00:02We've seen values fall by around 3% from their peak.
00:06They fell by 0.7% in July.
00:08But this is after a period where we've seen very strong increases
00:12in property prices over the past five years.
00:15But as you said, interest rates are high.
00:17Inflation is still high.
00:19There's things going on in the Middle East.
00:21There's quite a lot of properties on the market.
00:23So it's not really a surprise that we have gone into this housing market downturn.
00:26So the Treasurer has this morning said that we need perspective
00:29and that it's not uncommon to see some prices come off in this fashion.
00:33When you look at this over the past couple of decades, would you agree with that?
00:38Yes, certainly.
00:39I think people really forget that prices do go into a downturn.
00:43Of course, in the global financial crisis back in 2008, we had a downturn.
00:48We had a downturn when interest rates started to rise in 2010, 2011.
00:52We had a downturn in 2017 and 2018.
00:56And then there was another downturn a couple of years ago.
00:58I think, though, that what generally happens is the downturns are fairly short-lived.
01:03That's probably why we tend to forget them.
01:06And the periods where prices are rising tend to go on for quite a long period of time.
01:10So people forget that this is a natural market.
01:12This is what happens.
01:13So, Cameron, do you expect this to be short-lived
01:16and then the property market to resume on that upward trajectory
01:19as we've seen over the past two decades?
01:22Well, I think this is going to be a bit of a deeper downturn
01:24than we've seen over recent years.
01:26And there's a few reasons for that.
01:27What we've typically seen when there has been a downturn in the housing market
01:31is that the Reserve Bank has responded by cutting interest rates.
01:34And they haven't cut interest rates because the housing market has gone into a downturn.
01:39They've cut interest rates because the economy's gone into a downturn
01:42and inflation's been low.
01:43But if we look at how things are playing out at the moment,
01:46we've still got very high rates of inflation.
01:49The economy, you know, the last quarter economic growth wasn't particularly strong,
01:53but the economy is still growing.
01:54And the unemployment rate is sitting at 4.3%.
01:57So unemployment is very low.
01:59So I don't think that we're going to have the scope to cut interest rates
02:04as soon as we have in other housing market downturns.
02:07Now, that doesn't mean that eventually interest rate cuts won't happen
02:09and that will see the market stabilise.
02:11But I don't believe that we're going to see interest rate cuts coming until mid next year.
02:15So even if we see a 12, 18-month downturn in the housing market,
02:20that would be the longest downturn we've seen in a very long time.
02:24And I guess that the pace at which values are declining at the moment,
02:28that could result in prices falling 10%, maybe even more than that.
02:31OK, so when do you expect, if you can look into that crystal ball,
02:35you'll see this bottom out and prices start to resume their upward path?
02:41Look, I think at the earliest we're looking at late next year.
02:44But I don't think that necessarily we'll see the rate of price decline continue.
02:49A lot of that will depend on how many properties come to the market.
02:53And the reporting today said, and this is very clear,
02:57that there's a lot of properties on the market at the moment
02:59and there's a low level of demand, but there has been a slowdown
03:02in the number of new properties coming to the market.
03:05Now, this is quite seasonal at this time of year.
03:08If in spring we see a lot of properties coming to the market,
03:11then that mismatch between demand and supply will grow
03:14and that will probably put more downwards pressure on prices.
03:17But if we see people holding back from listing properties,
03:20I still think we'll see prices fall
03:22because there is quite a lot of stock available for sale and fewer buyers.
03:25But the rate of decline in the market might slow.
03:29So really at the moment it's a case of there's too many people looking to sell
03:33and there's not enough people looking to buy.
03:35And the people that are looking to sell are not willing to reduce their price enough
03:39to meet the expectations of the people that are out there trying to buy.
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