And the investor sector of the market, I mean, how important are they for keeping prices elevated? Because clearly they're feeling the pinch right now after these changes at the federal budget time.

That's true.

So whenever you look at any measurement, whether it be the ABS data or other measurements, investors have been leaving the market predominantly because of the property taxation changes.

What investors demand now is a rise in rental yields.

And how you get a rise in rental yields is by either housing prices fall or rents rise or a combination of the two.

Now, many have been forecasting that rents will rise in this environment because we have less investors in the marketplace.

To date, we haven't seen that as yet.

It's obviously better than what it was last year, but it's still not really enough to fix a housing supply issue.

If there's any change, and any change would be less immigration, that I think we can take as read, how does that play into the property market?

Yeah.

It's a really good question, James.

Now, the population numbers that we rely on to make conclusions and deductions and so forth is a really, really laggy measurement.

So just so you know, the official population numbers from the ABS have only been updated through to December 2025.

We don't know yet what's happened in the first quarter of 2026, let alone the second quarter of 2026, let alone what's going on in real time.

However, what we do know is that December number showed a population expansion of about 78,000 for the December quarter, which does represent a natural slowdown on what we've been recording previously.

Yeah, yeah

the part that I, I was quite interested in that came out through the budget is, what is the impact on the property market over time? Like, should people be expecting these changes to materially impact the, the viability of property as a, as an asset, as an in- as an investment, or el- and/or the, the growth rate of property moving forward?

Mm.

Mm.

Good question.

So how I see this is that the market right now is in disequilibrium.

Uh, there's a lot of, uh, gap between buyers and sellers.

Once the market gets back into equilibrium, in other words it adjusts for these property taxation changes, I think we'll get back to a state of normalness.

Mm.

How bad is this?

Yeah, it's been the worst we've seen in some time.

Briefly, on the outbreak of COVID, we had a little bit of a panic in the market.

That quickly settled down once the government brought in stimulus into the economy.

Before that, we go back to about 2017, where there was a reasonably sized downturn.

where housing prices fell by about 8% to 9%.

And then before that, we need to go back to about 2011.

But, I mean, do you think we are going to get to that sort of crisis, recession level? I mean, where is this going?

Have, have we reached, uh, anywhere near the bottom do you think, or is there still more to fall out of the bottom of the market?

Steve, there's, there's much more to come, uh, in our view.

Just looking at the leading indicators we've got.

As you, you rightly point out, auction clearance rates have fallen off a cliff.

The real number is now actually in the 30s.

You...

Often what you see in the media quoted is a clearance rate in the high 40s or early 50s, but then at, that number is adjusted or revised later in the week and it's regularly falling into the 30s.

You know, i- is there any evidence that there's a whole bunch of first home buyers benefiting from this downturn in, in real estate prices?

We'll come up with our market headwinds on our first slide here, if you like.

Geopolitically, what do you see happening there? I see tensions continue in the Middle East like they always have, but they've simmered down a little bit of late.

Interestingly, oil prices have really fallen.

We're now back to levels recorded prior to the outbreak of the Middle East War.

This is an important point, Peter, in my view, because the driver of this potential new outbreak of inflation was a rise in energy prices driven by big rises in oil prices.

Oil prices did go up.

There were concerns about shortages, and we briefly had some.

Evergrande collapsed, ghost cities.

So you say rents are not rising to the same extent that maybe some parts of social media and others are suggesting.

That's true, Ross.

Uh, on our numbers over the past 30 days, we've actually recorded a stabilization of rents, notwithstanding that if we look at over the last 12 months, rents have accelerated.

We've got them up by about 6.9% as a capital city average, and that's well above the CPI and certainly well above wages growth.

But during winter times, we tend to see a little bit of a lull in the rental market where rents tend to stabilize, and I, I think what we've seen over the past 30 days is just that seasonal lull.

So my point being is that we're not ruling out that rents could accelerate from here, particularly when we go back into the spring months.

And so something's gotta give at some stage.

Absolutely, Ross.

Can I just have a quick assessment from you based on what you think is happening with the property market over the last three or four weeks?

Yeah, so really ever since the announcement of the budget, the housing market has lurched southwards across the country.

This initial downturn that we had, which started in February, was limited to Sydney and Melbourne, but it's now spread to Brisbane, to Perth.

to Adelaide.

And yeah, clearly there's been a lurch down since the announcement on the property taxation changes.

A clearance rate below 50%.

Yeah, that's weak.

How serious and concerning is it for young people that could now be trapped in negative equity where their mortgage is worth more than what the house is right now?

Those figures are bad enough, but in Queensland, it's down to about a quarter of auctions succeeded only.

That's true, Chris, but let's keep in mind with Queensland, it's not exactly an auction state.

So we've historically recorded fairly low clearance rates in Brisbane, in South East Queensland, and there's a lot of after sales.

That all said, though, definitely Brisbane and South East Queensland are now in a downturn.

We are recording falls in vendor asking prices, falls in actual prices.

So the very low clearance rates in Brisbane, yes, that is reflective of a downturn, albeit Brisbane's always had low clearance rates.

The big question is, is this going to help first-home buyers get in or are they going to be squeezed out still with interest rates?

Yeah, good question.

But we're in winter when stock levels are low.

Yeah.

So what tends to happen seasonally is that y- you see a, a little bit of a rise in the clearance rate over winter, but we're not getting that.

And then the, the real concern is, uh, yes, seasonally you see tighter listings, uh, and we are seeing less listings now, but they're still at the same levels that we recorded this time last year, Peter.

So I don't think sellers are actually leaving the market.

We will, in about 60 days time, go back into the spring selling season, and that's when we will see a seasonal rise in listings.

And normally what you see during the spring selling season is a fall in clearance rates.

Uh, what's your takeouts?

Does that feed into where we are?

Absolutely, it does.

So there's been a number of events which have created a shock in the marketplace, starting off with the first interest rate rise back in February.

Then, of course, we had the outbreak of the Middle East war and that created a lot of uncertainty for the outlook for the economy and living standards.

Then we had a further two interest rate rises followed by the taxation changes.

We started noticing the market turning in early February.

So I think the first interest rate rise took some of the wind out of the sails of the market and then these consecutive events really smashed the market.

in Sydney, if the value of your place drops by, and let's call it 10%, does that likely send you into negative equity? And what does that mean?

Yeah, how much of the blame for this downturn do you think is the federal budget and those tax changes, or how much of it is the Reserve Bank lifting rates pretty aggressively to start off the year?

In truth, it's been a combination of factors, and this downturn started before the announcement of the property taxation changes.

The market has suffered a series of shocks from the February interest rate rise.

We had the outbreak of the Middle East war, where people were concerned about rising petrol prices and what that would mean for the economy as well.

We had a slump in consumer confidence, then we had further interest rate rises, and then the property taxation changes.

But it would be wrong to say that the property taxation changes have had no impact upon the market.

I think out of all the above, uh, the property taxation changes have had the single largest impact upon the market, and we can measure it.

And then just shifting quickly to the rental market, I mean, how much pressure is that now under with less interest from the investor side of things?

Is this people worried about the tax changes or is it the uncertainty, people waiting to see what actually ends up becoming law?

Nice to be with you, Chris, and your audience.

It's a combination of factors driving this.

We noted that the housing downturn started with the first interest rate rise back in February and has progressively got worse and conditions have definitely deteriorated, especially on the announcement of the property taxation changes.

So in truth, markets suffered a series of shocks and And at this point in time, we're not seeing any bottom in the market.

And indeed, when we look forward, we see things worsening from here because there is no actual sweetener on the horizon this time around, unlike other cycles.

We're not expecting an interest rate cut anytime soon.

What about to the fact that negative gearing remains available for new builds? Is there any suggestion that there's additional investment looking to go into new housing?

And then you put on top of it the extra taxes in the budget.

Absolutely.

To be fair, the market's been hit by a number of shocks, as you rightly point out.

The first shock came with the February interest rate rise.

Of course, we've had two more interest rate rises since then.

Then, of course, the outbreak of the war and the sudden rise in energy costs.

That was a shock in the housing market that affected everybody's discretionary income and consumer confidence started to fall away.

But now we're hearing that many, maybe tens of thousands, could be looking at negative equity.

In terms of where this sits and stays compared to previous market cycles, is there a view here that we haven't seen this kind of impact or fluctuation in the property market for forty years? Is that what you believe?

Yeah, I saw that headline.

Look, uh, I can tell you now auction clearance rates are the lowest we've had since the first COVID lockdown of March twenty twenty.

Um, and if you were to strip that out, you would then go back to two thousand and eight, uh, where we had auction clearance rates, uh, this low.

Now that year we had a, a fairly sizable correction of about a nine percent decline in housing prices.

Uh, the thing was, in that year, of course, the Reserve Bank of Australia and the government eventually came to the party in getting us out of the global financial crisis fairly quickly.

But the issue we've got with this down leg now is that there's nothing that seems to be on the horizon.

But with these market conditions, the states are gonna suffer, right?

Broadly give me the scope of how you worked out by how much the sale of homes or the transaction of homes might fall.

Yes, Ross.

So looking at the data we've already seen so far this year and what's already happened to date since the announcement of the taxation changes, we believe that it's very likely we'll see about a 30% decline year on year in sales turnover of residential property real estate.

And the relevance of that, Ross, is that each state government receives a hefty, uh, component of their revenues from residential property sales turnover.

It is actually one of the largest, uh, taxation income takes from the state governments.

For example, in New South Wales, each year they receive about $10.8 billion in stamp duty revenue.

So if you assume a 30% decline in sales turnover, that means for FY27, New South Wales is going to lose in revenue about $3.24 billion in that year alone.

What's your own thought on what happens to rents then?