Can we expect a lot more stock to slowly come onto the market in the coming weeks?

Look, I think this is going to be fascinating to watch because we normally do see a lot more homes put on the market for spring.

It's a popular time to sell.

But what we have been seeing is some different movement across the states.

So we've really seen signs that sellers have pulled back a bit in Sydney and Melbourne.

But if we look around the other capital cities, we've seen some very, very strong levels of selling behaviour.

So I think this is something that we might continue to see through spring.

And I think the thing that jumps out at me is it seems like there are quite a lot of buyers here that are taking up that 5% deposit scheme.

Look, that headline is really loud, but can you actually put some numbers behind that for us?

When we say that the auction clearance rate hasn't been particularly high, that is certainly the case.

We've seen clearance rates sitting below 50% for around three months now.

Now, while that does sound very dramatic, it's important to remember that the vast majority of those homes that do go to auction, they do still sell subsequent to the auction.

It might be after the auction or it might be a few weeks after.

We do see more homes not selling after auction compared to, say, a year ago, but it's still certainly the minority.

I think the main thing that auction clearance rates tell us is really that there's still a bit of a mismatch between what vendors are hoping to get and buyers are willing to pay.

So what does that mean for the market as a whole, though?

So what's your gut feel there? What are your senses going on? Because they're quite disparate, and yet right now what you can see is that the home prices are starting to go in places that were previously successful like Brisbane, like Perth and like Adelaide.

Well, I think that price movements in recent years have a lot to do with the current stock levels we're seeing on the market.

For homeowners in Perth, Brisbane, Adelaide, they have seen some extremely significant growth in recent years.

So even though we are seeing a weaker market to sell in at the moment in those capitals, it does still make sense if s- an, someone is looking to sell.

Even selling in a weaker market where prices are starting to decline, you're still probably going to make a very significant capital gain.

Whereas if we look at a market like Melbourne where prices have been very subdued for quite some time now, um, owners could stand to actually lose quite a lot by selling in the current market there.

So I think that's really the main factor driving decision-making around whether or not it's now a good time to sell.

They get their chance to jump into the market." But is there evidence from what you're seeing now that h- first home buyers in particular are taking that opportunity? Or are they still concerned of even further home price falls in the future?

Mm.

Over the short term, certainly the cyclical impact of interest rates seems to be the major factor here.

Um, we're also still seeing a lot of nerves and a lot of buyer hesitation post tax changes.

And, and this is true of all buyers, not just investors, who are sort of waiting to see how long prices fall.

Particularly for people like first home buyers, it's really in their best interests to wait it out until property prices hit a fall.

But if we do take a longer term view, the reality is that the fundamentals of Australia's property market, which is very, very strong rates of population growth, uh, we're expected to add around three and a half million extra people to our population within the next 10 years.

Uh, and at the same time, we have a problem with under-building.

Mm.

What's driving the increase in that? Look,

costs are a major factor and they have become even more pertinent in recent years.

So, when we think about building material costs, they increased extremely dramatically, particularly post-COVID.

We have seen the rate at which they're rising has stabilised.

They are still growing, but at a more reasonable rate.

But it's not the only cost.

We also see labor shortages, also financing costs.

But if we look, I guess, to where opportunity still exists and from a national perspective, what are you still seeing where the opportunity is for buyers and builders? Look,

Were you surprised?

I am definitely surprised, but we actually have seen similar polls in recent weeks which, with likewise results.

And one of the things that's most surprising about it is that around two-thirds of Australians actually own a home.

So what we're seeing is that people who even own their home are saying, "You know what? Home prices are too high." And I, I think this is very much the case in some of the other capital cities where growth has really accelerated.

In Melbourne, things are m-more affordable, um, if you can believe it.

Um, so the fact that there are people who, who do own that want home prices to fall, um, that's surprising.

But I think I agree that there will be unintended consequences, uh, if we do see dramatic falls in home prices.

So are, are there other losers from falling house prices? I mean, maybe the state government, less land tax.

Were you surprised?

I am definitely surprised, but we actually have seen similar polls in recent weeks with, with likewise results.

And one of the things that's most surprising about it is that around two-thirds of Australians actually own a home.

So what we're seeing is that people who even own their home are saying, "You know what? Home prices are too high." And I, I think this is very much the case in some of the other capital cities where growth has really accelerated.

In Melbourne, things are m-more affordable, um, if you can believe it.

Um, so the fact that there are people who, who do own that want home prices to fall, um, that's surprising.

But I think I agree that there will be unintended consequences, uh, if we do see dramatic falls in home prices.

So are, are there other losers from falling house prices? I mean, maybe the state government, less land tax.

Were you surprised?

I am definitely surprised, but we actually have seen similar polls in recent weeks with, with likewise results.

And one of the things that's most surprising about it is that around two-thirds of Australians actually own a home.

So what we're seeing is that people who even own their home are saying, "You know what? Home prices are too high." And I, I think this is very much the case in some of the other capital cities where growth has really accelerated.

In Melbourne, things are m-more affordable, um, if you can believe it.

Um, so the fact that there are people who, who do own that want home prices to fall, um, that's surprising.

But I think I agree that there will be unintended consequences, uh, if we do see dramatic falls in home prices.

So are, are there other losers from falling house prices? I mean, maybe the state government, less land tax.

What's happening to those 700 homes that don't sell on the weekend?

Look, the overwhelming majority of those homes will sell later on when the vendors bring down their price expectations.

But of course, a certain percentage of those will be withdrawn.

Uh, we have actually seen the number of homes being withdrawn for sale increase compared to the same time last year.

And if we continue to see these lower clearance rates, I think that has the potential to happen.

I think as well, people have expectations when they sell a property about the ki- kind of market that they're selling in, and I think that we have seen the market shift quite rapidly over the past few months.

So I think people who are considering selling their properties now, they have a better understanding of the market that they're selling in, whereas those who may have, uh, decided to sell their property a couple of months ago may now be selling in a market that isn't as appealing as it was a couple of months ago, and then may reconsider their timing.

So, you know, there are periods when home prices consolidate or even fall, and, and, and, uh, certainly owners are gonna be conscious of this.

Uh, what are the big cities around the country which you think are gonna struggle the most with property prices, potentially could fall a lot as well?

Look, what we've been seeing is it's primarily your less affordable markets that are seeing bigger declines.

This makes sense because if we think about interest rates as being one of the bigger drivers for, um, home price falls, um, areas where we see people having to take out larger mortgages are typically more sensitive to higher interest rates.

So what we've been seeing for well over a year now is more expensive capital cities, more expensive, uh, regional, um, I should say, um, SA4 regions have been recording some of the bigger drops.

I think as well we're going to see houses record bigger falls than units.

Again, it comes down to that affordability piece, more people being priced out of those more expensive areas, priced out of purchasing houses, and that's redirecting a growing share of that buyer demand into the more affordable areas and property types.

So are those big weaknesses in the market really coming from both Sydney and Melbourne?

Look, predominantly what we've been seeing over recent months is that Sydney and Melbourne have been leading the declines in, around the, the country.

How is this budget being received?

Overall, I don't think that people are very positive about it.

I think there's certain reforms like to capital gains, which seem to make sense.

But I think that if we look at where we are in the rental market, there's a lot of cause for concern.

If we go back a few decades to when Keating removed negative gearing, this was 1985.

After about two years, they reversed that policy.

And one of the main reasons for that was that they saw very sharp rent growth.

And why is that?

What sort of stuff are you picking up from them at the moment?

Look, we're still seeing a lot of buyer interest, but what we're seeing is a lot more caution.

So there are still a lot of people out there looking at properties, making inquiries, doing searches, but I think the buyers recognize that they have more space now than they did 12 months ago.

I think that, you know, that hesitation, it's, it's not just about having more space and a bit less competition in the market, but I think that people are also spending more time looking at things around, okay, what happens if interest rates rise more rapidly than I might be anticipating? What could I really afford if, if those rates did move higher? I think that a lot of people are also waiting to see what happens with home prices.

I think for people who do have a bit of flexibility in when they buy or maybe when they sell, they're, they're looking at what's happening with market conditions and thinking, "You know, I might be a little bit better off waiting slightly longer to buy if home prices do decline in the market I'm looking to buy in." So I think there's a lot of things going on in the minds of buyers.

But regional areas also seem to be a lot stronger than the metropolitan precincts.

That's exactly right.

And if we look at the best performing regions around the country, you know, there's, there's a lot of headlines around home prices are falling, but actually we saw home prices rise in over 60% of those SA4 regions around the country.