Current Market Insights
The Current Market Insights Podcast is brought to you by Harris Partners Real Estate.
Understanding the property market can be a challenging thing, with highs and lows, twists and turns. The media and agents tend to spread the news they want you to hear, with the advice they want you to follow.
Current Market Insights is an unbiased look into what is happening, what tips you can use to buy, sell, or rent, and that you wont find anywhere else.
Current Market Insights
2GB Property with John Stanley
Peter O'Malley recently joined John Stanley on 2GB to examine the latest auction clearance rates and how buyer confidence is affected by recent interest rate changes. He guides you through the implications of rising land values amidst economic fluctuations.
• Review of recent auction results with a 71% clearance rate
• Discussion on how interest rate cuts impact buyer behaviour
• Examination of land value increases and their implications for investors
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Every Monday night we do a review of the real estate market. And tonight we've got Peter O'Malley with us once again from Harris Partners.
Speaker 2:Peter, good evening Good evening, john, great to be with you.
Speaker 1:Each week you look at the clearance rates, the number of auctions, to get an idea of what's happening. What do you say on this Monday night?
Speaker 2:Look pretty healthy sales volumes on the weekend, John, and what we saw out there in the property market was buyers armed with a rate cut were more confident in playing in the property market. I wouldn't say that there were more buyers that entered the market last weekend, but those that were active definitely showed greater signs of confidence. And when we look at the weekend just gone, Domain reported a 71% clearance rate. That's a preliminary clearance rate before all the results are in, but for the corresponding weekend last year the clearance rate was 66%. So there has been a bounce there, there's no doubt.
Speaker 1:Yeah, okay. So I guess, anecdotally, what you hear in relation to interest rates and what people are saying is we've got the interest rate cut, but then, of course, the Reserve Bank's saying that maybe we won't get any more. So is there a sense of where this is going to go in terms of the reaction from the market?
Speaker 2:Look, I think it was received very well from those buyers that are active. Obviously, the rate cut was announced last Tuesday, so no one's going to quite go from being a potential buyer to an active buyer between Tuesday and Saturday, but that will build over the weeks and months ahead. I think the RBA are jawboning a little bit there, john, and I think they will cut sooner than they've let on. They are just acutely aware that they don't want to set off any sort of frenzy in the property markets. But my personal view is the RBA will have the data that allows them to cut either in April or May.
Speaker 1:Land values, of course. Now the total land value and this is for New South Wales has topped $3 trillion. For the first time there's been a 6.4% increase year on year. Is that a good thing?
Speaker 2:It's not for investors. I'm a bit cynical on this one, john. I just cross-referenced the CoreLogic numbers with that number that you've quoted. There and in regional New South Wales over the last 12 months CoreLogic have prices up 2.9% and in the city of Sydney metropolitan area CoreLogic have Sydney property prices up 1.7%. We must keep in mind that the figure that you've just quoted is what land tax and or council rates are based on. So the higher that figure, the better for the government. And each year people wave these land valuations around in front of us saying, look how much my land's worth. And it's like, yeah, because the government's looking to do budget repair. And the higher the land value, the more they can tax investors. So be careful with that one.
Speaker 1:It's a really interesting point, isn't it? So you look at the land value and you think, well, based on this land value, based on the house I've got here, you then try and work out the value of your property and you think, well, that doesn't quite tally with what they're selling for that's exactly right.
Speaker 2:That's my point entirely. You know to call a 6.4% increase for the last 12 months. That's disconnected from the market reality. John Down in Victoria, a big part of their property market and the reason it's falling is they're doing budget, you know, repair of themselves down there with a land tax on the locals, but they're being more open about what they're doing and it has driven prices down. Where what the New South Wales government are doing here with inflated land values, it's more nuanced, it's more subtle. But make no mistake, it's all about budget repair and we constantly see landlords at this time of year, every year disputing what they've been assessed for for land tax. I've seen, truly I have seen a $289,000 land tax bill for one couple this year.
Speaker 1:Right, okay, and that has to feed into, of course, the on costs in terms of places being rented. Just on that question of investing, of course you don't have to invest in the area where you live. You can invest anywhere in Australia and we do have a lot of people who decide we talked about them as being rent festers who can't get into the market so they rent where they want to live and they invest somewhere else Mining towns. There's an example, and Cooper Petey's been held up as an example. You can buy a place for less than $100,000. Now, some of these places aren't all that flash. The question is whether you can rent them. But across the board, in terms of mining towns, where there are a lot of workers looking for somewhere to stay, are these good investments?
Speaker 2:They can be and they can be blowouts. One needs to be very careful and know what they're doing and where they're buying. And buying over the internet, where one moment you might be looking in central Adelaide and the next minute you're looking at Coober Pedy saying, hey, that represents great value, is a crazy way to buy a property. If you're on the ground and you understand the local market that you're buying in and you feel comfortable buying something there as an investment, by all means go ahead. But what you'll find is that the price you buy it for is likely to be the price you'll sell it for in 10, 15 years' time, or very similar to, and you're buying these properties as a yield property, not so much as capital growth, because there's no systemic demand there from home buyers to push prices up, like you see in the capital cities.
Speaker 1:Yeah, and then the question's going to be, as you say, yield as opposed to capital growth, because there are question marks over a lot of mining and just how long-term it's going to be. As you say, yield as opposed to capital growth, because there are question marks over a lot of mining and just how long-term it's going to be, and the growth of the population of those towns. So it is an interesting one. I guess the best thing to do if you can, is to go there, talk to some people, drive around, do it at least. That's right.
Speaker 2:And how deep is the infrastructure and the workload there? We've seen many examples in the last two decades where companies like BHP just put a red pen through projects and it just decimates these country towns that are surviving and relying on the workers that it brings to town.
Speaker 1:Very interesting. All right, peter, as always, great to talk to you and we'll talk again very soon. Thank you, pleasure. All the best, john. Thank you.
