00:01I think what's quite interesting for the rental market is over the recent quarter, we actually
00:06saw rents flatline. And there were a couple of capital cities that saw a decline in asking rents.
00:12And that was namely Sydney and Canberra. Really, the only capital city to see rents continue to
00:18rise is Darwin. And this is very unusual to see rents flatline or even fall when we still
00:24technically have a landlord's market. So that means that vacancy rates still remain below
00:292%. But this relationship between a low vacancy rate and strong rates of rental growth, there
00:35is clearly a disconnect now. And I think that that really does reflect the affordability ceiling
00:40that tenants have found themselves reaching over many years of escalating asking rents.
00:46We have to remember that this and we're about to embark into the really busy period of the rental
00:53calendar, which means that seasonally we do see a lift in available vacant rentals. But what we see
01:00is at the beginning of the year, this is when most new leases are signed. And it's also typically the
01:07time that we see stronger rates of rental growth. So ultimately, if we continue to see rents flatline,
01:12it really tells us that affordability ceiling has been reached. But if we do start to see re-acceleration,
01:18it does tell another story. I do think it's a little bit early to tell the longer term impacts
01:23on the rental market. I think the rental market in itself has seen some extreme rates of rent growth
01:29and that stretched affordability is certainly playing out. And it plays out quite rapidly in
01:34the rental space because it means that people move back in with family and friends or they lease out a
01:39room or they look to more affordable locations. I think the impacts on investors and if we think to the
01:46structural change in the way that we tax investment property, investors have pulled back and they
01:52have pulled back sharply. And it is time will tell really how that plays out for the rental space,
01:58because ultimately that will impact the flow of new rental housing into the property market. But
02:04ultimately, I'm also concerned about what this means longer term for the supply of homes overall.
02:10And if we see that 25 basis point increase in the cash rate, which is unanimously pretty much what
02:17we're all expecting, it reduces borrowing capacity by about 2.5%. And we've got to remember that if
02:24that rate hike does come to fruition tomorrow, that's five interest rate rises that we've seen
02:29this year. And that really is making a dent on borrowing capacity and impacting buyers' confidence
02:37to transact. And it's playing out in purchasing prices. And that is one of the reasons why we've
02:44seen the downturn not only broaden geographically, but it's also impacting both houses and units now.
