1 00:00:05,680 --> 00:00:08,360 Speaker 1: Welcome to the Fear and Greed Business Interview. I'm sure Almam, 2 00:00:08,480 --> 00:00:12,320 Speaker 1: property buyers could be facing their best spring season in years. 3 00:00:12,480 --> 00:00:16,040 Speaker 1: New research from Domain shows that arise in property listings 4 00:00:16,079 --> 00:00:19,320 Speaker 1: and properties spending longer on the market are giving buyers 5 00:00:19,400 --> 00:00:22,360 Speaker 1: more choice. But what does it mean for prices? Doctor 6 00:00:22,400 --> 00:00:26,000 Speaker 1: Nicola Powell is Domain's chief of Research and Economics. Nicola, 7 00:00:26,040 --> 00:00:27,160 Speaker 1: Welcome back to Fear and Greed. 8 00:00:27,600 --> 00:00:29,120 Speaker 2: Hello, thanks for having me again. 9 00:00:29,480 --> 00:00:31,520 Speaker 1: It's very exciting. Do you get excited ahead of the 10 00:00:31,560 --> 00:00:34,280 Speaker 1: spring selling season because this must be peaked time for you? 11 00:00:34,320 --> 00:00:37,920 Speaker 2: Almost absolutely, you know this as well as autumn. But yeah, 12 00:00:38,040 --> 00:00:40,400 Speaker 2: you do get that kind of vibe of energy, and 13 00:00:40,479 --> 00:00:44,000 Speaker 2: I feel that that actually commences in August because you know, 14 00:00:44,000 --> 00:00:46,440 Speaker 2: I think we're all getting prepped and ready for the 15 00:00:46,440 --> 00:00:47,240 Speaker 2: boom in spring. 16 00:00:48,080 --> 00:00:51,159 Speaker 1: Let's start with new listings. New listings across the combined 17 00:00:51,200 --> 00:00:54,800 Speaker 1: capitals hit their highest level on record for the month 18 00:00:54,840 --> 00:00:58,800 Speaker 1: of July, which I think is pretty incredible. Why and 19 00:00:58,840 --> 00:00:59,920 Speaker 1: where is it so strong? 20 00:01:00,920 --> 00:01:03,320 Speaker 2: It is pretty incredible, and I actually think it really 21 00:01:03,360 --> 00:01:06,880 Speaker 2: showcases the confidence coming from sellers. You know, when you 22 00:01:06,959 --> 00:01:10,559 Speaker 2: look at the combined capitals increased by almost fifteen percent 23 00:01:10,640 --> 00:01:13,080 Speaker 2: in terms of new listings of fifteen percent higher compared 24 00:01:13,080 --> 00:01:16,039 Speaker 2: to this time last year. It is diverse across the 25 00:01:16,080 --> 00:01:18,760 Speaker 2: different cities. You know, the gains in terms of the 26 00:01:18,840 --> 00:01:22,840 Speaker 2: strongest annual changes have been in Adelaide and Canberra. Canber 27 00:01:22,880 --> 00:01:25,559 Speaker 2: has actually led that increase, almost thirty four percent higher 28 00:01:25,640 --> 00:01:28,800 Speaker 2: year on year, and then we've seen smaller increases in 29 00:01:29,400 --> 00:01:32,240 Speaker 2: markets like Hobart which are up about six percent, and 30 00:01:32,280 --> 00:01:34,920 Speaker 2: also Sydney up by almost seven percent. So there is 31 00:01:34,959 --> 00:01:37,840 Speaker 2: a bit of diversity. But largely speaking, you know, this 32 00:01:38,000 --> 00:01:40,360 Speaker 2: is the same trend across all of our capitals, rising 33 00:01:40,480 --> 00:01:40,959 Speaker 2: new supply. 34 00:01:42,400 --> 00:01:44,240 Speaker 1: I think Adelaide is really interesting there but will come 35 00:01:44,280 --> 00:01:47,600 Speaker 1: to prices in a moment. So what about Melbourne? Why 36 00:01:47,680 --> 00:01:49,920 Speaker 1: there are still plenty of properties on the market in Melbourne, 37 00:01:49,920 --> 00:01:51,520 Speaker 1: aren't they? There are? 38 00:01:51,680 --> 00:01:53,720 Speaker 2: I think with Melbourne it has been interesting. I mean 39 00:01:53,760 --> 00:01:56,240 Speaker 2: we've still seen a steady stream of new home listings 40 00:01:56,240 --> 00:01:59,120 Speaker 2: throughout autumn and winter, and when you look at Melbourne 41 00:01:59,240 --> 00:02:03,080 Speaker 2: it hasly topped the five year average. I think as well, 42 00:02:03,120 --> 00:02:05,720 Speaker 2: Melvin's been really interesting because the buyer profile has been 43 00:02:05,800 --> 00:02:08,560 Speaker 2: changing and what I mean by that demand has been 44 00:02:08,680 --> 00:02:12,519 Speaker 2: rising from first time buyer activity, but actually investor activity 45 00:02:12,520 --> 00:02:16,080 Speaker 2: has been dwindling in comparison, and I think that higher 46 00:02:16,160 --> 00:02:20,000 Speaker 2: level of supply has definitely been testing the depth of 47 00:02:20,280 --> 00:02:22,239 Speaker 2: buyer interests. And we know that Melbourne is one of 48 00:02:22,280 --> 00:02:25,120 Speaker 2: those cities that's really struggle to move into a recovery. 49 00:02:25,360 --> 00:02:26,880 Speaker 2: So I do think it's going to be interesting to 50 00:02:26,880 --> 00:02:29,880 Speaker 2: see how that spring season unfolds, because I think overall 51 00:02:29,919 --> 00:02:32,240 Speaker 2: suppli has always been much better in Melbourne compared to 52 00:02:32,240 --> 00:02:34,399 Speaker 2: other capital cities, and it's been one of the foundational 53 00:02:34,480 --> 00:02:37,880 Speaker 2: reasons why we haven't seen Melbourne really move into a 54 00:02:37,919 --> 00:02:38,799 Speaker 2: stronger recovery. 55 00:02:39,639 --> 00:02:41,960 Speaker 1: Yeah, just as an aside on Melbourne, they had the 56 00:02:42,000 --> 00:02:46,399 Speaker 1: tax changes. The Victorian government introduced tax changes where investors 57 00:02:46,440 --> 00:02:50,160 Speaker 1: got taxed more effectively buying in Victoria. Has it paid 58 00:02:50,160 --> 00:02:51,040 Speaker 1: a role, do you reckon? 59 00:02:51,480 --> 00:02:54,240 Speaker 2: I do think it has. I think it's very evident 60 00:02:54,280 --> 00:02:57,400 Speaker 2: when you look at the distribution of investment activity across 61 00:02:57,440 --> 00:03:00,000 Speaker 2: the different states and territories, and you know they are 62 00:03:00,040 --> 00:03:02,919 Speaker 2: getting to those areas that have seen stronger capital growth. 63 00:03:02,960 --> 00:03:06,400 Speaker 2: Got to member that investors are really activated by rising 64 00:03:06,440 --> 00:03:09,919 Speaker 2: prices ultimately, so they've been going to Queensland, they've been 65 00:03:09,919 --> 00:03:13,160 Speaker 2: going to wa and they have been shying away from Melbourne, 66 00:03:13,200 --> 00:03:16,200 Speaker 2: and it's very telling when you look at that buyer profile. 67 00:03:16,480 --> 00:03:19,799 Speaker 2: But it is interesting because what Melbourne wanted was an 68 00:03:19,800 --> 00:03:23,560 Speaker 2: increase in first time by participation and that is exactly 69 00:03:23,600 --> 00:03:26,680 Speaker 2: what they've been seeing. We have seen a larger share 70 00:03:26,800 --> 00:03:28,160 Speaker 2: going to first time buyers. 71 00:03:28,760 --> 00:03:30,760 Speaker 1: Stay with me, Nikola, we'll be back in a minute. 72 00:03:37,360 --> 00:03:39,720 Speaker 1: My guest this morning is doctor Nicola Powell, chief of 73 00:03:39,760 --> 00:03:43,920 Speaker 1: Research and economics at Demain. Okay, So how long are 74 00:03:43,920 --> 00:03:46,520 Speaker 1: properties typically taking to sell? 75 00:03:46,680 --> 00:03:49,480 Speaker 2: It is a bit diverse across the different cities. So 76 00:03:49,520 --> 00:03:51,560 Speaker 2: some of the shorter days on market are obviously in 77 00:03:51,600 --> 00:03:54,839 Speaker 2: those capitals where we've got real momentum still within those 78 00:03:54,840 --> 00:03:57,760 Speaker 2: housing markets, so Brisbane and Perse days on market for 79 00:03:57,800 --> 00:04:01,560 Speaker 2: houses is only at thirty days in Perse. But when 80 00:04:01,600 --> 00:04:03,360 Speaker 2: you look at some of the other capitals, this is 81 00:04:03,360 --> 00:04:06,000 Speaker 2: where it gets quite interesting. So let's take Sydney. The 82 00:04:06,040 --> 00:04:08,600 Speaker 2: average days on market for a house is fifty eight days, 83 00:04:08,680 --> 00:04:11,200 Speaker 2: but that is increasing. You know, when you look back 84 00:04:11,240 --> 00:04:13,720 Speaker 2: into you know, the latter part of twenty three it 85 00:04:13,800 --> 00:04:16,360 Speaker 2: was sitting at a forty four days. So what that's 86 00:04:16,400 --> 00:04:19,000 Speaker 2: telling us is we're seeing a slowdown in momentum. We're 87 00:04:19,000 --> 00:04:21,240 Speaker 2: seeing a slow down in the pacer price growth. We're 88 00:04:21,240 --> 00:04:25,760 Speaker 2: seeing supply rise and we're now seeing overall the time 89 00:04:25,839 --> 00:04:28,799 Speaker 2: a home spends on the market is now lengthening. And 90 00:04:28,880 --> 00:04:31,680 Speaker 2: I do think that when you think about Sydney, I 91 00:04:31,760 --> 00:04:34,560 Speaker 2: do think that the spring selling season is going to 92 00:04:34,600 --> 00:04:37,200 Speaker 2: present an opportunity I think for buyers. I do think 93 00:04:37,200 --> 00:04:39,599 Speaker 2: that that buyers do have more negotiation power. 94 00:04:40,560 --> 00:04:42,560 Speaker 1: So I mean, just take Sydney and Melbourne at the moment, 95 00:04:42,600 --> 00:04:47,920 Speaker 1: then as we head into spring selling season, perhaps it's 96 00:04:48,000 --> 00:04:50,440 Speaker 1: just shifted a little bit compared to previous couple of 97 00:04:50,520 --> 00:04:53,640 Speaker 1: years where buyers have, as you just said, more power. 98 00:04:54,520 --> 00:04:56,839 Speaker 2: Absolutely the case, and when you look at some of 99 00:04:56,839 --> 00:05:01,719 Speaker 2: those smaller areas within Sydney and and even Melbourne, we've 100 00:05:01,720 --> 00:05:05,719 Speaker 2: seen the days on market lengthen quite significantly. So areas 101 00:05:05,760 --> 00:05:08,800 Speaker 2: like Rouse Hill McGrath's Hill the days on market is 102 00:05:08,880 --> 00:05:11,440 Speaker 2: up by almost forty percent compared to this time last year, 103 00:05:11,480 --> 00:05:14,000 Speaker 2: so it's gone from sixty two days up to eighty 104 00:05:14,080 --> 00:05:18,560 Speaker 2: six days. Even Hawkesbury seventy five days last year up 105 00:05:18,600 --> 00:05:21,800 Speaker 2: to one hundred and five days today. And even when 106 00:05:21,839 --> 00:05:24,360 Speaker 2: you look at Melbourne's doon Inton East days on market 107 00:05:24,440 --> 00:05:28,279 Speaker 2: is up by almost about fifty percent, white Horse East 108 00:05:28,480 --> 00:05:31,400 Speaker 2: forty three percent. So some of these real kind of 109 00:05:31,640 --> 00:05:34,359 Speaker 2: city locations are really seeing a lengthening in terms of 110 00:05:34,440 --> 00:05:35,440 Speaker 2: time it takes to sell. 111 00:05:36,640 --> 00:05:39,360 Speaker 1: So what's it mean for prices? Then? I suppose that's 112 00:05:39,360 --> 00:05:40,520 Speaker 1: the bottom line for most of us. 113 00:05:40,960 --> 00:05:43,640 Speaker 2: Yeah, ultimately is isn't it? And I think this is 114 00:05:43,680 --> 00:05:46,720 Speaker 2: really interesting because you know what a lengthening days on 115 00:05:46,839 --> 00:05:50,880 Speaker 2: market or in a deepening discounting means, and even rising 116 00:05:50,920 --> 00:05:53,520 Speaker 2: supply means that we're starting to see a slow down 117 00:05:53,560 --> 00:05:56,480 Speaker 2: in the absorption rate. And I think what it's showcasing 118 00:05:56,560 --> 00:05:58,320 Speaker 2: is there is a bit of a mismatch between what 119 00:05:58,360 --> 00:06:01,159 Speaker 2: a seller's pricing expectation years and what the market is 120 00:06:01,200 --> 00:06:03,880 Speaker 2: willing to pay. And I think that what we are 121 00:06:04,000 --> 00:06:07,040 Speaker 2: seeing is that buyers have got a little bit more 122 00:06:07,200 --> 00:06:11,120 Speaker 2: negotiation power in certain areas. And I think what we've 123 00:06:11,120 --> 00:06:13,680 Speaker 2: started to see in recent months is price gains is 124 00:06:13,720 --> 00:06:17,039 Speaker 2: losing momentum, I would say, apart from really kind of 125 00:06:17,080 --> 00:06:20,479 Speaker 2: Brisbane and perse So what we're expecting is a slow 126 00:06:20,520 --> 00:06:22,839 Speaker 2: down in the pace of price grows. I mean, even 127 00:06:22,839 --> 00:06:25,440 Speaker 2: when you look at Sydney units units prices fell over 128 00:06:25,440 --> 00:06:27,640 Speaker 2: the most recent quarter for the first time in a 129 00:06:27,720 --> 00:06:31,120 Speaker 2: year and a half, so I think it really showcases 130 00:06:31,279 --> 00:06:33,599 Speaker 2: it's going to be a different spring compared to the 131 00:06:33,640 --> 00:06:34,240 Speaker 2: last couple. 132 00:06:35,240 --> 00:06:37,920 Speaker 1: What about the regions generally, and I mean no need 133 00:06:37,960 --> 00:06:40,480 Speaker 1: to go into any specific detail, but it's the trend. 134 00:06:40,560 --> 00:06:43,080 Speaker 1: Do the regions just follow the cities ultimately or is 135 00:06:43,080 --> 00:06:44,719 Speaker 1: there anything different going on in the regions? 136 00:06:45,279 --> 00:06:48,320 Speaker 2: Look, largely speaking, they do. I think what we saw 137 00:06:48,400 --> 00:06:50,760 Speaker 2: during the pandemic was highly unusual because we did really 138 00:06:50,760 --> 00:06:53,279 Speaker 2: see that flight to the regions. I think what you 139 00:06:53,400 --> 00:06:56,560 Speaker 2: tend to find is regional pricing does hold up much better. 140 00:06:56,600 --> 00:06:59,760 Speaker 2: They'd see more subdued pullbacks in price, and they tend 141 00:06:59,800 --> 00:07:02,200 Speaker 2: to see slower rates of gain as well. I think 142 00:07:02,240 --> 00:07:05,919 Speaker 2: that has been something that obviously didn't occur since the 143 00:07:06,000 --> 00:07:08,440 Speaker 2: pandemic because we did see that focus on the regions. 144 00:07:08,480 --> 00:07:11,600 Speaker 2: But you know, largely speaking, I think the focus over 145 00:07:11,800 --> 00:07:13,440 Speaker 2: you know, the last twelve months has really been on 146 00:07:13,440 --> 00:07:16,200 Speaker 2: the capital cities. We've seeing stronger rates of price growth, 147 00:07:16,520 --> 00:07:18,880 Speaker 2: and actually I think in regional markets, we've got some 148 00:07:19,080 --> 00:07:23,240 Speaker 2: areas that are now moving into that pricing recovery and 149 00:07:23,240 --> 00:07:26,800 Speaker 2: actually better conditions than compared to what they had been experiencing. 150 00:07:26,960 --> 00:07:28,960 Speaker 2: But there are many regional areas that are also still 151 00:07:29,000 --> 00:07:29,760 Speaker 2: falling price. 152 00:07:31,000 --> 00:07:34,120 Speaker 1: How important is a rate cut or expectations of a 153 00:07:34,200 --> 00:07:37,520 Speaker 1: rate cut two prices, because that seems they've gone off 154 00:07:37,520 --> 00:07:39,160 Speaker 1: the baill in the last couple of weeks on the 155 00:07:39,200 --> 00:07:43,000 Speaker 1: back of comments from there Reservank Gavnor, Michelle Bullock. What 156 00:07:43,160 --> 00:07:45,400 Speaker 1: does that mean for the market, particularly given we're heading 157 00:07:45,400 --> 00:07:45,880 Speaker 1: into spring. 158 00:07:46,400 --> 00:07:48,720 Speaker 2: I think it is important, i'd say how I would 159 00:07:48,720 --> 00:07:51,600 Speaker 2: describe it. It's actually more important for sentiment. I think 160 00:07:52,280 --> 00:07:55,680 Speaker 2: when sentiment is improving, and I think when you think 161 00:07:55,720 --> 00:07:59,800 Speaker 2: about the chatter around interest rates has been deeply, deeply 162 00:08:00,440 --> 00:08:02,280 Speaker 2: and when we're a cost of living crisis, you can 163 00:08:02,360 --> 00:08:06,920 Speaker 2: understand why Australians are feeling so gloomy. That has an 164 00:08:06,960 --> 00:08:12,240 Speaker 2: impact on turnover, transactional activity, you know, and how much 165 00:08:12,280 --> 00:08:15,280 Speaker 2: actually debt people are willing to take on. I think 166 00:08:15,280 --> 00:08:17,320 Speaker 2: a rate cut is going to be interesting because I 167 00:08:17,320 --> 00:08:18,840 Speaker 2: think there'll be a pool of buyers that are going 168 00:08:18,880 --> 00:08:21,520 Speaker 2: to want to get in before we actually see rates 169 00:08:21,560 --> 00:08:24,800 Speaker 2: being cut. Obviously, when a rates are cut, it increases 170 00:08:24,920 --> 00:08:26,960 Speaker 2: borrowing capacity. But I do think we're going to have 171 00:08:27,000 --> 00:08:30,560 Speaker 2: to see a few really to kind of see that difference. 172 00:08:31,120 --> 00:08:32,720 Speaker 2: But I do think of what it will see is 173 00:08:32,720 --> 00:08:36,000 Speaker 2: once rate cuts start, it will improve consumer sentiment. And 174 00:08:36,080 --> 00:08:39,920 Speaker 2: what that will do is actually increase housing turnover. And 175 00:08:39,960 --> 00:08:43,439 Speaker 2: I think that positivity will be amplified through the housing market. 176 00:08:43,800 --> 00:08:46,200 Speaker 1: One final one, and I mean I'm sort of harping 177 00:08:46,200 --> 00:08:48,560 Speaker 1: back a little bit here. A year out from the 178 00:08:48,559 --> 00:08:53,280 Speaker 1: federal election. Housing affordability is already an issue and that 179 00:08:53,360 --> 00:08:58,320 Speaker 1: comes down to migration issues and supply issues. How much 180 00:08:58,360 --> 00:09:00,920 Speaker 1: do you think that will play out over the next 181 00:09:00,960 --> 00:09:04,199 Speaker 1: twelve months, given houses are on the market for longer, 182 00:09:04,240 --> 00:09:08,679 Speaker 1: given interest rates might be falling. This is an apolitical comment, 183 00:09:08,760 --> 00:09:10,920 Speaker 1: so it's not good or bad, it's just how it's 184 00:09:10,920 --> 00:09:11,600 Speaker 1: going to play out. 185 00:09:12,120 --> 00:09:14,640 Speaker 2: I think we have to remember we still have record pricing, 186 00:09:14,760 --> 00:09:19,719 Speaker 2: so why while supply is rising. I think overall there 187 00:09:19,800 --> 00:09:23,520 Speaker 2: are strong affordability barriers to enter the housing market, and 188 00:09:23,559 --> 00:09:27,160 Speaker 2: I think that's the key crucial factor here in terms 189 00:09:27,200 --> 00:09:30,559 Speaker 2: of that conversation around supply, and we still have a 190 00:09:30,559 --> 00:09:34,160 Speaker 2: structural undersupply of housing across Australia. We're still not building 191 00:09:34,280 --> 00:09:38,440 Speaker 2: enough homes to meet population growth. Prices are still extremely high. 192 00:09:38,520 --> 00:09:40,360 Speaker 2: You know, the median house price in Sydney is one 193 00:09:40,360 --> 00:09:44,000 Speaker 2: point sixty six million dollars. So, you know, I do 194 00:09:44,040 --> 00:09:46,120 Speaker 2: think that it is going to be kind of a 195 00:09:46,160 --> 00:09:49,200 Speaker 2: crucial conversation over the next twelve months or more. And 196 00:09:49,559 --> 00:09:52,600 Speaker 2: you know, governments are really focused on addressing the supply 197 00:09:52,720 --> 00:09:55,600 Speaker 2: side for our housing markets, and I think it needs 198 00:09:55,640 --> 00:09:57,080 Speaker 2: to start with affordable housing. 199 00:09:57,840 --> 00:09:59,520 Speaker 1: Nichola, thank you for talking to Fear and Greed. 200 00:10:00,160 --> 00:10:00,520 Speaker 2: Thank you. 201 00:10:01,160 --> 00:10:04,679 Speaker 1: That's doctor Nikola Powell, Domain's chief of Research and economics. 202 00:10:04,840 --> 00:10:06,920 Speaker 1: This is a Fear and Greed daily interview. Join us 203 00:10:06,920 --> 00:10:09,000 Speaker 1: every morning for the full episode of Fear and Greed 204 00:10:09,080 --> 00:10:11,520 Speaker 1: daily business news for people who make their own decisions. 205 00:10:11,760 --> 00:10:14,880 Speaker 1: I'm Sean Elmer. Enjoy your day.