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Speaker 1: Welcome to the Property Pendulum, brought to you by Domain

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Speaker 1: and Fear and Greed, the podcast that tells you which

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Speaker 1: way the property market is going to swing and how

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Speaker 1: to make the most of it. I'm Michael Thompson and

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Speaker 1: I'm joined by Alice Staltz, National Property Editor at Domain,

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Speaker 1: and I've got to say one of Australia's foremost experts

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Speaker 1: on all things real estate, known to audiences around the

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Speaker 1: country for her work on nine including the Block. Hello Alice,

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Speaker 1: Hello Michael, Alice. We are setting ourselves a fairly lofty

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Speaker 1: kind of goal today. We're going to answer the question,

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Speaker 1: or we're going to attempt to answer the question. But

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Speaker 1: let's be optimistic. Is now the time to buy? Because

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Speaker 1: this week the Domain house price report for the September

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Speaker 1: quarter revealed that the property prices are still breaking new records.

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Speaker 1: But and it's a significant butt, isn't it. There are

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Speaker 1: some promising signs for buyers. And we have a special

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Speaker 1: guest joining us today to help us decipher all of this.

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Speaker 1: Doctor Nicola Powell is Domain's chief of Research and Economics. Nicola,

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Speaker 1: Welcome to the Property Pendulum.

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Speaker 2: Hi, Michael.

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Speaker 1: Now there's so much I want to talk to about,

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Speaker 1: but we only have a limited amount of time. But

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Speaker 1: I want to talk about houses, about units, about prices,

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Speaker 1: and about importantly how buyers can use this kind of

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Speaker 1: information to get themselves the best deal. But let's start

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Speaker 1: with houses, because it is really kind of the headline

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Speaker 1: that grabs you every time this data and this report

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Speaker 1: comes out. There's a number of cities that have hit

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Speaker 1: new records in the last quarter, and it's led by Sydney.

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Speaker 1: This is staggering, right at one point six five million

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Speaker 1: dollars and that's the median price. That is huge, But

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Speaker 1: it's not the only city that's set a record, right,

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Speaker 1: It's not.

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Speaker 2: And I do think you know when you're looking at

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Speaker 2: a one point six million media and it is eyewallshring,

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Speaker 2: and you know it's unattainable for most Australians. Sydney has

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Speaker 2: always been the most expensive capital and I remember when

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Speaker 2: Sydney broke that million dollar median house price, it was

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Speaker 2: such a milestone. And I think what's interesting is we've

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Speaker 2: got other cities that are going to break that milestone

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Speaker 2: very soon. So Adelaide and Brisbane are on the way

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Speaker 2: to breaking that million dollar medium. But we have got

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Speaker 2: prices rising. We've got house prices across the combined capitals

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Speaker 2: continuing to rise. But the key thing here is going

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Speaker 2: to slow down in the pace of price growth. So

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Speaker 2: what that means in Layman's terms is prices are rising,

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Speaker 2: they're just not rising as fast as they once were,

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Speaker 2: and that is because there's a bit more choice on

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Speaker 2: the market. But we do have, as you said, many

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Speaker 2: cities at record highs. Sydney, Brisbane, Adelaide and Perth of

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Speaker 2: hit new record highs over the September quarter. So prices

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Speaker 2: are still rising. And this is the interesting dynamic that

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Speaker 2: we've got across Australia's housing market. We are stuck between

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Speaker 2: a housing undersupply, a housing crisis and a high cash rate.

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Speaker 2: And there's an element of that high cash rate I

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Speaker 2: think is containing borrowing capacity and it's helping to slow

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Speaker 2: down as well the pace of price growth as a result.

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Speaker 3: And so Nicola, where are price is not rising and

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Speaker 3: actually going backwards.

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Speaker 2: We do have a couple of cities that are in reverse.

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Speaker 2: It is Melbourne and Canberra. House prices fell over the quarter.

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Speaker 2: Melbourne has been fascinating city to watch. Normally you see

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Speaker 2: in a big city like Melbourne. You see prices arising

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Speaker 2: steeply or they're falling, And really what we've seen over

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Speaker 2: the last couple of years is the city has pretty

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Speaker 2: much done nothing in terms of its house price movement.

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Speaker 2: They did fall over the quarter, it was down by

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Speaker 2: one point five percent, but we've seen a little bit

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Speaker 2: of volatility each quarter. I cannot stress how unusual that

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Speaker 2: is to see a massive capital city like Melbourne go

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Speaker 2: sideways for a long period of time. And I am

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Speaker 2: of the true belief that that city is continuing to

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Speaker 2: build the value. It's undervalued at the moment, and it's

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Speaker 2: underperformed compared to our other capital cities. Alice, you know

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Speaker 2: I love a headline stap. Since March twenty twenty, Melbourne

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Speaker 2: house prices have only risen twelve zero point five percent.

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Speaker 2: That is nothing compared to some of our bigger other

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Speaker 2: capital cities like your Perth, your Adelaide, that have seen

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Speaker 2: seventy eighty percent increase over that period of time.

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Speaker 3: So it might be a case of the hair and

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Speaker 3: the tortoise, though it mightn't. Us sort of black turtleneck

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Speaker 3: wearing Melbournians need not crying to our lastes too much.

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Speaker 3: And it might be that we kind of crawl back

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Speaker 3: a bit. Do you think so in the case of Melbourne.

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Speaker 2: Look, I think so. It's been interesting watching the change

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Speaker 2: in bier segments in Melbourne. Investors are definitely shying away

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Speaker 2: and first turn buyers are taking their place, and that's

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Speaker 2: probably a result of the land taxation changes. And we

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Speaker 2: have got investors looking to other capitals where there's greater prospects.

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Speaker 3: For capital growth, and you know, first.

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Speaker 2: Turn buyers have absolutely taken their spot in Melbourne. But

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Speaker 2: I do wonder the next price cycle that we see

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Speaker 2: Melbourne will likely overperform. It's still much more affordable compared

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Speaker 2: to many other capitals. It's got a median of just

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Speaker 2: over a million dollars. Affordability is there. It's got the

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Speaker 2: ability to urban sprawl, and that nature of urban spraws

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Speaker 2: helped to contain overall Melbourne's house price. But I bet

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Speaker 2: you next price cycle said it here, it will overperform.

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Speaker 1: Goodness, men, we're getting some great tips here. I'm going

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Speaker 1: to overperform and I love that hot tip of Melbourne

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Speaker 1: being undervalued right now. That is very exciting. Nikolay, you

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Speaker 1: mentioned some of the reasons why there's been this slowdown,

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Speaker 1: and obviously Melbourne is one thing actually going backwards. Canber

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Speaker 1: as well kind of going backwards now. But broadly there

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Speaker 1: has been this slow down now in house price growth.

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Speaker 1: Is it really just a matter of supply greater supply

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Speaker 1: or is interest rates really starting to bite as well

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Speaker 1: that the broader cost of living kind of crisis what

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Speaker 1: or is it just this big mix of factors all

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Speaker 1: coming into play at the same time.

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Speaker 2: I think it is a bit of a mixture. Supply

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Speaker 2: is definitely one of those key aspects. So over winter

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Speaker 2: and inter spring we had a strong flow of new

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Speaker 2: listings and that wasn't met by the same amount of

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Speaker 2: buyer demand. And what that's created is an increase in

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Speaker 2: supply overall what we call total stock total choice on

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Speaker 2: the market. So if there any buyer out there, they

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Speaker 2: will find that they have got more choice relative to

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Speaker 2: what it was twelve months ago. It's slightly different depending

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Speaker 2: upon the city. So for example, Adelaide person Brisbane aren't

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Speaker 2: quite in that state. They're still deeply below the five

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Speaker 2: year average for this time of year. But for example Melbourne,

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Speaker 2: overall supplies thirty percent higher than the five year average.

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Speaker 2: In Sydney twenty one percent higher than the five year average.

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Speaker 2: I know these are just numbers, but what it means

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Speaker 2: is for a buyer there is more choice. And what

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Speaker 2: that does, and this is the sentiment side of our

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Speaker 2: housing market, Alice. You know, it changes perception, It takes

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Speaker 2: away that urgency, It allows people to take a little

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Speaker 2: bit more time on their decisions, and I think that's

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Speaker 2: coming out in slour rates of price growth. We've got

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Speaker 2: days on market is generally rising, discounting is also increasing,

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Speaker 2: and so so everything is pointing to a slower dynamic.

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Speaker 2: But I also think, Alice as well, that kind of

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Speaker 2: sentiment side is I do wonder whether we've got a

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Speaker 2: pool of buyers now sitting on the fence. They're waiting,

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Speaker 2: they are waiting to see and have evidence that the

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Speaker 2: RBA is actually going to cut rates. And I do

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Speaker 2: think that people are waiting. They're waiting for borrowing capacity

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Speaker 2: to increase, They're waiting for that cash rate cut, which

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Speaker 2: we think is going to come sometime in the first

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Speaker 2: part of next year.

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Speaker 1: Alice. Then a question for you off the back of that, then,

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Speaker 1: how does a buyer use this How do they use

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Speaker 1: this knowledge if they are one of those ones who

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Speaker 1: are not necessarily just sitting waiting and they are actually

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Speaker 1: kind of ready to go. Now, how do they use

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Speaker 1: the fact that there are probably more properties there, those

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Speaker 1: properties are sitting on the market for longer. How do

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Speaker 1: they use that knowledge to improve their position in negotiating

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Speaker 1: a better deal.

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Speaker 3: I think first and foremost you need a little bit

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Speaker 3: of a psychological reset, because this is actually an unusual

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Speaker 3: situation to finally find ourselves in that buyers have really

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Speaker 3: there's been a complex deirth of listings of the past

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Speaker 3: few years. So finally, I think it's a bit generous

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Speaker 3: to say it's raining listings, but certain states are certainly

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Speaker 3: seeing that. You know, on the weekend just gone we

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Speaker 3: had the second busiest day that we've seen all year

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Speaker 3: in Australia, and I do think that when you look

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Speaker 3: at also the data around it, So it's really I

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Speaker 3: think important to look at what's happening with the time

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Speaker 3: it's taking to sell properties. And as Nicholas mentioned, then

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Speaker 3: you know Adelaide person Brisbane are actually selling faster than

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Speaker 3: what they were this time last year, whereas in the

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Speaker 3: States such as Melbourne' sitny in Hobite. If you're playing

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Speaker 3: on that field, you should really feel the upper hand

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Speaker 3: switching to you, I guess, and use that to your advantage.

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Speaker 3: But pore over those that so you can actually see

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Speaker 3: those vendors probably sweating a little bit thinking this is

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Speaker 3: taking longer than what I anticipated, too, And I think

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Speaker 3: having that knowledge should actually empower that buy to feel

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Speaker 3: it they've got the upper hand a little bit, because

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Speaker 3: in reality, if they can't get the deal they want

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Speaker 3: for the price they want or the house they want,

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Speaker 3: they pretty much came for quite confident they can go

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Speaker 3: around the corner and there might be a similar property

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Speaker 3: on the market or coming onto the market, so that

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Speaker 3: pressure has dissolved, all.

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Speaker 1: Right, without jumping ahead then too far. It does feel

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Speaker 1: like now is a better time to be buying, and

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Speaker 1: I feel like I'm now just pre emptying the end

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Speaker 1: of the show. Now it does feel like it's getting

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Speaker 1: towards that. Would you agree with that, Alice?

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Speaker 3: I do think it is. However, I think, and I

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Speaker 3: say this from a personal perspective, we can all get

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Speaker 3: very carried away with this and think, right, great, go

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Speaker 3: go go. However, this is a massive decision buying property,

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Speaker 3: and I don't think that people should be rushing it.

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Speaker 3: So I think it's really important to stay on your

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Speaker 3: own roadmap and really do that research, do that due diligence.

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Speaker 3: So whatever you do purchase is done with you know, caution,

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Speaker 3: but also with a sense of empowerment about what you

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Speaker 3: are doing. And I think it's going to be interesting though,

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Speaker 3: when we start seeing narrative from the RBA change what

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Speaker 3: that does to the mindset of sellers, what that does

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Speaker 3: to other buyers. So the advantage is now, I guess

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Speaker 3: one could say is that there's probably less competition in

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Speaker 3: the market. We know that when the RBA starts to

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Speaker 3: cut rates that will change the game again. So maybe

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Speaker 3: it's also about understanding what sort of pressures you best

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Speaker 3: like to work with. I suppose heightened competition or potentially,

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Speaker 3: you know, different prices but a bit less competition.

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Speaker 1: So alistat's the voice of reason, seems for one tempering

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Speaker 1: my over enthusiasm, it would seem Nicola, can I ask

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Speaker 1: you about units because this is really really interesting, isn't it?

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Speaker 1: What's kind of going on with unit prices? There are

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Speaker 1: records in Sydney, Brisbane, Adelaide and Perth, and in a

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Speaker 1: couple of key cities Sydney and Melbourne, price growth is

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Speaker 1: actually accelerating.

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Speaker 2: Isn't it It is? And overall what we've seen, even

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Speaker 2: on the combined capital city level is the slowdown in

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Speaker 2: price growth is much more pronounced for houses, says a

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Speaker 2: lot about affordability. And we've got our two you know,

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Speaker 2: most expensive capital cities, Sydney and Melbourne, have seen a

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Speaker 2: bit of a reacceleration of their unit price growth. I

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Speaker 2: think for Melbourne, you know, it probably showcases the bio segments.

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Speaker 2: You know, as I mentioned earlier, we have got a

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Speaker 2: rise in cohort first time buyers in Melbourne. They're absolutely

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Speaker 2: going to be steered towards more affordable locations and property types.

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Speaker 2: And an element Sydney too. You know, when you've got

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Speaker 2: a median house price at one point six you can

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Speaker 2: understand why, you know, contained borrowing capacities and extreme rates

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Speaker 2: of price growth over the last four years is absolutely

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Speaker 2: going to be diverting people towards the more affordable end.

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Speaker 2: And look, this is such a headline. We actually had

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Speaker 2: a bit of a reshuffling on the affordability stakes across

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Speaker 2: our different capital cities for the first time in twenty

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Speaker 2: five years. Brisbane is now the second most expensive city

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Speaker 2: in which to buy a unit. Like that headline, that

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Speaker 2: one line flawed me when I saw this unravel And

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Speaker 2: what that really does show is the strength of Brisbane's

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Speaker 2: housing market overall that we've seen. I mean, it's saw

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Speaker 2: a little bit of a downturn, but really not much

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Speaker 2: and it's just continued to plow ahead.

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Speaker 3: And Nick Clara is it fatters say that investors are

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Speaker 3: kind of like a moth to a flame and they're

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Speaker 3: the ones that are really rushing into that market.

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Speaker 2: Look, I think so investors are definitely sparked by capital

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Speaker 2: growth and they will go to those areas that they

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Speaker 2: think capital growth prospects are more likely. And when you

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Speaker 2: look at Brisbane with the games and the amount of

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Speaker 2: infrastructure spending, and we know when government spends big on infrastructure,

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Speaker 2: it leaves a legacy in our housing market, you do

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Speaker 2: see a change in price point. So yeah, investors will

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Speaker 2: be looking towards those areas. And really, if you look

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Speaker 2: at any of our capital cities, the only city I

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Speaker 2: think is going to be in any way able to

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Speaker 2: actually deliver on its infrastructure promise, it's Brisbane because they've

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Speaker 2: got that ticking time of the game's upcoming and they

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Speaker 2: need to deliver the infrastructure that has been promised for

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Speaker 2: the games.

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Speaker 1: I find the whole affordability kind of factor just fascinating

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Speaker 1: that it is just a straight up reflection of kind

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Speaker 1: of human behavior. Then, isn't it that as soon as

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Speaker 1: you are priced out of one suburb or one kind

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Speaker 1: of area, you move to the next and it's the

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Speaker 1: same kind of looking from houses, going okay, all right,

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Speaker 1: that's unaffordable at this stage, we'll look to the next stage.

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Speaker 1: And so just seeing this playing out in the data

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Speaker 1: is fascinating. Alice, I love talking about strategy, and so

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Speaker 1: this question is kind of then about the strategy for

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Speaker 1: if you are a buyer of an apartment at this stage.

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Speaker 1: Does the acceleration in unit prices change the strategy here

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Speaker 1: we talked about kind of with houses, you have more

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Speaker 1: time that the property might be on the market for longer.

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Speaker 1: You've got a little bit more time, a little bit

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Speaker 1: more freedom, a little bit more room to move. Is

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Speaker 1: that the same then for units or do you need

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Speaker 1: to be quicker, do you need to be more decisive

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Speaker 1: or does the buyer still have a lot of power

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Speaker 1: in this scenario.

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Speaker 3: I think it depends on what sort of buyer you are.

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Speaker 3: I think if you're an owner occupier versus an investor,

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Speaker 3: it's probably quite differing situations. But I do think you know,

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Speaker 3: from the work that comes out of Nicholas team, we

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Speaker 3: really know that it's population growth is what's really fueling

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Speaker 3: house price growth. So I guess what I'm saying is

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Speaker 3: we know our population is going to continue to grow,

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Speaker 3: particularly certain cities, and I do think when we think

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Speaker 3: of it like that, the sort of dependability of what

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Speaker 3: we're going to see around house prices, they will basically

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Speaker 3: keep going up and up and up. So I'm always

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Speaker 3: reluctant for people to rush in and do urgent transactions

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Speaker 3: based on that. The other thing I think it's worth

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Speaker 3: mentioning here, Michael is also I think sort of stigma

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Speaker 3: around units is also really shifting. We've got so much

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Speaker 3: conversation at the moment federally and at state and local

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Speaker 3: government levels, particularly in Melbourne, Sydney and Brisbane, talking a

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Speaker 3: lot about sort of delivering more apartments, and you know,

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Speaker 3: in Victoria this week they actually also talked about incentivizing

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Speaker 3: developers who are actually delivering decent apartments. There's a whole

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Speaker 3: other conversation on that one, but this idea around apartments

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Speaker 3: is changing. There's not going to be cookie cutter apartments

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Speaker 3: in our future. Hopefully, we're actually, I'm going to get

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Speaker 3: better and more thoughtful about it, and I think opportunistic

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Speaker 3: buyers will really be entertaining the thought about units in

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Speaker 3: a way that perhaps people haven't over the past.

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Speaker 1: All right, Nicola, final question then, to wrap things up,

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Speaker 1: coming back to where we started, is now the time

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Speaker 1: to buy or is it kind of looking to the future,

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Speaker 1: looking kind of six months ahead, twelve months ahead, waiting

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Speaker 1: to see what happens with the Reserve Bank, and just

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Speaker 1: kind of seeing how things play out. I'm asking you

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Speaker 1: for the impossible look into the crystal ball here.

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Speaker 3: Michael.

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Speaker 2: You're going to hate my answer because I really truly

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Speaker 2: believe that you need to purchase when it's right for you,

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Speaker 2: and it's not about timing the property market. Property needs

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Speaker 2: to be seen as that longer term game and we

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Speaker 2: need to not be distracted by property price cycles. I

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Speaker 2: think what the house price report allows us to do

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Speaker 2: is it allows us to understand current market dynamics and

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Speaker 2: it allows people to make informed decisions, and that makes

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Speaker 2: a great decision. So I would say, you know, if

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Speaker 2: you're in some of our cities where we're seeing an

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Speaker 2: increase in supply, absolutely seeing that pendulum swing towards buyers,

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Speaker 2: and we're seeing those buying conditions become more favorable. In

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Speaker 2: other capital cities, it still remains very competitive, such as Adelai,

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Speaker 2: Brisbane and Perth. But I go back to my original

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Speaker 2: answer of it's all about timing when it's right for you.

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Speaker 1: That is just it is painfully good advice here. I

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Speaker 1: was just hoping that for this fantastic headline of do

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Speaker 1: it before the end of the week or something along

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Speaker 1: those lines, and instead, no, I get rational, sensible, smart

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Speaker 1: advice based on the data. I should have expected that. Nicola,

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Speaker 1: thank you very much for joining the property pendulum today.

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Speaker 3: Thank you.

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Speaker 1: That was doctor Nicola Powell, Domain's chief of Research and economics. Alice.

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Speaker 1: Final word, I'll let you have this one because it

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Speaker 1: feels like I have just kind of I have tried

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Speaker 1: to kind of stitch you both up today with trying

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Speaker 1: to wedge you on on matching my enthusiasm. Right now,

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Speaker 1: any kind of last advice for buyers.

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Speaker 3: Oh, look, I think if you are going out to auctions,

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Speaker 3: I think it's just really important to be incredibly disciplined

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Speaker 3: about your bidding ability. So I think we've talked about

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Speaker 3: this before, Michael, that idea of writing down a price,

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Speaker 3: you consider the property at a bargain that you'd think

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Speaker 3: you've got a really good deal. Then number two realistically

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Speaker 3: what you're prepared to pay, and you would pay number

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Speaker 3: three your absolute ceiling, and that's it. And when it

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Speaker 3: hits that, you have to just think, Okay, at least

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Speaker 3: finally now there is other choice on the market. There'll

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Speaker 3: be another one that comes along. Yeah, well said, Thank

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Speaker 3: you very much, Alie, Thanks Michael.

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Speaker 1: That was real estate expert Alice Staltz, national property editor

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Speaker 1: at Domain, and I'm Michael Thompson. Make sure you're following

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Speaker 1: the podcast and we'll be back next week with another

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Speaker 1: episode of the Property Pendulum, brought to you by Domain

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Speaker 1: and Fear and Greed, the podcast that tells you which

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Speaker 1: way the property market is going to swing, how to

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Speaker 1: make the most of its