00:02So what we've seen this month is that the housing downturn across Australia has both
00:06widened and deepened. We saw nationally a downturn of 0.7%, but yeah, I think the most
00:12interesting thing is that it's now some of those mid-tier capitals, such as Brisbane
00:16and Adelaide, that have started to join this wider downturn in the market.
00:21And, you know, the likes of Brisbane and Adelaide joining that, was that expected?
00:26Yeah, it was. We have seen in our data that the momentum in these markets had clearly
00:31slowed since late last year, and the weight of these demand-side pressures that have built
00:35up over time have started to impact these cities as well.
00:39Now, as you said, the overall downturn that we're seeing, and this is the second month
00:44of steep falls that we're seeing here in July, are we getting a better understanding as to
00:49what's behind it?
00:51We are. I mean, what we are seeing is a market that's adjusting very rapidly.
00:55But when we look at the broader factors that are behind this, you know, we see the affordability
01:02pressures that were already evident late last year. The three rate increases from the Reserve
01:06Bank have really hit demand quite significantly. Higher energy prices, the higher petrol prices
01:12at the Bowser have hit household incomes. And then finally, we've had this policy shift
01:16in the budget hitting investors. So everything has come together and they're all pulling in
01:20the same direction.
01:21And, you know, we're speaking a lot about Adelaide and Brisbane, but this downturn still
01:25being led by Sydney and Melbourne, as I understand it. How far have they fallen since their price
01:31highs? And I guess, how is this comparing historically?
01:35Yeah, so both markets are down over 5% from their peaks. Compared to, you know, the history
01:41of downturns that we've seen in these markets, it's kind of within the middle of the pack.
01:45You know, if we compare it to the last significant move around 2022, that was a very steep downturn
01:51as rates were really increased very rapidly off those emergency lows that we had coming out
01:56of the pandemic. This time around, it's a more modest downturn in terms of the pace.
02:02But I guess the big question mark is how long it lasts.
02:05And, I mean, what we're looking at, is this just the property cycle?
02:09Look, it is. You know, we've seen in all markets bar Melbourne, really, some quite strong
02:14appreciation in values over the past five years. And, you know, these pressures that have built
02:20up on the demand side are a natural response. We are now seeing, obviously, the market moving
02:25lower, and it may do so over the next 12 months.
02:29Now, an overall downturn, as we said, are there bright spots within that in terms of property
02:34prices going up at this time?
02:36There are a few markets that still show some signs of strength, most notably Darwin and Hobart.
02:41These are two markets that have very different market conditions. You know, supplies remain
02:45very tight in both of them and consistently low in Hobart. In the case of Darwin, I guess it's
02:51really the lack of new building that occurred between around 2014 and 2020, as values in
02:57that market really retreated post the mining boom.
03:01What are we seeing in this context in terms of listings? Are they going up or down? What's
03:07affecting what?
03:08Yeah, so new listings point to the idea that supply is becoming tighter, you know, that a
03:14lot of people are starting to pull out of the market. If you're a potential seller and
03:17you have the chance to wait, increasingly people are making that choice, waiting for
03:22the market to turn around and to sell in a more positive environment. So that has a way
03:26of, you know, adjusting the market as well in terms of the shift that we're seeing. Right
03:32now, total listings are quite elevated across the country, but that may start to change if
03:36we see this continued decline in new listings.
03:40And if there's a sustained fall in housing turnover, that has implications for other industries,
03:44of course, you know, real estate building comes to mind. What is the latest forecast as to
03:49where these prices will go?
03:52Yeah, so we don't directly forecast the direction of these values. But when we look at the historical
03:58trend, there have been 10 downturns over the past 40 years in the Australian market, and
04:03they've ranged from around 3% to 8% in terms of the peak to trough moves. Now, some markets
04:09have seen larger downturns. Sydney, for example, between 2017 and 2019 saw a 13% downturn. At
04:16the same time, in Melbourne, it was close to 10%. So there are forecasts out there in the
04:20market that are saying that this could be a 10% downturn. It's not completely out of the
04:24realms of possibility. But as we say, we are starting to see supply moving out of the market,
04:29and that could provide a bit of a flaw underneath where values are. It's also very difficult to build
04:36right now. Feasibility is already quite challenging given the current values and the construction
04:42costs and labour availability. So that also provides a bit of insulation to the market.
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