Current Market Insights

Talking Property - The 2025 Sydney Property Market Previewed

Harris Partners Real Estate

SQM Research's Managing Director Louis Christopher recently joined us to offer a detailed overview of what buyers, sellers, tenants and landlords can expect in 2025. In this wide ranging discussion, Mr Christopher outlines

  • the process the RBA will go through before cutting rates
  • how the Sydney market is likely to perform with and/or without a rate cut in Q1 2025
  • the impact a Federal Election has on property markets
  • the importance of Money Markets when anticipating interest rate movements
  • the surprise jump in Home Loan applications 

and much more... 

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As always if there is a specific topic you would like for us to cover, please reach out and let us know!

Speaker 1:

Welcome to Talking Property Today. I'm joined by SQM researchers Louis, christopher, as we preview the 2025 Sydney property market. Louis, thanks as always for being with us, thanks for having me on once again, peter. Louis, you've put out your boom and bust report in late 2024, an excellent report. I want to bring up your scenarios for the nation, if I can here, and just have a chat to you about those. Yes, would you like to walk us through your base case for the 2025 Sydney property market?

Speaker 2:

So for this year our base cases at dwelling prices overall nationwide will change somewhere between plus one to plus 4%. However, when it comes to the Sydney housing market, we're forecasting net housing price falls of minus 1% to minus 5% and essentially what we think will happen in Sydney for this year is that the housing market will fall for the first half of the year. We will get those mid-year rate cuts and then we'll start to see a recovery in the Sydney housing market starting in the second half of the year.

Speaker 1:

So you're thinking rate cuts will come in mid 2025? Yes, we've got a federal election scheduled for somewhere, realistically, between February and May.

Speaker 2:

Yes.

Speaker 1:

It can't be any later than May. They may start it in February with a March election before the footy season starts. So you're thinking the RBA could leave the government hanging with no rate cut until after the election?

Speaker 2:

It is certainly possible. Look, the Reserve Bank of Australia is data driven, so if we get more good news on the inflationary front, the RBA may well cut sooner.

Speaker 1:

More good news on the inflationary front means more bad news for the economy's performance, though, doesn't it? That should be pointed out.

Speaker 2:

Potentially yes, because we have a productivity issue. So it will likely mean that if we see a further slowdown in inflation, it does mean the economy is overall slowing down too.

Speaker 1:

Yeah, If we can go to your scenario three. I always like to have a look at all your scenarios and just take a look at that. If the RBA were to cut sooner, you think that'll have a direct impact on how the property market performs.

Speaker 2:

Yes, and that is because the Sydney housing market in particular will have more of the year to recover into. Essentially so the forecast is that if we were to see a rate cut, say, for example, in March, then our forecast is that city housing prices will rise for the year between plus three to plus seven percent.

Speaker 1:

There were some dire economic numbers to finish 2024. How concerned or conscious would the RBA be of that? And and would they be sort of not happy but satisfied to see the worm is turning in terms of slowing economic activity and inflation down? And are they jawboning us? Essentially, louis, are they talking tough but they're privately preparing to act with a rate cut?

Speaker 2:

Look, they could be Peter, they could be. However, I think what would also be a concern cut, they could be, peter, they could be. However, I think what would also be a concern for them is stagflation. So that's where you have a flat, slowing economy, potentially even a recession, but inflation is still not coming down A little bit like what we had in the 1970s. And that makes their job extremely difficult, because they've got two forces they need to respond to firstly, a slowing economy but still sticking inflation, and their mandate is to try and address both at the same time, potentially. So it is a difficult one for them, I think. If they were to see some significant rises in unemployment, well then I think their they were to see some significant rises in unemployment, well then I think their focus would be more to the slowing economy and to heck with what the inflation is doing.

Speaker 1:

If we see unemployment get out to say 4.5, 4.6%. From where we are to that point, what will the economy look like there and the RBA's policy?

Speaker 2:

Well, potentially you would see an absolute negative quarter of GDP. So that would be once again playing on the minds. But the RBA would be saying, okay, look, 4.5% unemployment, that's still relatively good in the scheme of things, perhaps a little bit above our or below our actual capacity somewhere, say, around 4%, and they may well actually welcome that because it's a sign of economic slowdown. Now would they cut in that environment? I don't know, I'm not a central banker, but I'm pretty sure if it were to get above 5%, heading towards 6%, then the pressure would be on them in a big way to start cutting rates, no matter what inflation's doing.

Speaker 1:

Louis, as you said, central banks with stagflation have a no-win scenario, because they've got to manage unemployment to a sensible level and they need to manage inflation, and sometimes there's a clash on those two points. How prepared is a central bank, how prepared are they to go into recession to win on their mandate, keeping in mind that recession versus not being in recession and in growth is not really part of their mandate?

Speaker 2:

Really good question, peter. I think, knowing these people, as I do, these professionals, having a recession on their resume would not go down well at a personal level. So I think they wish to avoid a recession, but at the same time, they also cannot afford a recognition of inflation.

Speaker 1:

There is a lot of finger pointing between the government and the RBA at the moment, isn't there?

Speaker 2:

The RBA is saying the government's spending too much and the government is saying that the interest rates are and there is a good argument that the government is indeed spending a lot of money and sucking a lot of capital out of the economy. So public expenditure as a percentage of GDP is now actually up to 28%. If you know your numbers, Peter, you may recall certainly back when ScoMo was in power that the notion of being above 23% was regarded as something they didn't really want to do. So now that we're at 28%, it does show that the government's becoming an increasingly larger component of the economy.

Speaker 1:

Which is not healthy.

Speaker 2:

Not in the long term. Not in the long term, that is correct. It may well in part explain why we've had falls in productivity.

Speaker 1:

Yes, louis, for our audience they hit, as we all are, with such contradictory messages around interest rates. So you have esteemed commentators in the marketplace that all have a different view on what the RBA should do and what interest rates will do. You have the money markets that place bets on what interest rates will do you have the RBA statement after every meeting. Which are they jawboning us in that meeting or are they telling us, are they giving us a real insight into their thinking? Who should we and what should we follow with this whole interest rate story? Because everyone has credibility to some degree in this space, but they all contradict each other.

Speaker 2:

Well, that's true. Yes, and you rightly point out, there are people who say we should do something, versus people who say this is what will happen.

Speaker 1:

Sorry, I missed one key group in that as well. Sorry to cut in on you the retail banks. And the reason the retail banks are so important in that mix of people that have a view. Is the Commonwealth Bank, for example, think the RBA will cut in February? Yes, and after the RBA, the retail banks probably see more nuanced data than anyone else in the country and they must be seeing something in their books for them to reiterate their call that the RBA will cut in February.

Speaker 2:

Well, we must remember that, when it comes to the major banks at least, they pay a very close eye to what the money markets are doing, because they regularly trade in the money markets. So they look at the long-term end of what we call the yield curve, so 10-year bond rates versus two-year bond rates, and they essentially trade between the two. So of late we've been seeing the 10-year bond rate come off, which is generally good news for the economy, and they are able to, to an extent, cut interest rates even while the RBA doesn't cut rates, because they can trade their way through, especially if, say, two-year bond yields come off, five-year bond yields come off, they keep falling. They're able to use that to actually cut the variable rate. Now, it's not that easy to do, but that's what they generally do do.

Speaker 2:

How we forecast interest rates is that we don't rely on anyone in particular. We follow what the money markets are doing. So when we come out with our forecast that interest rates would be cut mid-year, it was because the money markets were pricing that in. And so, while the money market's not perfect, because no one knows the future for sure, more often than not the money markets do get it right, for sure, more often than not, the money markets do get it right, and hence the reason why we put our hat on that. Okay, it is more likely than not. We will see a final cut in interest rates mid-year 2025.

Speaker 1:

It was an interesting one. In 2024. I think it was Macquarie Bank reduced their interest rate for a very short time and then popped it back up. So that was like they were trying to front-run the market on yeah, we're going to get rate cuts. And then data came through to suggest you're on the wrong side of the call here.

Speaker 2:

Yes, that's right.

Speaker 1:

So talk us through what's happened there, and that wasn't really a proud moment for the bank.

Speaker 2:

So there was a brief period where interest rates or the money markets were falling in terms of yield, before the Trump government was elected. When the Trump administration was elected, yields went up again, and so Macquarie were briefly caught out that way. Over and above that is it is actually a very competitive lending industry right now, and so many banks are competing with each other on price, on lending rates, and to the point where some are essentially cutting their throats, particularly the smaller operators. They're finding the sector very tough indeed to compete, whereas the banks, of course, have got scale.

Speaker 1:

Louis, is there a point that the RBA have done such damage to the economy through their interest rate setting that a rate cut or two doesn't actually turn things around the way people think and hope they might?

Speaker 2:

There is that risk depending on when they actually cut rates and potentially how much they cut by. The RBA, as with many central bankers, have a history of not getting this quite right in terms of picking the turnaround in the cycles. Once again, we go back to the 1990 recession, where interest rates were briefly at 18% and the economy was in recession. So there is a risk of the central banks and the Reserve Bank of Australia getting their timing wrong and the magnitude of the rate cuts wrong. This is true.

Speaker 1:

So are you in the camp that thinks they should wait for the data to be absolutely and utterly conclusive or, as the data is trending in a certain direction, try and manipulate it or make a move at that point to avoid the worst of what that data is suggesting?

Speaker 2:

Paul Holmes, I'm a little bit more neutral about what they should do. I'm more focused on what they might do. James Hemsworth, look, I think, looking back in hindsight, they were right not to lift rates as hard as what other central banks did, and then that, by virtue, means that they not to lift rates as hard as what other central banks did, and then that, by virtue, means that they had to keep rates higher for longer to offset. As I've said many a time, I would hate to be a central banker. It's a very difficult job. Should they be cutting rates now? There is an argument to cut rates now. There's no question the economy has been slowing. It's been propped up a bit by very strong population growth. No question about that and that would be playing on the RBA's mind as well that the combination of increased government spending plus the expansion of the country by north of 500,000 people a year, which adds to aggregated demand, potentially keeps inflation elevated. That would be a concern for them for sure.

Speaker 1:

So if we just quickly look at your scenarios here again, scenario one, which is your base case Sydney will pull back. This is dwelling prices somewhere between minus five and minus 1%. If we don't get a rate cut to the middle of the year, I'm going to go for scenario three. Uh, in 2025, louis, and I think they're going to cut in the first quarter. Um, I've only formed that view in the last week, but the gdp number and and and what that all suggested which I must say, that this report was put together before that poor GDP number in 2024.

Speaker 2:

Yes.

Speaker 1:

So it didn't capture that low reading, did it?

Speaker 2:

It did not capture that low reading. But even as we stand today, I'm going to differ with you. I do not think that they're going to cut in the March quarter. I think unemployment's not high enough yet. I think there is still some fairly strong forces out there on the overall demand side. But I do hear you that. Look, the economy overall is slowing and on a per person basis people are hurting.

Speaker 1:

Yeah, we'll do lunch on that one. All right, that's good.

Speaker 2:

Yes, well, so far on the geopolitical front, you've got one up on me.

Speaker 1:

So, moving along to the rental market, in late 2024, on the ground, we noticed a noticeable shift in the rental market. It didn't start falling, but landlords were looking for year-on-year or lease-on-lease increase in prices and they were saying where are the crowds? And it's like the crowds are gone.

Speaker 2:

Yeah, that's right.

Speaker 1:

Now they may come back early in 2025 with the start of the university year and they will to an extent To an extent, but you're not seeing the same growth in the rental market. The reverse, actually potentially for 2025.

Speaker 2:

Yeah, so for 2024, sydney rents finished up by about 3%, which was just under the CPI, so that's the slowest rate of rental growth we've actually had since the COVID days. We still have a rental crisis in Sydney. There's no question about that, but how tenants have been responding is that they've been grouping together and, as stated earlier, lots of people are doing it tough, so they need a place to live in, of course. What do they do? They stay with their parents for longer, they share with more people, and by doing that, you see an increase in the number of persons per dwelling, and that ultimately then reduces demand for rental properties compared to the amount of stock that's out there.

Speaker 1:

So prices got to a point where they changed behaviours.

Speaker 2:

They changed behaviours because rents just got too high and they had to change accordingly their behaviour.

Speaker 1:

And talking about consumer behaviour, a very interesting trend that we started to see in the back end of 2024, instead of mum and dad turning up to the auction to help their children hopefully secure a property or negotiate one, mum and dad were turning up to the rental open with the kids to help them secure a rental property. So that's how tight it got out there that mum and dad felt the need to act as a guarantor or as a security blanket to help the kids get a rental property.

Speaker 2:

I've never seen that in my 30 years in real estate, I'm not surprised when you see a lot of competition between tenants, any edge that a tenant can get in terms of look local here. Here are my parents willing to guarantee this rent? That that would help yeah, it was.

Speaker 1:

It was an interesting one. Uh, look, we do have a rental crisis still, even though rent the rental market is settling down. Yes, we have a housing crisis as well. Yes, this next slide, if we can bring it up here, won't make anyone happy. This is total dwellings commenced. So, unless we're going to change our immigration policy as a country, we need more housing. Yeah, what's happening here, louis?

Speaker 2:

Yeah, so this is a number of you left. Look at the left side of the chart. We've got numbers there 40,000, 45, 50,000 dwellings. This is the number of dwellings commenced on a quarterly basis. So in 2024, we were essentially averaging about 40,000 dwellings commenced on a quarterly basis. Or, if you analyse that number, that's about 160,000 dwellings that were essentially in the pipeline over 2024. And for 2024, we believe the final number of dwellings being completed will be about that 160,000 mark. Now the issue with that is that for 2024, we strongly believe that the population expanded by over 500,000 people. Those two numbers do not go into each other very well, do they? Now there's basically more people coming in than what we've built to actually accommodate them.

Speaker 1:

So how many people live per dwelling on average?

Speaker 2:

Well long term the average has been well over the past 10 years has been about two and a half persons per dwelling. That's changed. At times, like during COVID, that got down to lower than two and a half and of late it's been increasing up to about 2.7 persons per dwelling okay.

Speaker 1:

So we're underperforming there, obviously, if we can bring up our next slide here, building costs are a major impediment for builders wanting to commence a new project. Yes, this is a real problem for government now, isn't it? They're approving, they've finally cut some red tape and they're getting approvals through to the market.

Speaker 2:

Yeah.

Speaker 1:

But the builders are saying, hey, we're not building in this environment. We don't have confidence that the market will be there at the end to pay a profitable price. Yes, and part of the reasoning that is where is the market going? On price, but also where is supply chains and costs and inflation going whilst I'm building, because they've all been nailed essentially in the last three years with cost overruns, haven't they?

Speaker 2:

That's completely true. Over and above that, peter is getting the finance, because the truth is that the major banks are rarely lending to property developers these days, unless you're a huge name, right? So what's going on is that a lot of property developers are needing to go to the non-bank financial sector to secure funding. Now, the issue with that is that the non-bank financial sector like charging a nominal leg when it comes to interest rates. We're talking, say, a lending rate of 10%, 11%, perhaps even more.

Speaker 1:

So that's loan sharking really.

Speaker 2:

To an extent, and that of course adds to the overall cost budget of a developer trying to make a project work. Yes, hence they're not building because… Hence, they're not building. I mean, they're not building for a number of reasons. To your point about confidence, that's true Also. Of course, there's still issues with local council blocking developments and creating uncertainty there too.

Speaker 1:

I think from the local council perspective is that everyone thinks that the developer, who we need them to build more, as you've just outlined, the developer should fund all of the infrastructure as well and infrastructure costs on behalf of the developer that's just trying to put some dwellings up for the people that are needing a new house. I heard recently that we're saying we should make developers provide contributions for mobile phone towers. How does a developer who builds houses end up paying for mobile phone towers?

Speaker 2:

Well, developers are already making a contribution through a bill, through the taxes, the various taxes there are within a property development, a project. The taxes are not immaterial, put it that way. So there's a good argument that they're already making contributions indirectly. James Hemsworth, absolutely, peter Lawrence. Then, over and above that, going back to the confidence issue, we've had a period where the quality of the build of a number of the projects has not been that particularly great. In the last 10 years. There's been some real issues with some complexes in and around Sydney which have grabbed the headlines, and I think government need to do more on that front in terms of oversight of the quality of these builds. Too many times I've seen people lose a lot of money over off the plan developments and I really do mean a lot of money over off the plan developments, and I really do mean a lot of money.

Speaker 1:

Oh yeah, it's very common. I don't like to say it. I certainly don't want to rub salt into the wounds for anyone, but it's very common to sell a property, an apartment, at the moment in a poorly built complex that sells for a lower price than they paid in 2014. Absolutely, and they're lucky to get the price they want.

Speaker 2:

Yeah.

Speaker 1:

And again, I don't want to single out any particular region, but if you go out to the Ryde Council, for example, people up and down Victoria Road there with some of those complexes definitely could not sell their property for anywhere near what they paid for it eight, nine years ago.

Speaker 2:

Exactly, and I think that's becoming. The community is becoming more aware of these issues off the plan, yes, and the fact that the risks are very, very high indeed.

Speaker 1:

Yeah.

Speaker 2:

Something needs to happen on that front to build confidence within the off the plan sector. I'm not sure exactly what needs to happen, but something needs to happen there. So, as we can see, when you put all these things together, no wonder we're under building. No, wonder.

Speaker 2:

And I just don't see it changing anytime soon. And when we look at these leading indicators, I don't think it is going to change anytime soon. Look at these leading indicators I don't think it is going to change anytime soon. And then you've got the issue, of course, where the federal government has made a commitment to build 1.2 million dwellings through to 2029. Well, I can tell you, in year one they're well and truly behind the run rate required. That run rate required is 240,000 dwellings a year. In year one at best, we'll be building 160,000 dwellings a year, and year one at best we'll be building 160,000 dwellings.

Speaker 1:

So when you say the government should do more, what are some creative and bold solutions not saying they'll become government policy, but what are some creative and bold solutions that either the state or the federal government could implement to really start breaking the back of this and turning, you know, properties not just from approvals but into hard construction and livable dwellings.

Speaker 2:

Oh look, I think there needs to be a bit of a carrot and stick approach towards developers. I mean, look, they're not angels in themselves, as we all know. So the carrot would be let's get some real tax breaks happening for developers. Not add to the cost, let's take away from the cost of the build. Then, at the same token, the stick will be they must build. They're holding on to Greenfield's land, undeveloped land for an extended period of time. Well, that should be a no-no as well. They must build. Then, potentially, what we could also do is get the banks, or perhaps get a better lending solution towards the development sector, where they're not paying 11, 12% interest rates, they're paying something that's more reasonable. That would help make the project work as well. And then, yeah, we need also more cooperation from local councils.

Speaker 1:

Yeah, louis, I just want to move on to your next slide from your boom and bust report, which I encourage everybody to get hold of. This here is new home loan or housing loan commitments. Can you walk us through what we're seeing here?

Speaker 2:

Yeah. So this is a good leading indicator of demand. So it's a measure of how many people are taking out housing finance and, generally, if you're taking out a loan, you're going to buy a property. Now what this shows, of course, is that we had a big dip over the course of 2023 in terms of housing finance approvals, but since then and over the course of 2024, surprisingly, there's been a lift in housing finance approvals both on the investor front and the owner occupy front. So there's been a lift in housing finance approvals both on the investor front and the owner-occupier front. So that's been interesting. So, normally, when you see that, you tend to start to see a bit of a rise in housing prices and, as noted in 2024, there was a slight rise in housing prices, but not in our largest capital cities. It was mainly in Brisbane, in Perth, in Adelaide, in particular. So an interesting chart. Interesting in the sense that this time round we've had a rise in housing finance approvals but we've still, overall, had, you know, just a marginal increase in dwelling prices for 2024.

Speaker 1:

Look, this was one of the more surprising slides from your report for myself.

Speaker 2:

Yes.

Speaker 1:

And the reason I was surprised by this is I wasn't expecting it to be that confident, based on what we've been seeing in the marketplace. I'm not saying the marketplace is dire, but I wasn't expecting new home loan starts to be showing this sort of upward trend. Would this be forming part of the RBA's decision around interest rate cuts that there is this underlying demand that if they again, if they time it wrong, if they go too early, if they don't get it right, it could just pop again and people are off to the races.

Speaker 2:

Correct. They'd be very conscious of that. They would understand why this is happening. This is happening because we've had very strong population expansion once again. Yes, so the average person out there probably doesn't feel like taking out a million dollar loan right now, but since the population is expanded by north 500 000 people, there's a lot of those people who have the the borrowing power to go into the marketplace so we're really seeing the importance here of the immigration policy and its impact on housing.

Speaker 1:

Yes, In late 2024, the alternate to the current government, Peter Dutton, came out with his view on what he might do with immigration and he sort of he had a shift there in what he's thinking. Do you want to walk us through that?

Speaker 2:

Yeah, well, initially in earlier 2024, it appeared as though the LNP opposition had a different approach to migration. They were more boisterous about it. They said that they wanted to cut annual migration down to about 160,000 people. Wanted to cut annual migration down to about 160,000 people. Then it appeared as though, as you mentioned, in late 24, dutton came out and he generally was more ambivalent about what he wanted to do and he said look, we'll wait and see what the economy is doing before we come up with a specific target.

Speaker 2:

So that was a change, and a very interesting change indeed, and what it suggests is that they look to population as potentially one where, if we cut too aggressively, it could actually put the economy in recession. But at the same time, the economy is somewhat in recession on a per capita basis, in part because we've got a very strong population, and we've got very strong population and we've seen a fall in productivity. So it's an interesting one to see how it's going to play out politically for them. I can understand why they've come out and said what they've come out with. I don't think it's going to go down too well with their base.

Speaker 1:

Louis, let's get a little bit more micro about Sydney going into next year. What segments of the market whether it be suburbs or market niches apartments, houses, suburbs regions do you think will be the strongest performers in 2025?

Speaker 2:

I think the outer ring for existing units will be a good defensive play. They are affordable. They will appeal to the growing population. They will still appeal to essential service workers. Meanwhile, when we look at the inner city ring, particularly the CBD, we're recording skyrocketing stock for sale for apartments in the CBD area.

Speaker 1:

Why do people not want to live in the CBD?

Speaker 2:

That's a very good question. Look, the truth is that apartment prices in the CBD are still very expensive. You're looking at spending north of a million dollars for just a standard two-bedroom unit, so that would certainly put a lot of people off, but the reality is that that is a market that is set to severely underperform and probably will fall more than just 1% to 5%.

Speaker 1:

Look, that's a fascinating statistic in its own right, because Chris Minns wants to flood the inner city with more apartments.

Speaker 2:

Yeah, and look from an affordability factor. Falling unit prices do help with housing affordability there's no question about that but we're starting from a fairly high level, as mentioned before, so it's going to be very hard still for the average worker to afford an apartment in the CBD.

Speaker 1:

And if we don't see interest rate cuts until later in 2025,? We've spoken a lot about what happens when we see rate cuts in the first quarter and mid-year, but if they don't come to late 2025, let's say the Trump agenda is inflationary, as many have predicted, and that means that rates need to be higher for longer and there's stagflation. How does that play in the market? What does that look like at that point?

Speaker 2:

So, yeah, that's our second most likely scenario that there is no interest rate cut at all in 2025. And on that scenario, we believe housing prices in Sydney would fall by up to 8%.

Speaker 2:

That would be pretty tough. It would be tough. You're talking, then, firstly, of a slowing economy, economy where there's even less confidence in what we have now, even more disappointment by housing market participants that interest rates haven't been cut, and more and more people would be on the sidelines. And then, over and above that, I think you would see more distressed selling in Sydney as well.

Speaker 1:

Louis, in closing, what X factors? Things that haven't been considered, that could potentially play a role in the market next year. Do you want to have a stab at that for us? Well, we've covered a lot of ground here, Peter, and we've talked about interest rates. That's clearly one.

Speaker 2:

Population yes, so there is a chance that we see an unexpected fall in migration. In its own right, there is that outside chance. Treasury have been counting on that, but it hasn't really happened. But it could finally happen, so that's one we need to watch very closely as well. Are we going to suddenly see a spike in building supply? We're definitely not going to see that, so we can rule that out. Are we going to see a crash in housing prices? I think we can rule that out because we've got this underlying shortage of real estate, and whenever I study previous crashes, worldwide housing crashes, there's one key ingredient which has been in all of them and that is a speculative oversupply of real estate beforehand, before the crash. We definitely do not have that in this country, so I think we can definitely rule out a crash. Other factors which we need to consider the terms of trade, iron ore prices.

Speaker 1:

Yeah, okay. And is the Trump agenda pro or anti the iron ore price?

Speaker 2:

all in all, oh, I think it's neutral. It's neutral because Trump is going to stimulate the US economy, and he's going to do that by tax cuts. At the same time, he's going to increase energy supply, which will help stabilise global inflation or perhaps even potentially create a global deflationary environment. He's offsetting that because he wants to do tariffs, and that is inflationary as well and that could slow down the Chinese economy in particular. I think his tariffs are going to be focused towards China in many respects If the Chinese economy goes into a double dip recession. And despite their nominal numbers not showing a recession, I think the reality is the economy has been contracting in China. That would be bad for base commodity prices, so that's one that we need to watch out for.

Speaker 1:

Okay, now, every time a federal election comes around, there's a view that people sit on their hands until they see what happens. Do the numbers support that in terms of the housing market's performance? Do people go to the sidelines? Is there less activity?

Speaker 2:

They do.

Speaker 1:

Is there a drop in activity?

Speaker 2:

So, historically, what you see in the few weeks leading up to the election day is a fall off in auction volumes. We'll see that again this year, for sure.

Speaker 1:

And does either party at this stage and it is very early to they'll both come out with different policies on housing? Does either party have a superior policy to, in your view, around housing?

Speaker 2:

Oh, I think we need to wait see until closer to the election to see exactly what the policies are. I think Labor's been pretty clear what their policy is that they wish to build 1.2 million dwellings and they've given a bit ofa plan how they do that. So far they haven't been able to meet those goals as yet. Speaking of what's been built to date, we need to see more policy come out. I think more policy will come out because housing is a critical issue across the country. It's a talking point for many in a community.

Speaker 1:

It certainly is, louis. That's an outstanding preview of what's going to happen in 2025. And we look forward to catching up mid-year to see how it all plays out.

Speaker 2:

Great Peter. I look forward to the June catch-up.

Speaker 1:

Thanks for coming in today, cheers, and thank you for joining us today on Talking Property. We look forward to speaking with you in the middle of 2025. Thank you.

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