and that is because the government did come to the

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Speaker 2: party and saved you kind of by all the various measures.

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Speaker 2: We're well aware of the.

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Speaker 1: Other Well, one of the things of lewis that most

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Speaker 1: people where it was the tff I mean the funding

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Speaker 1: facility and funding facility that the RBA offered to the

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Speaker 1: banking system because it wasn't really ever announced because it's

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Speaker 1: not a government thing as an RBA thing, and that's

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Speaker 1: where all these people were able to get one point

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Speaker 1: nine to nine percent fixed rate for three years. That

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Speaker 1: was a huge stimulus to the real estate market.

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Speaker 2: Absolutely whats you when you bring down the cash right

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Speaker 2: to near zero percent and you've got lending rates running

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Speaker 2: at two to three percent out there. Massive stimulus. I

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Speaker 2: think it was that combined with the government stimulus as well.

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Speaker 2: You may recall that for small businesses we've got a

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Speaker 2: break in terms of GST payg as well. I recall

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Speaker 2: that as a small business operator at the time, and

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Speaker 2: I think that saved the banking for many many businesses

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Speaker 2: out there. Of course, many shopfronts still got smashed, as

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Speaker 2: we all know when you close up the streets, this

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Speaker 2: is what happens.

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Speaker 1: And but job keeper as well. So, but what did

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Speaker 1: you see after a very short period of time.

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Speaker 2: Yeah, I think once that stimulus came in place. Sorry,

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Speaker 2: the other trend it occurred was that we were recording

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Speaker 2: a sharp rise in rental vacancy rates.

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Speaker 1: Already were you yes, So this.

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Speaker 2: Was back in March April twenty twenty. Vacancy rates absolutely

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Speaker 2: shot up shortly after the lockdowns, and they shot up

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Speaker 2: in the CBD locations, and they shot up in the

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Speaker 2: holiday locations in particular.

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Speaker 1: What do you think that was the cause of that.

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Speaker 2: Well, no one could take any holidays for starters, and

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Speaker 2: I think business trips were all about. Of course at

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Speaker 2: the time, going away for a weekend wasn't happening, So

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Speaker 2: I think the combination of those factors. But also what

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Speaker 2: was happening was that we were seeing an exodus out

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Speaker 2: of cities to try and get away from COVID, to

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Speaker 2: try and get away from the lockdowns. And so the

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Speaker 2: trend we had in later twenty twenty and going into

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Speaker 2: twenty one was that regional rental vacancy rates, after initially rising,

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Speaker 2: sharply fell and they fell to record those.

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Speaker 1: Because people want to get to those places and sort

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Speaker 1: of hide away.

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Speaker 2: Correct. Yeah, Over and above that, people were looking for

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Speaker 2: larger places because they were working from home. So towards

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Speaker 2: the end of twenty twenty, we also noticed a reversal

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Speaker 2: in these sky high rental vacancy rates in the cities.

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Speaker 2: They started to fall and then fall rather quickly, and

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Speaker 2: so across twenty twenty one and into twenty twenty two,

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Speaker 2: rental vacancy rates for most cities fell well under two percent,

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Speaker 2: and in some cities actually fell by fell below one percent.

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Speaker 2: And that was because I think people were looking for essentially,

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Speaker 2: as mentioned, more room. They were working from home and

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Speaker 2: the yor staying in the city, but they were looking

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Speaker 2: for whole premises.

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Speaker 1: Less people per apartment for example. Yes, correct before I like,

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Speaker 1: you know, if we were young guys, you and I

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Speaker 1: I might have shared the rent in that place, my

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Speaker 1: bedroom at the other bedroom, yes, and then we shared

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Speaker 1: the rest of the facilities. But now what you're saying

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Speaker 1: is it would be just you because you say, look, Mark,

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Speaker 1: that's cool. I wanted to bet on the other room

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Speaker 1: for my work.

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Speaker 2: Yes, that's right. Now. Those vacancy rates stayed low when

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Speaker 2: we had the borders open. Of course, we had a

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Speaker 2: massive wave of overseas arrivals and now put further pressure

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Speaker 2: on the rental market across twenty twenty two and into

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Speaker 2: twenty twenty three, and indeed this year as well. And

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Speaker 2: I think the current state of play with the rental

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Speaker 2: market as we speak is that vacancy rates still remain tight.

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Speaker 2: We've got a population that's going fast and what we

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Speaker 2: can build for I don't see that alleviating itself really

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Speaker 2: anytime soon. But I will say to what we're seeing

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Speaker 2: with rents at this point in time is that the

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Speaker 2: market is largely priced in a lot of the rental

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Speaker 2: crisis now. So rents have actually the recent few months

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Speaker 2: of starting to flatline in our across our capital cities

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Speaker 2: and not rising at the rate of ten to twenty

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Speaker 2: percent that we saw across twenty twenty two. The annual

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Speaker 2: rate now has fallen for most capital cities back down

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Speaker 2: to about four to five percent.

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Speaker 1: But they're not going backwards though.

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Speaker 2: It's not going backwards. But there are some cities now

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Speaker 2: recording some slight falls. So Melbourne, for example, the last

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Speaker 2: quarter we've recorded about a one percent decline in rents.

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Speaker 2: Keeping in mind rents have risen massively.

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Speaker 1: Yes, it's not really that bad, but at the same time,

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Speaker 1: it is indicating perhaps a different trend. Correct And LOUI,

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Speaker 1: is that because the rental decline, for example in Melbourne, Yeah,

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Speaker 1: it's only a small mountains, it's only for what a quarter.

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Speaker 1: I think you said that's right. Is that because there's

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Speaker 1: less demand or is it because the demand isn't willing

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Speaker 1: to pay any more money? In other words, suck the

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Speaker 1: oxygen out of the system.

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Speaker 2: Yeah. Look, I think it's a combination of the two.

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Speaker 2: So I think how tenants have responded to the sky

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Speaker 2: high rents is that they've been sharing together, or they've

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Speaker 2: been grouping together more after that period where they wanted

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Speaker 2: a home just to themselves and not share with anyone

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Speaker 2: due to the sky high rents, that they're now being

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Speaker 2: forced to share. So that's occurred. Also, we speak of

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Speaker 2: the rental crisis, but I would argue that it hasn't

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Speaker 2: further deteriorated. So as I mentioned this notion that a

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Speaker 2: lot of the bad news has been priced in now

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Speaker 2: into weekly rents. For rents to rise further from here,

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Speaker 2: you'd have to see a further deterioration in the rental crissis.

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Speaker 2: In other words, vacancy rates would have to fall further

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Speaker 2: from where we are now.

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Speaker 1: Is it probably impossible to fall further? I mean zero

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Speaker 1: and zero anyway, they're definitely round one or less one percent,

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Speaker 1: less in most cases less than one percent. So it's

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Speaker 1: sort of like I mean, I guess you can get

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Speaker 1: into negative. You could have negative vacancy rates. In other words,

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Speaker 1: there's just no vacancies. In fact, there's people walking around.

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Speaker 1: We know where to live.

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Speaker 2: Well, yes, I guess you could. And the concern going

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Speaker 2: forward is that it looks like our population for this

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Speaker 2: year is expanded by another five hundred thousand people. On

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Speaker 2: our numbers, it looks like we will build or complete

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Speaker 2: about one hundred and fifty thousand dwellings. So there'll be

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Speaker 2: a shortage again this year of accommodation that could put

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Speaker 2: downward pressure on vacancy rates as we get towards the

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Speaker 2: end of the year once again.

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Speaker 1: So if I'm an investor, which I guess if I'm

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Speaker 1: an investor, then would I be still would I be

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Speaker 1: still trying to be interested in buying property in some

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Speaker 1: of the metro the capital cities of the metros in Australia, perhaps,

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Speaker 1: let's say on the East Coast where I live, because

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Speaker 1: my rental returns should be very good or has that

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Speaker 1: all been priced in to the purchase price.

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Speaker 2: It's been priced in to an extent, but you can

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Speaker 2: get good yields at this time. The question will be

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Speaker 2: will rents rides further over and above today's rents, and

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Speaker 2: I suspect what we'll actually see, provided the rental crissis

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Speaker 2: doesn't deteriorate further, is that rents will rise more in

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Speaker 2: line with CPI or the inflation rate going forward.

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Speaker 1: So in other words, which probably means the yield that

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Speaker 1: I'm going to get is already set. In other words,

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Speaker 1: it's back back to normal three for residential three and

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Speaker 1: a half four packs.

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Speaker 2: It's depending where you are around the country. There's some

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Speaker 2: great areas where you can get a gross rental yield

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Speaker 2: of six percent plus.

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Speaker 1: Yeah. You might be up up and north of Brisbane.

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Speaker 1: You might yeah, Morton Bay or something like that, or

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Speaker 1: he might be some part of Adelaid baps. Yep, that's

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Speaker 1: right or better than if you go down a Canberra.

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Speaker 1: You're not going to be seeing that.

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Speaker 2: You're not going to be seeing that. You won't see

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Speaker 2: that in Melbourne. Melbourne average rents running average yields are

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Speaker 2: running at about three.

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Speaker 1: Percent, right And in Sydney, Sydney they're.

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Speaker 2: A little bit higher than Melbourne by a quarter of

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Speaker 2: a percentage point, say three and a quarter to three

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Speaker 2: and a half percent, depending whereabouts you looking. City and

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Speaker 2: what type of property you buy.

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Speaker 1: So the agents that I've had in here more recently

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Speaker 1: on this show, properly insights have been saying to me,

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Speaker 1: as of now, we're seeing a lot more stock available

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Speaker 1: for auction than we have seen in previous periods, like

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Speaker 1: the previous similar periods, this time last year, this time

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Speaker 1: of the yearfore and what are you guys seeing there as.

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Speaker 2: That's right for Sydney in particular or in particular yeah,

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Speaker 2: or up by about seventeen percent compared to this time

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Speaker 2: last year in terms.

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Speaker 1: Of a big increase, I mean seventeen percent relative to

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Speaker 1: other periods. Is that an outlier increase.

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Speaker 2: In terms of percentage, yeah, it's a little bit at normal,

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Speaker 2: But in terms of the absolute number of listings out there,

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Speaker 2: we're just back to long term average our levels for Sydney.

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Speaker 1: So give me a bit of a feel for that.

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Speaker 1: So let's say Sydney, I know, and on any one weekend,

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Speaker 1: what would have two thousand listings were we looking at?

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Speaker 2: Although in terms of total listenings out there for a

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Speaker 2: course of a month, you'd be looking at about forty

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Speaker 2: five thousand.

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Speaker 1: Listings, right, So you were saying that right now, even

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Speaker 1: with a seventeen percent increase in Sydney, that's just bringing

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Speaker 1: us back up to pre COVID COVID levels, that's right,

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Speaker 1: pre COVID levels. So if I go back a year

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Speaker 1: this time last year, so we were seventeen percent less,

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Speaker 1: say in Sydney, we were way level lower than our

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Speaker 1: pre COVID levels.

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Speaker 2: Oh my word? Were we were near record lied?

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Speaker 1: And would you attribute the price rises and the speed

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Speaker 1: at which places were sold and the just a general

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Speaker 1: demand of people inspecting and turn up doctions. Would you

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Speaker 1: attribute that to that very factor, that one factor like

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Speaker 1: supply not not anywhere in needing to meet demand.

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Speaker 2: Yes, ultimately that's what it does mean. Now you've got

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Speaker 2: to look at well, why supply hasn't met demand and listings,

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Speaker 2: the total number of listings is often swayed by the

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Speaker 2: increases and decreases in demand and as well as how

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Speaker 2: vendors see the market. Now, up until now, vendors have

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Speaker 2: never been fource sellers in this country really, so when

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Speaker 2: the market gets a bit soft, they tend to withdraw

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Speaker 2: their properties more often than not.

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Speaker 1: So why not, now, it's a good question.

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Speaker 2: Potentially they many of them are stretched. Of course, you

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Speaker 2: may record the beginning this year, there was a great

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Speaker 2: expectation that we're about to have an interest rate car.

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Speaker 1: I remember it well, didn't happen time at August September

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Speaker 1: this year, they.

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Speaker 2: Were, but there were some media reports to suggest it

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Speaker 2: could happen as early as March April. And so when

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Speaker 2: the market opened at the beginning of twenty four we

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Speaker 2: notice a bit of a jump and buyer activity and

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Speaker 2: sellers lifted their asking prizes across the cities. But that

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Speaker 2: interest rate cut, that expected interest rate cut, didn't materialize,

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Speaker 2: and I think as the year went on there was

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Speaker 2: a lot more uncertainty and concern on both sides, particularly

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Speaker 2: the concern on the vendor side that an interest rate

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Speaker 2: cut wasn't forthcoming. And so I think for a number

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Speaker 2: of vendors, especially those who are right on the edge

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Speaker 2: in terms of trying to meet their more injury payments,

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Speaker 2: perhaps a number of them now have said, right, well,

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Speaker 2: we don't know when this rate cut's coming. It might

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Speaker 2: not come for sometime. Yet I think it's now time

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Speaker 2: to sell and reduce our debt.

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Speaker 1: We had Warren Hogan in that chair about two weeks ago,

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Speaker 1: and he was actually saying that we should actually have

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Speaker 1: an interest rate rise.

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Speaker 2: Yeah, yeah, I know warrant and he was forecasting up

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Speaker 2: to three interest rate rises this year. I don't think

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Speaker 2: that's going to happen now. I understand where he was

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Speaker 2: coming from that there was still a lot of inflation

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Speaker 2: in the system, and there's no doubt that the Reserve

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Speaker 2: Bank made messages to suggest that they were not going

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Speaker 2: to rule out a rate rise this year. But I

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Speaker 2: think now there's plenty of evidence to say, Look, it's

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Speaker 2: unlikely they will lift rates this year, and I think

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Speaker 2: that the move will be towards a rate cut. I

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Speaker 2: don't think it's going to happen this year. I think

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Speaker 2: properly earlier next year.

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Speaker 1: So what do you think about it? What do you

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Speaker 1: think of the economy? And often I sit down with

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Speaker 1: Kookie Stupa Gaculas and we once a month we sit

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Speaker 1: down together, and he's a bit bearish on the economy

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Speaker 1: at the moment.

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Speaker 2: Yeah, he was hoping for rate cuts this year big time.

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Speaker 1: But what do you think of the economy? Where do

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Speaker 1: you think of is that? I mean, because stable retail

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Speaker 1: sales been very low relative to historic numbers back to

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Speaker 1: the ninety nine and one levels, although more recently, the

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Speaker 1: retail sales are glad. They bounced a bit, but off

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Speaker 1: a low base. You know, small businesses, you know, there's

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Speaker 1: not a lot of of new small businesses opening up,

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Speaker 1: quite a lot of going out of business, particularly in

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Speaker 1: the retail and fashion. What do you generally, what's your

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Speaker 1: read on the economy at the moment.

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Speaker 2: It seems to be mixed to me, There's no doubt

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Speaker 2: many businesses are still doing a tough particularly shopfronts. In

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Speaker 2: my view, you look at consumer sentiment a good measure

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Speaker 2: in terms of how people are thinking of the economy. Well,

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Speaker 2: those numbers suggest that a lot of people out there

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Speaker 2: very negative about the economy. Then again, if you look

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Speaker 2: at employment and employment growth, we've added in the last

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Speaker 2: twelve months about three hundred thousand jobs. That's not too

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Speaker 2: bad at all for an economy that's been flatlining.

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Speaker 1: A lot of being government though, a lot of.

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Speaker 2: Being government that is true to private sector that's been struggling.

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Speaker 2: But nevertheless, that has occurred, and it might well explain

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Speaker 2: why we haven't seen any or any real deep route

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Speaker 2: in housing prices while interest rates have risen. And I

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Speaker 2: think this is one of the things which has surprise

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Speaker 2: eyes mean this year is that the housing market still

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Speaker 2: rose despite the rise and interest rates, and people have

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Speaker 2: been scratching their heads about that.

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Speaker 1: So I mean, you look at all the data you

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Speaker 1: know we've got. We'll talk about their head scratching bits

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Speaker 1: in a second, because you've got all the data we've got.

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Speaker 1: The economy's GDP is not growing very well, certainly in

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Speaker 1: relation to long term averages. It's nowhere near it. Interest

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Speaker 1: rates are relatively speaking high, but I'm saying relatively speaking

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Speaker 1: high relative to point one of the percent when it

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Speaker 1: was you know, that was the cash rate. But you know,

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Speaker 1: there's still four thirty five, four point three five. Warren

407
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Speaker 1: would argue you should have a five in front of it,

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Speaker 1: but irrespective is still four point three five. That's squat

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Speaker 1: a big jump. But unemployment still only four point two,

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Speaker 1: that's right. And there seems to be a lot more

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Speaker 1: job as being allocated by various governments in the country,

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Speaker 1: like I'm doing at federal, state, and local governments. Do

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Speaker 1: you think this is just window dressing that's happening at

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Speaker 1: the moment, and that you know, really once the once

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Speaker 1: that that spend on employment by the various government stops

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Speaker 1: and where they stop employing more people, that we're going

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Speaker 1: to see a spike in unemployment. To get closer to

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Speaker 1: what's going on in New Zealand, was closer to going

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Speaker 1: what's going on in Canada, what's going on in Europe,

420
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Speaker 1: and what's going in the UK. They've all got a

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Speaker 1: six in front of them.

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Speaker 2: If the economy were to sorry, if the federal gun

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Speaker 2: were to cut expenditure or just stop or.

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Speaker 1: Just stop okay, just not that more news stuff.

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Speaker 2: Yeah, okay, yeah, I think the economy would completely stall.

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Speaker 2: Now that's said, population is still expanding at a very

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Speaker 2: quick quick rate. I think it wasn't. If it wasn't

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Speaker 2: for that, we also would have stalled as well. So

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Speaker 2: there's been two factors. I agree with you on the

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Speaker 2: government spending, but it's also been very strong population growth. Yeah,

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Speaker 2: we just kept the economy afloat.

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Speaker 1: Can you explain to the listeners how does population growth

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Speaker 1: keep the economy just murdering along?

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Speaker 2: Okay? So it basically affects total demand in the economy

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Speaker 2: and also has the ability to increase the capacity of

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Speaker 2: the economy. So I think for this year we will

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Speaker 2: have about five hundred plus one thousand people, which on

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Speaker 2: the calendar year that we get calendar year, so twenty

439
00:23:20,000 --> 00:23:23,720
Speaker 2: twenty four that I think the population will expand by

440
00:23:24,240 --> 00:23:26,040
Speaker 2: north for five hundred thousand people.

441
00:23:25,880 --> 00:23:27,880
Speaker 1: That including a person.

442
00:23:28,200 --> 00:23:30,760
Speaker 2: Natural bursts plus migration.

443
00:23:30,520 --> 00:23:33,679
Speaker 1: Right, that's like double what we normally would have.

444
00:23:33,880 --> 00:23:36,199
Speaker 2: It is, it is. It's a very strong number, and

445
00:23:36,200 --> 00:23:39,639
Speaker 2: it's not necessarily a number I agree with personally, but nevertheless,

446
00:23:39,640 --> 00:23:42,480
Speaker 2: it is what it is. And so with that amount

447
00:23:42,520 --> 00:23:44,280
Speaker 2: of people coming in, of course, a number of those

448
00:23:44,320 --> 00:23:48,959
Speaker 2: people are also bringing their wealth into the economy and

449
00:23:49,000 --> 00:23:51,920
Speaker 2: they spend. They need a home, of course, they need

450
00:23:52,240 --> 00:23:54,920
Speaker 2: food and groceries, they need clothes, They.

451
00:23:54,760 --> 00:23:57,199
Speaker 1: Go out and spend, Kids go to school, kids go

452
00:23:57,240 --> 00:23:58,000
Speaker 1: to school.

453
00:23:57,960 --> 00:24:01,320
Speaker 2: All that and that helps drive keep the economy afloat.

454
00:24:01,800 --> 00:24:04,919
Speaker 2: Now that's one thing. But of course, if you measure

455
00:24:04,960 --> 00:24:07,600
Speaker 2: the economy on a what they call a per capita

456
00:24:07,680 --> 00:24:11,120
Speaker 2: basis or per person basis, the economy has actually been

457
00:24:11,119 --> 00:24:16,760
Speaker 2: going backwards. So a GDP per capita since twenty twenty

458
00:24:16,800 --> 00:24:20,199
Speaker 2: two has fallen I think the total falls getting up

459
00:24:20,240 --> 00:24:22,840
Speaker 2: to around seven to eight percent. That means our standard

460
00:24:22,920 --> 00:24:26,320
Speaker 2: of living has been falling per person on average by

461
00:24:26,400 --> 00:24:28,200
Speaker 2: seven to eight percent from twenty twenty two.

462
00:24:28,280 --> 00:24:29,639
Speaker 1: That's that's quite historic.

463
00:24:30,359 --> 00:24:32,880
Speaker 2: Yeah, it's actually worse than what happened in nineteen ninety

464
00:24:32,880 --> 00:24:33,520
Speaker 2: to ninety two.

465
00:24:34,000 --> 00:24:36,560
Speaker 1: Yeah, that's a big number. It is a big number,

466
00:24:37,119 --> 00:24:41,080
Speaker 1: would would. So therefore, as immigration policy, or what of

467
00:24:41,119 --> 00:24:44,040
Speaker 1: the I think is called immigration policy, is immigration policy

468
00:24:44,080 --> 00:24:47,840
Speaker 1: being used as a fiscal lever? I think so purposefully?

469
00:24:48,359 --> 00:24:52,480
Speaker 2: I think so. Yeah. Keeping in mind the government may

470
00:24:52,520 --> 00:24:54,200
Speaker 2: claim that they were going to try and slide down

471
00:24:54,280 --> 00:24:57,960
Speaker 2: migration this year, I think in the end they're going

472
00:24:58,000 --> 00:25:00,359
Speaker 2: to fail in turns of a target number day had

473
00:25:00,520 --> 00:25:02,040
Speaker 2: by some margin. Yeah.

474
00:25:02,080 --> 00:25:04,080
Speaker 1: So if we look at that, you said five hundred

475
00:25:04,119 --> 00:25:06,240
Speaker 1: thousand this year, I think we had a similar number

476
00:25:06,320 --> 00:25:06,760
Speaker 1: last year.

477
00:25:07,560 --> 00:25:11,120
Speaker 2: So that's total population. So last year in twenty twenty three,

478
00:25:11,560 --> 00:25:14,800
Speaker 2: total population expansion was near seven hundred thousand.

479
00:25:14,880 --> 00:25:17,280
Speaker 1: So we have one point two to three million people

480
00:25:17,280 --> 00:25:21,879
Speaker 1: in the last twenty four months, correct, And that apart

481
00:25:21,880 --> 00:25:26,080
Speaker 1: from most of those people would probably live in the

482
00:25:26,119 --> 00:25:29,280
Speaker 1: Eastern States major cities because that's where the jobs are.

483
00:25:29,800 --> 00:25:30,880
Speaker 1: Cyney will always.

484
00:25:30,560 --> 00:25:35,359
Speaker 2: Pick up the line share of overseas arrivals. Brisbane comes third,

485
00:25:35,680 --> 00:25:37,879
Speaker 2: but it's definitely city in Melbourne. They come to Sitney

486
00:25:37,880 --> 00:25:40,800
Speaker 2: in Melbourne first, and then you see a secondary flow

487
00:25:40,840 --> 00:25:41,840
Speaker 2: on into other states.

488
00:25:42,119 --> 00:25:45,800
Speaker 1: Yeah, so they're Therefore it would be fair to say

489
00:25:45,840 --> 00:25:49,240
Speaker 1: that in terms of data, I can not. I can,

490
00:25:49,280 --> 00:25:53,160
Speaker 1: but data can be manipulated by things like population growth.

491
00:25:53,920 --> 00:25:58,120
Speaker 1: Data can be manipulated by job numbers being increased as

492
00:25:58,119 --> 00:26:00,639
Speaker 1: a result of government employ more people. And I'm not

493
00:26:00,680 --> 00:26:03,879
Speaker 1: saying that the government departments that these people work in

494
00:26:05,160 --> 00:26:07,760
Speaker 1: shouldn't have these people, because a lot of the great

495
00:26:07,760 --> 00:26:10,240
Speaker 1: ideas and dis is actually good if it's not being ruted,

496
00:26:10,760 --> 00:26:16,400
Speaker 1: it's a good thing. Teachers, hospitals, blah blah, all those

497
00:26:16,520 --> 00:26:21,360
Speaker 1: public servants, jobs, police, fieries, etc. They're all great things.

498
00:26:21,480 --> 00:26:23,840
Speaker 1: I get it. But then there's a whole lot of

499
00:26:23,880 --> 00:26:25,840
Speaker 1: other people going in to administration all of the various

500
00:26:25,880 --> 00:26:30,960
Speaker 1: departments that probably aren't all that efficient. But I don't

501
00:26:30,960 --> 00:26:32,480
Speaker 1: know how cynical a person you are, But do you

502
00:26:32,480 --> 00:26:35,800
Speaker 1: think there's some fiscal manipulation happening.

503
00:26:36,960 --> 00:26:40,440
Speaker 2: I think the government's very keen to keep the country

504
00:26:40,480 --> 00:26:44,919
Speaker 2: out of a recession, a formal recession, and they know

505
00:26:45,880 --> 00:26:49,280
Speaker 2: good population expansion will help a lot in that, combined

506
00:26:49,359 --> 00:26:52,919
Speaker 2: with good government spending that keeps us out of a recession.

507
00:26:54,240 --> 00:26:58,640
Speaker 2: That yeah, we are in a recession, per person situation

508
00:26:58,760 --> 00:27:01,280
Speaker 2: at the moment. Definitely are living standards have been falling

509
00:27:02,200 --> 00:27:04,360
Speaker 2: according to the Australian Bureau Statistics.

510
00:27:04,600 --> 00:27:08,919
Speaker 1: So what louis what is the what factors? And I

511
00:27:09,000 --> 00:27:11,200
Speaker 1: might suggest some I don't know if it's right or wrong,

512
00:27:11,240 --> 00:27:16,320
Speaker 1: but that are great correlations with property prices reducing. In

513
00:27:16,359 --> 00:27:18,560
Speaker 1: other words, what I mean by that too, by the ways,

514
00:27:18,560 --> 00:27:21,719
Speaker 1: where people feel like they have to sell their property

515
00:27:21,720 --> 00:27:23,159
Speaker 1: and a lot of people got two properties that it

516
00:27:23,200 --> 00:27:25,479
Speaker 1: is so they want to offload one. What are the

517
00:27:25,680 --> 00:27:29,320
Speaker 1: correlated factors? I mean? Is unemployment a big important one?

518
00:27:29,400 --> 00:27:32,239
Speaker 1: Like I imagine if someone lost their job. Imagine if

519
00:27:32,240 --> 00:27:35,000
Speaker 1: all of a sudden we had six percent unemployment in

520
00:27:35,040 --> 00:27:39,160
Speaker 1: the country instead of four point two, a significant increase.

521
00:27:40,760 --> 00:27:42,600
Speaker 1: I would imagine people who are going to mortgage is

522
00:27:42,600 --> 00:27:44,800
Speaker 1: going to say, well, I've got a job anymore, We're

523
00:27:44,800 --> 00:27:45,560
Speaker 1: going to sell the house.

524
00:27:45,840 --> 00:27:49,639
Speaker 2: Yeah. I think if we had unemployment rise above six percent,

525
00:27:50,200 --> 00:27:54,399
Speaker 2: you would see a clear rise and force selling activity.

526
00:27:54,760 --> 00:27:56,919
Speaker 2: We measure force selling activity, by the way, and I

527
00:27:56,920 --> 00:27:59,680
Speaker 2: can tell you now that across the country there's a

528
00:28:00,040 --> 00:28:03,000
Speaker 2: out six thousand properties selling under distress conditions.

529
00:28:03,240 --> 00:28:03,840
Speaker 1: Is that a lot?

530
00:28:04,840 --> 00:28:07,359
Speaker 2: It's a lot less than while we had prior to COVID,

531
00:28:07,400 --> 00:28:09,600
Speaker 2: when the number will circle about eleven to twelve zero.

532
00:28:10,440 --> 00:28:12,680
Speaker 1: In produ COVID was not a bad time though, wasn't

533
00:28:12,920 --> 00:28:14,479
Speaker 1: It wasn't a bad time, that's right. I think underpoint

534
00:28:14,560 --> 00:28:18,359
Speaker 1: might have been close to five percent. So the number

535
00:28:18,400 --> 00:28:20,840
Speaker 1: we've got now of let's call it distressed sales or

536
00:28:20,880 --> 00:28:23,919
Speaker 1: for sales, is less than it was pre COVID.

537
00:28:24,040 --> 00:28:25,000
Speaker 2: Absolutely wow.

538
00:28:25,200 --> 00:28:26,240
Speaker 1: And what do you put that down to.

539
00:28:27,640 --> 00:28:31,000
Speaker 2: Well, it fell sharply across twenty twenty one in particular,

540
00:28:31,520 --> 00:28:33,520
Speaker 2: and that was at the time when the banks were

541
00:28:33,560 --> 00:28:37,720
Speaker 2: offering a moratorium to borrows who were struggling. So I

542
00:28:37,760 --> 00:28:40,520
Speaker 2: think that combined with the fact that we also hit

543
00:28:40,560 --> 00:28:42,600
Speaker 2: a record light. Well I'm not sure if it was

544
00:28:42,640 --> 00:28:44,840
Speaker 2: a record light, but we hit a look at least

545
00:28:44,880 --> 00:28:48,880
Speaker 2: a twenty year low and unemployment three point two that's

546
00:28:48,920 --> 00:28:53,480
Speaker 2: exactly right. I think that that helped as well to

547
00:28:53,560 --> 00:28:57,480
Speaker 2: keep the full selling at Bay. Now we have recorded

548
00:28:57,480 --> 00:29:01,000
Speaker 2: a little bit of a pickup in full selling in

549
00:29:01,080 --> 00:29:05,160
Speaker 2: the last eighteen months, but it's still at relatively benign levels.

550
00:29:06,080 --> 00:29:09,200
Speaker 2: In all honesty, I think what's going on out there

551
00:29:09,840 --> 00:29:13,200
Speaker 2: is that the home, the principal place of residence is

552
00:29:13,240 --> 00:29:16,920
Speaker 2: a last asset to go when someone is under a

553
00:29:16,920 --> 00:29:21,960
Speaker 2: lot of financial stress, what goes first, Well, discretionary spending goes,

554
00:29:22,080 --> 00:29:27,160
Speaker 2: you know, avoiding the restaurants. Then perhaps avoiding buying a

555
00:29:27,320 --> 00:29:30,720
Speaker 2: caral selling a carb you have to. Then after that,

556
00:29:31,040 --> 00:29:32,920
Speaker 2: perhaps an investment property goes.

557
00:29:34,120 --> 00:29:36,920
Speaker 1: Then the holiday, the holiday because people do.

558
00:29:36,920 --> 00:29:40,000
Speaker 2: Not like giving up the holiday, right And then after

559
00:29:40,040 --> 00:29:42,520
Speaker 2: all that, sadly would be a principal place of residence,

560
00:29:42,520 --> 00:29:44,560
Speaker 2: which is quite different from other countries. So in the

561
00:29:44,640 --> 00:29:48,680
Speaker 2: United States know that the principal place of residence can

562
00:29:48,720 --> 00:29:49,520
Speaker 2: often go first.

563
00:29:49,800 --> 00:29:52,760
Speaker 1: Yeah, or they just had the keys back there, exact words. Australia,

564
00:29:53,520 --> 00:29:54,360
Speaker 1: you'll go bankrupt.

565
00:29:54,480 --> 00:29:57,360
Speaker 2: You will go bankrupt, and even if your own negative equity,

566
00:29:57,960 --> 00:29:59,320
Speaker 2: the bank will still come to change you.

567
00:29:59,440 --> 00:30:01,600
Speaker 1: Yeah, if you add cars and other assets, you'll be

568
00:30:01,640 --> 00:30:03,760
Speaker 1: selling everything correct, well, everything will be sold by the

569
00:30:03,800 --> 00:30:06,040
Speaker 1: trustee in bankruptcy. Which is one of the reasons why

570
00:30:06,120 --> 00:30:10,760
Speaker 1: Australian mortgage bonds do so well because you know, we

571
00:30:10,840 --> 00:30:14,120
Speaker 1: have these raconing laws in Australia compared to everyone else

572
00:30:14,120 --> 00:30:16,640
Speaker 1: in the world relative to make sure you repay your debt.

573
00:30:16,840 --> 00:30:20,000
Speaker 1: Mortgage debt, that's right. As California, it's nearly like a

574
00:30:21,480 --> 00:30:24,479
Speaker 1: hallmark of success is about a hand the keys back

575
00:30:24,520 --> 00:30:27,880
Speaker 1: on at least one property in your lifetime, and then

576
00:30:27,920 --> 00:30:31,280
Speaker 1: you can gumborro again not very long after go again here.

577
00:30:31,320 --> 00:30:34,040
Speaker 1: You can't jumborrow for five years or something, and then

578
00:30:34,320 --> 00:30:36,440
Speaker 1: there's a period after which you still you're sort of

579
00:30:36,680 --> 00:30:38,320
Speaker 1: still in the system of the blacklist system.

580
00:30:38,520 --> 00:30:40,520
Speaker 2: That's right. I'm sorry. There's one more thing I think

581
00:30:40,560 --> 00:30:44,200
Speaker 2: we should add to speaking of banks, and you would

582
00:30:44,200 --> 00:30:46,440
Speaker 2: be very close to this, but I think over since

583
00:30:46,480 --> 00:30:49,680
Speaker 2: two thousand and eight, the banks balance sheets have been

584
00:30:49,680 --> 00:30:54,640
Speaker 2: getting stronger, Yeah, totally, and their lending policies have become

585
00:30:54,680 --> 00:30:58,120
Speaker 2: more and more stricter. So I think that has also

586
00:30:58,360 --> 00:31:02,320
Speaker 2: ensured that they had less bad borrowers on their books

587
00:31:02,320 --> 00:31:02,880
Speaker 2: to begin with.

588
00:31:03,360 --> 00:31:06,000
Speaker 1: Does that then put more pressure, though, on the rental market, Yeah,

589
00:31:06,240 --> 00:31:07,880
Speaker 1: because there's less borrowers so to speak.

590
00:31:07,960 --> 00:31:11,640
Speaker 2: Yes, ultimately there's less borrowers. And many people struggle to

591
00:31:11,680 --> 00:31:14,960
Speaker 2: actually understand this, But we need investors if we wish

592
00:31:15,040 --> 00:31:17,440
Speaker 2: to increase the amount of rental stock in the marketplace,

593
00:31:17,440 --> 00:31:20,440
Speaker 2: and if you actually reduce a number of investors out there,

594
00:31:20,680 --> 00:31:25,240
Speaker 2: that means that you will have less established rental properties available. Yeah,

595
00:31:25,280 --> 00:31:26,600
Speaker 2: it's just the simple numbers.

596
00:31:27,240 --> 00:31:31,560
Speaker 1: Yeah, And generally speaking, the number of investors who if

597
00:31:31,640 --> 00:31:33,760
Speaker 1: you look at borrowing data, the number of investors who

598
00:31:33,960 --> 00:31:37,360
Speaker 1: borrow to buy property as an investor compared to own

599
00:31:37,440 --> 00:31:44,240
Speaker 1: occupiers usually travels between thirty two percent and sometimes can't

600
00:31:44,240 --> 00:31:46,240
Speaker 1: get as high as forty percent of any one month.

601
00:31:47,120 --> 00:31:49,200
Speaker 1: Of course, the regulator does not like it to be

602
00:31:49,240 --> 00:31:52,719
Speaker 1: that high. A regulator usually, as they did in twenty fifteen,

603
00:31:52,760 --> 00:31:55,560
Speaker 1: they made us all change on our interest rate for investors,

604
00:31:55,600 --> 00:31:58,240
Speaker 1: and they also made us they put stricter requirements on

605
00:31:58,320 --> 00:32:01,360
Speaker 1: us in terms of approving it investors learan and we

606
00:32:01,400 --> 00:32:04,080
Speaker 1: had to dial ourselves back to about thirty thirty thirty

607
00:32:04,120 --> 00:32:07,360
Speaker 1: two percent or thirty one percent or something. So the

608
00:32:07,520 --> 00:32:10,160
Speaker 1: regulator can sort of regulate that territory, which means there's

609
00:32:10,200 --> 00:32:12,840
Speaker 1: less investors in the marketplace generally speaking. Of you were

610
00:32:12,880 --> 00:32:16,080
Speaker 1: to say it's better for occupied because they've got more

611
00:32:16,120 --> 00:32:17,960
Speaker 1: to choose from and they're not competing with an investor.

612
00:32:18,040 --> 00:32:19,840
Speaker 1: You might be able to pay a bit more because

613
00:32:19,880 --> 00:32:22,640
Speaker 1: they're going to rent it out. If I was asked

614
00:32:22,640 --> 00:32:26,400
Speaker 1: you to put your I know you don't like to

615
00:32:26,440 --> 00:32:30,200
Speaker 1: do this because you're a data person, but just looking

616
00:32:30,200 --> 00:32:32,920
Speaker 1: at the data today, where do you think we will

617
00:32:32,920 --> 00:32:36,240
Speaker 1: be in the new year in terms of the economy.

618
00:32:36,320 --> 00:32:40,360
Speaker 1: Do you think we could hit a technical recession? Because

619
00:32:40,480 --> 00:32:43,840
Speaker 1: by then we'll have the December numbers they'll be printed

620
00:32:44,080 --> 00:32:49,120
Speaker 1: the end of January for GDP, CPI, unemployment will get

621
00:32:49,120 --> 00:32:51,600
Speaker 1: through that month as well. Where do you think we'd be.

622
00:32:52,960 --> 00:32:54,960
Speaker 2: That's a good question. You tell me what government spending

623
00:32:55,040 --> 00:32:57,640
Speaker 2: is going to be for the December quarter. I think

624
00:32:57,680 --> 00:33:02,560
Speaker 2: a lot will ride on that. Yeah. Our net exports,

625
00:33:02,600 --> 00:33:05,760
Speaker 2: which is of course a key determined behind GDP, has

626
00:33:05,800 --> 00:33:07,880
Speaker 2: been weakening of late because of the fall and nine

627
00:33:07,920 --> 00:33:11,840
Speaker 2: are prices. I think it's possible we could have at

628
00:33:11,920 --> 00:33:16,120
Speaker 2: least one negative quarter, and we did forecast this year

629
00:33:16,160 --> 00:33:18,680
Speaker 2: there would be at least one negative quarter. We could

630
00:33:18,680 --> 00:33:21,080
Speaker 2: be wrong on that, and I must say that I've

631
00:33:21,120 --> 00:33:24,239
Speaker 2: been a little bit surprised by the strength that I

632
00:33:24,280 --> 00:33:26,400
Speaker 2: have seen in parts of the economy as well. And

633
00:33:26,800 --> 00:33:30,160
Speaker 2: that goes back to the population change. We thought the

634
00:33:30,200 --> 00:33:33,720
Speaker 2: government have some success in cutting migration this year, but

635
00:33:33,920 --> 00:33:35,960
Speaker 2: nowhere near as much as what they forecasted.

636
00:33:36,280 --> 00:33:38,560
Speaker 1: But does that mean they've been successful then? Like in

637
00:33:38,600 --> 00:33:44,000
Speaker 1: a funny way, they've avoided a negative quarter. Yeah, that

638
00:33:45,360 --> 00:33:47,400
Speaker 1: would you look at that as a successful thing?

639
00:33:47,920 --> 00:33:52,560
Speaker 2: No, not really, because, as mentioned, we've been having a

640
00:33:52,600 --> 00:33:57,360
Speaker 2: per capital recession. So they may see it as a success.

641
00:33:57,920 --> 00:34:00,600
Speaker 2: But the average person on the street who's struggling to

642
00:34:00,640 --> 00:34:03,800
Speaker 2: meet them or which repayments, struggling to hold their job,

643
00:34:03,880 --> 00:34:05,880
Speaker 2: or trying to earn more money over and above their job,

644
00:34:06,200 --> 00:34:09,040
Speaker 2: struggling to pay the rent. No, they're not seeing the

645
00:34:09,040 --> 00:34:11,200
Speaker 2: economy as a great success out there right now.

646
00:34:11,400 --> 00:34:12,799
Speaker 1: Maybe one a lot of language you can use to

647
00:34:12,800 --> 00:34:16,399
Speaker 1: explain it, perhaps, and like your opinion on this, it's

648
00:34:16,440 --> 00:34:20,920
Speaker 1: an arithmetic success, it's a database success, but it's not

649
00:34:20,960 --> 00:34:24,800
Speaker 1: actually success across the board because there are segments of

650
00:34:24,840 --> 00:34:28,359
Speaker 1: the book of the population like Morgshoulders for example, who

651
00:34:28,400 --> 00:34:30,440
Speaker 1: would definitely not see as success.

652
00:34:30,640 --> 00:34:32,560
Speaker 2: Yeah, no, I would agree with that. Now, things could

653
00:34:32,560 --> 00:34:35,120
Speaker 2: be worse. I mean, I'm sure you remembered the ninety

654
00:34:35,200 --> 00:34:38,040
Speaker 2: ninety two recess. Sure do. I certainly do it as well.

655
00:34:38,080 --> 00:34:39,640
Speaker 2: I was coming out of school a time I couldn't

656
00:34:39,640 --> 00:34:41,719
Speaker 2: even get a job at the supermarket. All that bad.

657
00:34:41,920 --> 00:34:43,640
Speaker 1: Now, I remember I had to sell my house, my

658
00:34:43,680 --> 00:34:44,200
Speaker 1: family home.

659
00:34:44,360 --> 00:34:49,000
Speaker 2: Yeah, so I remember what those days were like and

660
00:34:49,280 --> 00:34:52,160
Speaker 2: when you compare those times to now, I'd say we

661
00:34:52,520 --> 00:34:55,400
Speaker 2: are certainly doing better. I mean, unapplyymates still in the

662
00:34:55,400 --> 00:35:01,120
Speaker 2: low fours. The people are certainly struggling there, there's no

663
00:35:01,280 --> 00:35:06,200
Speaker 2: question about that. So and as mentioned before, the per

664
00:35:06,320 --> 00:35:10,320
Speaker 2: capita declining wealth is greater than what we've actually had

665
00:35:10,840 --> 00:35:13,600
Speaker 2: back in that ninety to ninety two recession. So yeah,

666
00:35:13,680 --> 00:35:16,640
Speaker 2: I agree, it's it's you know, on the face of

667
00:35:16,640 --> 00:35:19,800
Speaker 2: it looks like we're doing okay, you scratch underneath the surface,

668
00:35:20,040 --> 00:35:22,200
Speaker 2: things aren't so good well.

669
00:35:23,719 --> 00:35:28,319
Speaker 1: And unemployment's only four point two, so in some respects

670
00:35:29,880 --> 00:35:33,919
Speaker 1: maybe it is. It is successful. I don't necessarily agree

671
00:35:33,920 --> 00:35:35,480
Speaker 1: with the way they've done it, to be honest with you, Like,

672
00:35:35,760 --> 00:35:39,600
Speaker 1: I'm a skeptic, and I think we need to take

673
00:35:39,640 --> 00:35:41,799
Speaker 1: some hard hits and then clean it all up and

674
00:35:41,800 --> 00:35:44,040
Speaker 1: start again. That's the way I see it. But of course,

675
00:35:44,040 --> 00:35:47,400
Speaker 1: the election coming up, and I'm not a politician, so,

676
00:35:48,840 --> 00:35:51,720
Speaker 1: and you know, housing affordability is not being solved.

677
00:35:52,000 --> 00:35:53,880
Speaker 2: How's it going to be a great debating point come

678
00:35:53,920 --> 00:35:57,760
Speaker 2: to the election, do you think so? Absolutely? Let's remember

679
00:35:58,640 --> 00:36:01,280
Speaker 2: the federal governments stated day wish to build one point

680
00:36:01,320 --> 00:36:04,279
Speaker 2: two million homes yep, by twenty twenty nine.

681
00:36:04,440 --> 00:36:05,520
Speaker 1: Yeah, over the five year period.

682
00:36:05,560 --> 00:36:07,319
Speaker 2: Over the five year period, well, I can tell you

683
00:36:07,400 --> 00:36:10,480
Speaker 2: year one, year one is now they're falling way behind.

684
00:36:10,560 --> 00:36:13,120
Speaker 2: So that's two hundred and forty thousand dwellings a year.

685
00:36:13,040 --> 00:36:15,719
Speaker 1: If we just look at in a linear sense, that's right,

686
00:36:15,800 --> 00:36:18,480
Speaker 1: and I think they're about one hundred and fifty on hundred.

687
00:36:18,200 --> 00:36:21,719
Speaker 2: So it will be one hundred and fifty. So you know,

688
00:36:21,840 --> 00:36:23,640
Speaker 2: it means for the second thirty or fourth for you,

689
00:36:23,680 --> 00:36:24,400
Speaker 2: that run rate.

690
00:36:24,280 --> 00:36:26,280
Speaker 1: Required is much more than two forty.

691
00:36:26,400 --> 00:36:26,720
Speaker 2: Correct.

692
00:36:26,840 --> 00:36:30,719
Speaker 1: Yeah, it's a much bigger number. And it looks like

693
00:36:30,760 --> 00:36:33,040
Speaker 1: it's not going to get that from the developers I

694
00:36:33,040 --> 00:36:34,480
Speaker 1: speak to. It doesn't look like that's going to be

695
00:36:34,520 --> 00:36:37,440
Speaker 1: solved because developers are saying, well, it's all too hard.

696
00:36:38,040 --> 00:36:42,480
Speaker 2: Yeah, correct. So unless a goo and does something drastic

697
00:36:43,120 --> 00:36:46,759
Speaker 2: to try and lift the supply and try to really

698
00:36:46,880 --> 00:36:48,920
Speaker 2: encourage the developers to get out there and have a go,

699
00:36:50,160 --> 00:36:52,920
Speaker 2: they will not meet the target. Will be way off. Indeed,

700
00:36:53,960 --> 00:36:55,040
Speaker 2: I've no doubt about it.

701
00:36:55,160 --> 00:36:59,239
Speaker 1: So if this gouvernment gets revoted and re elected and

702
00:36:59,320 --> 00:37:04,799
Speaker 1: they're unsuccessful in reducing the immigration number or put it

703
00:37:04,800 --> 00:37:06,560
Speaker 1: this way, they can't get it back to our long

704
00:37:06,640 --> 00:37:09,040
Speaker 1: term average, which is about growth in Australia, which is

705
00:37:09,040 --> 00:37:12,400
Speaker 1: about two undred fifty thousand people. You know, people were born,

706
00:37:12,920 --> 00:37:15,920
Speaker 1: minus people that die, plus what we who comes into

707
00:37:15,960 --> 00:37:18,280
Speaker 1: the country, unless they can get it back to that number.

708
00:37:19,760 --> 00:37:22,200
Speaker 1: But if unemployment keeps around the four point two percent,

709
00:37:22,200 --> 00:37:23,640
Speaker 1: we're not going to see any relief on the interest

710
00:37:23,680 --> 00:37:27,640
Speaker 1: rates because the result being's looking for a high unemployment number. Yes,

711
00:37:27,719 --> 00:37:29,880
Speaker 1: they've made it pretty clear that's right, they need a

712
00:37:29,960 --> 00:37:30,640
Speaker 1: higher unemployment.

713
00:37:30,719 --> 00:37:33,160
Speaker 2: The last read we added about forty five thousand jobs

714
00:37:33,200 --> 00:37:35,839
Speaker 2: if I recall a numberah, which is a pretty strong result.

715
00:37:35,640 --> 00:37:38,640
Speaker 1: Totally and sort of a bit nerve racking for all

716
00:37:38,680 --> 00:37:42,040
Speaker 1: those mortgage holders who are sort of sitting there waiting

717
00:37:42,880 --> 00:37:45,160
Speaker 1: for some relief because you know you're right. You know,

718
00:37:45,320 --> 00:37:50,240
Speaker 1: like this time last year in twenty twenty three, Will

719
00:37:50,440 --> 00:37:53,319
Speaker 1: I remember sitting down with Bill Evans, I think it

720
00:37:53,440 --> 00:37:56,719
Speaker 1: was before we retired, and Bill saying they're predicting six

721
00:37:56,800 --> 00:38:02,040
Speaker 1: rate reductions in twenty twenty four. Now obviously didn't happen,

722
00:38:02,840 --> 00:38:04,880
Speaker 1: but people were hearing this all the banks for predicting

723
00:38:04,920 --> 00:38:08,880
Speaker 1: rate reductions. People are hearing saying, oh, well, let's not sell.

724
00:38:09,040 --> 00:38:11,520
Speaker 1: We should be all right, it's going to be okay,

725
00:38:11,600 --> 00:38:12,399
Speaker 1: but that didn't happen.

726
00:38:12,480 --> 00:38:13,640
Speaker 2: It didn't happen. That's right.

727
00:38:13,680 --> 00:38:16,840
Speaker 1: I'm wondering, and this is my final question for you, Louis.

728
00:38:17,000 --> 00:38:19,960
Speaker 1: I'm wondering whether or not we're all saying rate reductions

729
00:38:19,960 --> 00:38:23,000
Speaker 1: sometime next year, whether twenty twenty five is going to

730
00:38:23,000 --> 00:38:25,960
Speaker 1: be another twenty twenty four and no rate reductions because

731
00:38:26,440 --> 00:38:29,959
Speaker 1: unemployment remains stubbornly low, which is a good thing. People

732
00:38:30,000 --> 00:38:34,000
Speaker 1: aren't losing their jobs. Four point two percent. GDP just

733
00:38:34,080 --> 00:38:37,120
Speaker 1: keeps bumped along the bottom but doesn't sort of descend,

734
00:38:37,239 --> 00:38:39,560
Speaker 1: and no one looks at GDP per capital or governments.

735
00:38:39,600 --> 00:38:39,799
Speaker 2: Don't.

736
00:38:39,840 --> 00:38:42,320
Speaker 1: We do, but generally it's been governments don't. They just

737
00:38:42,840 --> 00:38:45,680
Speaker 1: hit to be the headline. Inflation stays sort of stubborn.

738
00:38:45,760 --> 00:38:48,160
Speaker 1: I know we've got a three points at two point

739
00:38:48,160 --> 00:38:50,240
Speaker 1: seven the other day, but that's a bit of an aberration,

740
00:38:50,920 --> 00:38:54,279
Speaker 1: sort of stays stubbornly just above three three two three

741
00:38:54,360 --> 00:38:58,560
Speaker 1: two three three whatever, And rates don't get reduced because

742
00:38:58,560 --> 00:39:00,640
Speaker 1: she's made it pretty clear, the reservan has made pretty

743
00:39:00,640 --> 00:39:03,720
Speaker 1: clear unless we get it down to those numbers sustainably,

744
00:39:04,719 --> 00:39:05,399
Speaker 1: she's not gonna move.

745
00:39:05,760 --> 00:39:06,279
Speaker 2: That's right.

746
00:39:06,640 --> 00:39:10,080
Speaker 1: So that to me means a problem for the maulsh belt.

747
00:39:10,560 --> 00:39:12,880
Speaker 2: It could be a real problem, and no, I wouldn't

748
00:39:12,920 --> 00:39:15,480
Speaker 2: rule out that scenari at all. Make But I am

749
00:39:15,520 --> 00:39:17,640
Speaker 2: a little bit more optimistic than you in terms of

750
00:39:17,640 --> 00:39:20,240
Speaker 2: getting a rate cut. And i'll tell you why. Okay,

751
00:39:20,560 --> 00:39:24,040
Speaker 2: this time last year, one measurement I like to follow

752
00:39:24,200 --> 00:39:27,520
Speaker 2: very closely, or what the money markets are doing. What

753
00:39:27,560 --> 00:39:30,799
Speaker 2: are the money markets betting on. Well, this time last year,

754
00:39:31,320 --> 00:39:33,880
Speaker 2: as a talk around a rate cut started to rise,

755
00:39:34,400 --> 00:39:39,640
Speaker 2: the money markets were forecasting for this year no rate change. Indeed,

756
00:39:39,640 --> 00:39:43,440
Speaker 2: maybe a slight chance of a rate rise. Now the

757
00:39:43,520 --> 00:39:46,520
Speaker 2: money markets are forecasting for the next twelve months up

758
00:39:46,560 --> 00:39:49,799
Speaker 2: to four rate cuts. Now, the money markets aren't always right,

759
00:39:50,800 --> 00:39:53,560
Speaker 2: but occasionally they're pretty good, and they're reasonably pretty good

760
00:39:53,560 --> 00:39:56,960
Speaker 2: at picking turning points in the market. Over and above that,

761
00:39:57,239 --> 00:40:01,920
Speaker 2: we've had rate cuts outer central banks, for example, the

762
00:40:02,000 --> 00:40:06,480
Speaker 2: Federate Reserve, European Central Bank, Bank of England, New Zealand,

763
00:40:06,719 --> 00:40:13,080
Speaker 2: New Zealand. We normally follow suits at some stage. So

764
00:40:13,960 --> 00:40:16,960
Speaker 2: that's why I'm a little bit more optimistic. But there

765
00:40:16,960 --> 00:40:21,399
Speaker 2: are risks out there. It is possible that we could

766
00:40:21,480 --> 00:40:24,560
Speaker 2: have a new round of inflation driven by the rise

767
00:40:24,600 --> 00:40:26,759
Speaker 2: and energy process once more due to what's happening in

768
00:40:26,800 --> 00:40:30,080
Speaker 2: the Middle East, that could blow apart my scenario there

769
00:40:30,160 --> 00:40:34,720
Speaker 2: quite easily. Rents are still rising overall, as we discussed before,

770
00:40:35,280 --> 00:40:39,240
Speaker 2: and if population keeps expanding by over two percent, Parana,

771
00:40:39,280 --> 00:40:42,000
Speaker 2: and that keeps the pedal to the metal. So I

772
00:40:42,040 --> 00:40:44,640
Speaker 2: see your point as well. We could happen another year

773
00:40:44,719 --> 00:40:47,480
Speaker 2: like that, and if we do, then we're going to

774
00:40:47,520 --> 00:40:51,480
Speaker 2: see more property owners struggle because they're not getting the

775
00:40:51,520 --> 00:40:52,799
Speaker 2: relief that they were hoping for.

776
00:40:53,280 --> 00:40:55,439
Speaker 1: So I'm putting in a difficult position. Now, what would

777
00:40:55,440 --> 00:40:58,000
Speaker 1: you say to doctor Jim Chalmers? If Gim was sitting

778
00:40:58,040 --> 00:41:00,360
Speaker 1: right now, what would you say to him? Mate, listen,

779
00:41:00,560 --> 00:41:03,520
Speaker 1: this is what I think. There's no quick fixes. But

780
00:41:03,880 --> 00:41:06,319
Speaker 1: what would you say to Jim. You know, given that

781
00:41:06,440 --> 00:41:08,359
Speaker 1: you know the mortgage market is going to suffer, they

782
00:41:08,440 --> 00:41:09,279
Speaker 1: have been suffering for long.

783
00:41:09,440 --> 00:41:11,359
Speaker 2: Would say to Jim, you need to do everything you

784
00:41:11,440 --> 00:41:15,480
Speaker 2: can to bring developers to the market. So cut property

785
00:41:15,560 --> 00:41:20,200
Speaker 2: taxes to encourage new building. You encourage new building, you're

786
00:41:20,239 --> 00:41:24,279
Speaker 2: increasing the capacity of the economy in many ways. You're

787
00:41:24,320 --> 00:41:28,520
Speaker 2: also going to relieve the rental market in time, So

788
00:41:28,640 --> 00:41:32,840
Speaker 2: I think that would that would help Okay, if we

789
00:41:32,880 --> 00:41:35,600
Speaker 2: wish to avoid a recession, I could understand Jim still

790
00:41:35,600 --> 00:41:38,960
Speaker 2: wishing to spend money to do that, but he's got

791
00:41:38,960 --> 00:41:40,959
Speaker 2: to balance it out. And I think it's a fine

792
00:41:41,000 --> 00:41:43,280
Speaker 2: balancing act. And I certainly wouldn't want to be him.

793
00:41:43,520 --> 00:41:45,840
Speaker 2: Neither would I want to be the Reserve Bank governor

794
00:41:45,960 --> 00:41:48,000
Speaker 2: right now, two very difficult jobs.

795
00:41:48,000 --> 00:41:53,880
Speaker 1: Indeed, would you would you? Would you say, perhaps to

796
00:41:53,920 --> 00:41:57,120
Speaker 1: the Reserve Bank governor, those things aren't going to happen.

797
00:41:57,120 --> 00:42:00,520
Speaker 1: That on your wish list that you just stated, Governor,

798
00:42:00,800 --> 00:42:03,239
Speaker 1: just put the rates up. Let's just have this coper

799
00:42:03,320 --> 00:42:08,360
Speaker 1: real hard hit, early Warren Hogan style, and then we

800
00:42:08,440 --> 00:42:09,440
Speaker 1: can backpedal after that.

801
00:42:09,680 --> 00:42:11,680
Speaker 2: And so if we go into recession as a result

802
00:42:11,760 --> 00:42:13,799
Speaker 2: of that, do you think the Reserve Bank will still

803
00:42:13,800 --> 00:42:14,319
Speaker 2: have a job.

804
00:42:15,239 --> 00:42:17,520
Speaker 1: Maybe not, that's right, and.

805
00:42:17,440 --> 00:42:20,319
Speaker 2: I'm sure that's running running across their minds. Yeah, it's

806
00:42:20,360 --> 00:42:24,000
Speaker 2: a very fine balancing act for these key decision makers,

807
00:42:24,040 --> 00:42:24,480
Speaker 2: no doubt.

808
00:42:24,960 --> 00:42:29,040
Speaker 1: Well that'll do me. Luus Christopher from SQM Research. I mean,

809
00:42:29,440 --> 00:42:31,120
Speaker 1: by the way I rate your stuff, and I've been

810
00:42:31,160 --> 00:42:33,160
Speaker 1: rating for a long time. Can anybody go onto your

811
00:42:33,200 --> 00:42:34,120
Speaker 1: site and look at your stuff?

812
00:42:34,160 --> 00:42:38,040
Speaker 2: Absolutely? Sqnresearch dot Com dot Au and I'll find their

813
00:42:38,080 --> 00:42:40,319
Speaker 2: free stuff, so we all have free property data on there.

814
00:42:40,360 --> 00:42:41,919
Speaker 2: We've got some paid stuff there as well.

815
00:42:42,160 --> 00:42:45,920
Speaker 1: Okay, and how often do you publish your updates?

816
00:42:46,400 --> 00:42:48,680
Speaker 2: So with the forecast, we put them out at the

817
00:42:48,760 --> 00:42:51,520
Speaker 2: end of each November, and I'm actually formulating the forecast

818
00:42:51,560 --> 00:42:53,560
Speaker 2: for next year. Yep, as we.

819
00:42:53,520 --> 00:42:55,560
Speaker 1: Speak, comes at the end of November this year.

820
00:42:55,760 --> 00:42:57,480
Speaker 2: November this year. That's exactly right.

821
00:42:57,680 --> 00:42:58,799
Speaker 1: And everybody can look at that.

822
00:42:58,920 --> 00:43:02,200
Speaker 2: Everyone can look at that. We basically put out about

823
00:43:02,239 --> 00:43:04,759
Speaker 2: one hundred and twenty page report and we charge about

824
00:43:04,760 --> 00:43:07,200
Speaker 2: fifty nine dollars for it, and we actually get down

825
00:43:07,200 --> 00:43:08,600
Speaker 2: to the individual postcodes.

826
00:43:08,880 --> 00:43:12,239
Speaker 1: Excellent, So and you give a forecast as to what

827
00:43:12,360 --> 00:43:16,040
Speaker 1: is included in the forecast, like price increases, price reductions.

828
00:43:15,520 --> 00:43:18,960
Speaker 2: Or prices rents, mainly at the capital city level. That's

829
00:43:18,960 --> 00:43:20,640
Speaker 2: what the media loves to cover, what's going on with

830
00:43:20,719 --> 00:43:23,200
Speaker 2: the capital cities. But then we get down to the

831
00:43:23,239 --> 00:43:26,200
Speaker 2: individual postcode, so we cover off well, what's actually happened

832
00:43:26,239 --> 00:43:28,800
Speaker 2: to each postcode over the course of the last twelve months

833
00:43:29,440 --> 00:43:32,440
Speaker 2: and what we think may will happen and going forward,

834
00:43:32,760 --> 00:43:35,600
Speaker 2: and we actually do a risk rating for every postcode

835
00:43:35,640 --> 00:43:39,000
Speaker 2: in one country. So looking at how those postcodes move

836
00:43:39,160 --> 00:43:41,480
Speaker 2: compared to interest rates, compared to what's going on with

837
00:43:41,480 --> 00:43:42,920
Speaker 2: to the local economy.

838
00:43:42,760 --> 00:43:45,840
Speaker 1: Well very good. I mean I think people are as interesting,

839
00:43:45,880 --> 00:43:48,200
Speaker 1: you know, in Australia, at least compared to other places

840
00:43:48,200 --> 00:43:52,279
Speaker 1: in the world. Australians are really clued in on what's

841
00:43:52,320 --> 00:43:54,480
Speaker 1: going on in house prices generally, as opposed to say

842
00:43:54,480 --> 00:43:55,000
Speaker 1: the United So.

843
00:43:55,040 --> 00:43:57,040
Speaker 2: We have indeed, then look there's a lot of media

844
00:43:57,080 --> 00:44:01,480
Speaker 2: focus on it. Over my time. Fortunately, property data has improved.

845
00:44:01,480 --> 00:44:04,040
Speaker 2: So when I first went into this game, property data

846
00:44:04,080 --> 00:44:06,080
Speaker 2: wasn't that great. It was controlled by just a couple

847
00:44:06,080 --> 00:44:10,279
Speaker 2: of bods. Now we see various bodies out there, including ourselves,

848
00:44:10,320 --> 00:44:13,200
Speaker 2: Core Logic Domain, all out there eaching to sort of

849
00:44:13,200 --> 00:44:15,880
Speaker 2: be the authority on property data. But it is actually

850
00:44:15,880 --> 00:44:17,680
Speaker 2: good for the community overall.

851
00:44:17,840 --> 00:44:19,520
Speaker 1: Well, thanks very much, Beje, You're doing a great job.

852
00:44:20,560 --> 00:44:21,120
Speaker 1: Cheefs Louis