Current Market Insights
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Current Market Insights
Talking Property – The 2026 Property Market Previewed
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In this special Talking Property episode, Harris Partners’ Peter O’Malley is joined by SQM Research Director Louis Christopher, widely regarded as Australia’s leading property analyst, to preview what lies ahead for the housing market in 2026. With Sydney tipped for a strong year, Louis unpacks the key forces that will shape prices, rentals, and market stability.
We also discuss:
- The RBA’s interest rate dilemma and what it means for housing
- Why 2026 is shaping up as a strong year for property markets
- Key risks that could threaten market stability
- The slow rebalancing between dwelling supply and demand
- Rental market forecasts and ongoing pressure points
- The impact of AI on employment and flow-on effects for housing
- What buyers, sellers, landlords, and tenants should be watching closely
As always if there is a specific topic you would like for us to cover, please reach out and let us know!
Welcome to Talking Property. Today I'm joined by Australia's best property analyst, Louis Christopher, as we preview the 2026 Sydney property market. Louis, thanks for joining us.
SPEAKER_01Good to be here in the new year.
SPEAKER_00Indeed it is. Let's bring up your um scenario slide for 2026, Louis. Each year one of your scenarios tends to come true, one of the four. It's not always the base case, though. Not always the base case. But one it's got a remarkable habit of being accurate. And we'll pull it apart and have a look at it in detail today. But could you just walk us through your base case for 2026?
Base Case: Migration, Rates, Supply
SPEAKER_01Yes, sure. So the fundamental assumptions behind our base case is that we expect migration rates to moderate over the course of the year. We expect no interest rate changes in the first half of the year, but the potential for interest rate cuts in the second half of 2026. We're expecting a little bit of an increase in dwelling completion. So this could be the first year since 2019 where we see a little bit more of a balance between supply and demand in the housing market. When I talk about supply and demand, I'm talking about underlying supply, underlying demand. Overall, we're quite bullish for this year. This is the first year I can think of in a long time where no matter the scenario, we're not forecasting housing price falls for any capital city. We are relatively bullish on 2026, but there are risks in our forecasts.
SPEAKER_00Yeah, well, I've got a number of risks that I want to work through with you today. Yeah. Not that I'm doubting your forecast, but I think our audience gets most value when we uh take a deep dive on this.
SPEAKER_01Well, Peter, that's the reason why I always run in the report how we went last year, and then when we got it wrong, we talk about why we got it wrong because I think it's a learning experience for all of us, not just for me. Correct. But for all of us to understand. It gives us better understanding in terms of why the market moves.
Risks Check: Shares And Sentiment
SPEAKER_00I've just outlined here in this slide a number of risks that I see uh emerging throughout the year, Lou, and we'll work through them. Um the first one is is the share market. I I have a view which doesn't necessarily need to be yours, but the upper end of the property market has been running as as confidently as it has for a long time now on the back of share market gains. When I speak to people at certain price points, um they're not buying, you know, five, eight million dollar houses because their wages have gone up. Um, they're moving assets around, they've had a gain in the share market, it's accumulated wealth, maybe they've made, which is increasingly, we're seeing stories of people made a clearing.
SPEAKER_01Interesting we should say that, Peter, because recall in the last weeks of 25, I believe that the top end of the market was starting to slow down, and we're seeing lower clearance. Also recall that we're having a reasonably sized equities market correction, which started really from the beginning of November.
SPEAKER_00Yeah, indeed.
SPEAKER_01Yep. Continue on.
Jobs, Inflation And The RBA
SPEAKER_00That is a risk there. Uh, you know, you have um seasoned uh operators globally, people like Ray Dalio, that's seeing that are openly saying share markets are overpriced and set for a correction. And from my experience in real estate sales, uh if the share market does suffer a major correction, we do feel it in the property market, but only at certain price points or levels of the market. The unemployment rate, are we going to see job losses to AI in 2026, in your view, Louis?
SPEAKER_01I'm not sure if they will be job losses to AI. Perhaps they will be, but one of our key assumptions is that the unemployment rate will move upwards from current levels. Uh, we're anticipating it might actually touch 5%. Uh, but that in turn will then get the RBA to stop thinking so much about or worried so much about inflation and and start worrying about the softness in the economy. Hence the reason why we're forecasting rate cuts in the second half of this year.
SPEAKER_00Okay, because that's not quite the market's thinking at the moment, is it? Not at the moment. No, I know. So you feel that if the RBA were forced to fight either rising inflation or rising unemployment, they would choose which?
SPEAKER_01I think that they would side on rising unemployment.
SPEAKER_00Even though that they say their primary mandate is is inflation.
SPEAKER_01I guess where we're coming from with this is that we do take the view that the recent rise in inflation is a bit of a passing fat. We know what's driven it. It was outrageously high electricity prices across 2025, which was in part driven by uh the elimination of these rebates. Now, I think that will feed through the system and we will see electricity price increases start to uh moderate somewhat over the course of 2026. And so this is one of the reasons why we think inflation will actually get down to below 3% sometime this year, once again. But there are risks, I could be wrong. Um inflation could be more stickier, and that was our scenario too, uh, that we ran where inflation is actually more sticky than what we actually uh forecasted as a base case.
What If Rates Rise?
SPEAKER_00Louis, I have to ask you this. If there is a rate hike in the first six months of 2026, what does that do to the property market?
SPEAKER_01All our forecasts will be wrong. Because uh look, um an interest rate rise came in, if I recall, it was number six in our most likely scenarios when we compiled our report uh in uh November 2025. Uh and you know, a week can be a long time in the housing market.
SPEAKER_00In fairness, your report was essentially out there um before the whole data flipped on its head, wasn't it? Yeah, that's exactly right. In late November 2020.
Why Sydney And Melbourne Are Vulnerable
SPEAKER_01That's exactly right. So if we had our time back, uh an interest rate rise scenario would have made our top four scenarios. And now on that scenario, and yes, there is still a risk that we could see an interest rate rise this year. What it does for the housing market, well, naturally it's negative, but it depends on the magnitude of the rises. So let's just say it's a 25 basis point increase and that's all we get. Okay, well, that's only going to dent sentiment in the housing market. I don't think it's enough for, for example, to create an a route in the market. But I think for Sydney and Melbourne, we would see lower housing price growth than what we have actually forecasted. And you potentially could see a flat housing market uh in Sydney and Melbourne on a single 25 basis point increase.
SPEAKER_00So given that Sydney and Melbourne are sort of running fourth and fifth, I think, uh, as far as market strength goes, why would they be the most impacted markets with a rate hike?
SPEAKER_01Number one, affordability. Uh so it's particularly for Sydney. Uh Sydney is the most uh unaffordable housing market in the country. Now, recall too that one of our utter assumptions is that we are going to see a slower rate of growth with migration. And recall up front, I've said, look, we're going to see a bit of a balance this year between demand and supply. Uh now, the bulk of migration, overseas migration, comes into our two largest capital cities, being Sydney and Melbourne. So if we're right about this relative slowdown, this moderation in population growth, that would actually be a bit of a dampener on the housing market. Then you combine that with a rise in interest rates, and then you can see then the triggers potentially for a slower market in Sydney and Melbourne in 2026.
SPEAKER_00So the strength of uh Perth, Adelaide, Brisbane, is that domestically generated in those markets?
SPEAKER_01Absolutely it is. I mean, look, all those markets are still influenced by interest rate settings. Yes. But I don't think a 25 basis point increase only would materially impact upon our forecasts for those cities in 2022.
SPEAKER_00But are we seeing people who are looking at differential between their Sydney house price and the relative affordability to them of a house in Brisbane moving to Brisbane? Absolutely.
SPEAKER_01Hence the reason why we've had for multiple years now very strong interstate migration outflows out of New South Wales going into Queensland, uh, going into WA as an example.
SPEAKER_00So correct me if I'm wrong, I don't want to put words in your mouth, but what you're saying here today is that from a statistical point of view, new migrants into the country are landing in Sydney and Melbourne. Yep, predominantly. And existing Sydney and Melbourneites are pushing out, when they move, pushing out into other capital cities to get the price differential or benefit that's on offer.
SPEAKER_01Correct. That's fundamentally what's been going on for a number of years now.
Supply, Completions And Population Math
SPEAKER_00Yeah, okay, thank you. And um when we talk about supply uh demand balance coming closer together, is that more driven by um uh demand or migration numbers coming back more so than supply numbers coming up? Because I'm not seeing any mass housing supply around Sydney. There's a little bit, but that what the government needs to do to tackle the issue, we're we're not within a bull's roar at an anecdotal level.
SPEAKER_01So last year it looks like we completed around 165,000 dwellings uh across the country. This year we think that number's going to go up to about 180,000 dwellings. When we look at, say, Sydney on its own, we're not expecting a major increase in supply. It'll be an increase of a few thousand dwellings uh compared to 2025, but you spread that across Sydney and it doesn't look like much at all, no doubt about it. No, this would be more of a fact of the growth and underlying demand slowing down to the point where it's it's it's it's meeting the increase in supply. So at 180,000 dwellings, that's enough to cater uh for roughly about 380,000, 370,000 people, and we think the the uh population expansion uh for 2026 will be below 400,000 people in total.
GDP, Living Standards And Migration Policy
SPEAKER_00And what's the government's motive um for being so pri pro-migration, if you like?
SPEAKER_01Well, it helps with the uh economic numbers at an artificial level, so it enables them to report uh uh a real GDP growth rate. But of course, the underlying number of GDP per capita has been weak for some time and has been falling for some time. So in other words, our living standards have been falling for quite some time. Uh so you know if you bring more people into a static economic cake that's not growing materially, that means that everybody's slice of the economic cake has reduced. And that's what's been going on essentially since COVID.
Land Tax And What Really Moves Sydney
SPEAKER_00I think most people would uh lock in and uh relate to that point, wouldn't they? I would think so. Yeah. Louis, um I'm I'm not sure how closely you've looked at the land tax issue. Is this something that you have been looking at in New South Wales where they've f frozen the threshold for next year, but uh the the land rate is still floating?
SPEAKER_01Oh, I looked at it, looked at it briefly. Uh I don't think it's it's uh something that's going to be material to the housing market overall in Sydney. Yep. That's that that was not one that was moving our dial for our forecasts. Uh the the biggest dial movers on our forecast was Sydney, where interest rates, uh our forecast for a slowdown in migration, uh, and the supply side as well.
SPEAKER_00So where where did employment rate as as a as a material risk or driver of of the housing market for you in 2026?
Unemployment Trends And AI Effects
SPEAKER_01Look, it was it was up there. It's definitely in the top half in terms of influences. Yes. Uh so our assumption is that we will see unemployment nudge 5% for 2026. It shouldn't go further than that. If it does, that plays into some of our more bleaker scenarios that we've got.
SPEAKER_00And is that is that driven by uh corporates moving across to AI or is that an economic slowdown or a mixture?
SPEAKER_01I think it's a mixture. Yep. The reason why we're a little bit more negative on the unemployment rate is uh is the measures of job ads, the ANZ job ads series, which has been pretty weak of late.
SPEAKER_00Will we see cost of living relief uh in 2026, or will it be another case of just, you know, making ends meets for households continue to be very challenging?
SPEAKER_01I think it's going to stay uh continually very challenging. One of the fundamental problems we've got in our economy is productivity. So you get real economic growth, real increases in living standard, where you can get productivity rates rising. But our productivity rates have been falling. They've been falling since COVID. Uh, and it's happened for a whole bunch of reasons, in my view. To increase productivity, you need serious microeconomic reform. The type of reform that we saw from the Hawke Keating government in the 1980s continued on by the How Costello government in the 1990s. That was a good period of microeconomic reform. But since then, we haven't really had it. And I think it's now starting to show in the economy.
SPEAKER_00If I could just bring up this slide, this really caught my attention in late 2025, um, where you have a uh Labour government taking an ax to the public service because that's a rarity. Yes, that's right. All in all in the uh all in the name of budget repair. So that just that slide right there speaks to the dire situation in Victoria, doesn't it?
SPEAKER_01Well it does.
SPEAKER_00I mean when you've got a Victoria Labour and government having to cut the public service, that's the last thing they want to do. Yeah. And and this this feeds into productivity too, doesn't it? Absolutely. That's the point you're making, Mr. It does.
SPEAKER_01And and quite frankly, um for a number of years now, government spending as a percentage of overall GDP has been gradually rising. In other words, the government's becoming a bigger and bigger component of the economy. Now, when you consider government, are they the most productive beast out there that we've ever come across? No, they're not. They never have been. And this is one of the reasons why we've had lower and lower productivity growth, in my opinion.
SPEAKER_00If I can bring up our next slide and take a uh broader look at what the unemployment rate is doing historically, you can see there that um where it's at as we closed out 2025 is at a reasonable level. But the trend line slowly but surely is edging up, isn't it?
The Slow Grind Higher In Joblessness
SPEAKER_01Yeah, look at it. The trend the trend's been rising essentially since 2022. Gradually but steadily, it has been rising. And then look at it uh prior to COVID, the trend was easing down. And then we had this you know gigantic event being COVID, causing all types of distortions. The ultimate disruption economy. Yeah, and it was indeed. And yeah, fantastic. We got unemployment down to record lows uh coming out of uh COVID, uh, but but it couldn't stay there, of course. Uh and look, I I'm not surprised unemployment rose from the record low levels we had, but it's continued to rise. And this in part has been driven by a slower economy, still very strong migration numbers coming through. So more people looking for the same number of jobs and essentially not finding it. Government, of course, trying to take up the slack in terms of, for example, outrageous growth in NDIS. Um and and so therefore governments are becoming bigger and bigger as a part of the economic pie. But since it's based on lower productivity inefficiencies, unemployment continues to rise.
SPEAKER_00Of those people that are um uh say losing their high-powered job to AI or or cutbacks uh in the public service or whatever it might be, who then go on to get gainfully re-employed? I think the sign of a healthy economy is they can get re-employed at the same position or better. Yeah. Um and the sign of a weakening economy is people have to uh take a job below their pay grade to stay gainfully employed. So they're essentially underemployed, therefore their earnings are not uh uh maxing out. Do we do we have a sense of of how people that have gone through the unfortunate experience of losing their jobs or will what their chances are of being gain you know reemployed at the same level or better?
AI: Tool Or Job Destroyer?
SPEAKER_01Not as good as where we were in 22 and 23, quite clearly. Now, certainly not as bad as what we had in the 1990 recession. Yeah. Uh when I was graduating and I couldn't even get a job in a supermarket. And that's how bad it was at the time. Yeah. Look, uh, I think it represents a market that that's stable in terms of the employment market, but slowly deteriorating. It could be worse, it certainly could be better. I'm more concerned about this trend. Hence the reason why we're forecasting unemployment could touch 5% issue.
SPEAKER_00Yeah. And and and are you of the view that uh AI is going to attack white-collar jobs as such, more so thanks.
SPEAKER_01It already has been. Yeah. No question about it. Um, but let's remember with the rise of the PC uh in the 1980s, uh, great concern was that a lot of jobs would go then. Uh in the end, what it did was made us more productive. And new job creation occurred. It was actually part of strong economic growth at the time. AI still has the potential to do that if we get it right. So I am a believer that okay, if AI do take over some jobs, um there'll be job creation elsewhere. It will be fundamentally okay. And we all know that there are limitations with AI. Uh, I certainly don't use it for any of our assessments that we do either on the property side or on the funds rating side, but we will occasionally use it in terms of report writing. It helps a little bit in terms of getting those reports out uh in terms of just some basic templates you want to do. Um, so we do find some use from it, but I would never get it involved in decision making.
SPEAKER_00Yeah, indeed. Look, I I think um binary issues such as accounts. I've had accounts people tell me that it turns uh a day's work into 15 minutes.
SPEAKER_01Yeah, that's right. That's its potential. Uh but decision making, uh you just gotta be very, very careful about it, and advice you get from it. You've got to be very careful on it.
SPEAKER_00So it's a tool, not all dominant.
SPEAKER_01Exactly. Uh and so at this point in time we still fortunately need humans, Peter.
SPEAKER_00Yeah, thankfully. Uh I I just think that um as the economies go through the cycles that they do, increasingly what we're seeing is corporates are struggling in this environment to grow their top line, their revenue line, and the easiest way to grow profits, in their view, is to cut costs, and the easiest costs to cut at the moment is human labour into AI as much as they can.
SPEAKER_01Well, it is a form of microeconomic reform that I spoke of earlier. You know, um when when you go through hard times, businesses get tougher, they get meaner and leaner. That creates productivity, which in turn eventually creates good times.
SPEAKER_00Yeah. And well, let's flow over into Work from home? Like if you are a work from home and your boss is saying, Look, I appreciate I appreciate that you can and do want to work from home, but I prefer you in the office, is it a smarter move to start fronting up to the office? I don't know.
SPEAKER_01Yeah. And those companies who have decided to be soft on their team.
SPEAKER_00Yeah, indeed. Look, coming over to the next uh issue that I keep reading about here, the Japan carry trade and what is going on with Japan. Just for those that might not be across it, but could you just quickly explain? Because they're gonna I think people are gonna hear a lot more about the Japanese carry trade.
Watching The Big Macro Risks
SPEAKER_01So let's talk about what the carry trade is. Yeah, correct. Yeah. So it is when an investor decides to borrow money in a country where interest rates are super low. Japan. In Japan. And then re-lend that money out in a country where interest rates are quite high. Whether it be Australia or in an emerging country, as an example. And that's a carry trade. There are issues, though, for people who do that when suddenly your cheap financing country such as Japan has rising interest rates.
SPEAKER_00Which is where they're heading.
SPEAKER_01Yeah, that's exactly right. And has all types of ramifications on, for example, uh the exchange rate that occurs. It can affect investment markets in a very big way. So often when you see volatility uh with uh Japanese interest rates, you see major ramifications for world equity markets. And we've been through a phase of that recently.
SPEAKER_00Indeed. So the reason I've put that in there is that it is an emerging story. Yeah. Um as we know, uh for five Christmases ago, um, we were hearing about this virus in in China, and the first we knew about it was they were rolling down the truck and spraying the streets with disinfectant, I assume, or a version of. And it's like that's an interesting scenario. I must keep an eye on that. It became what it became. Um a few years later, Evergrande um in a in China uh imploded, um, the largest ever corporate failure, I believe. It was monumental and it had the uh had the ability to threaten all royal markets in a massive way, but it didn't happen. Uh but this one here, this is big if it uh if it it implodes, isn't it? We're talking contagion here.
SPEAKER_01Yeah, yeah. Look, so if Japanese interest rates keep rising, let's keep in mind that Japan has been suffering from a stagnant economy for quite some time. You've also had the government trying to pump the economy up with more money printing. Declining population. Declining population has been their number one issue. It has the potential to create a rout in equity markets uh and potentially uh an a global economic recession if it if it really spun out of control.
SPEAKER_00So again, we're not saying it's a dominant issue. You're very positive about next year, but these are the sorts of big issues, the big rocks that people should keep one eye on.
Infrastructure As A Long‑Run Price Driver
SPEAKER_01These are the risks, absolutely. So uh I think uh for those who like to follow the housing market here closely, yes, this is an issue to watch. Equity markets is definitely to watch. Interest rates naturally is something we always watch. As mentioned before, what is the level of migration? Is it slowing or have we got that wrong as a research house? It's still running hot. Uh, these are the risks fundamentally to our forecast that we've run for this year.
SPEAKER_00Louis, um, coming back to Terry Ryder from Hotspotting, I saw him speak uh recently, gave a terrific speech, and he spoke about um the things that drive property markets up. And um his primary view was the greatest indicator that a property market is going to rise, is not interest rates and it's not population numbers, it's infrastructure spending. And he pointed to the$900 billion infrastructure investment by governments of all levels in Australia. Um, do you have a view on Terry's uh perspective there? I thought that's the one.
Outer Sydney Strength And First‑Home Demand
SPEAKER_01I think that has a long-term bearing upon the housing market. So, for example, uh two markets which are submarkets which we think will outperform for the foreseeable future. Number one, west and southwest Sydney, primarily because of the secondary airport that's that's uh that's about to be um opened, uh, and the Brisbane Olympics.
SPEAKER_00Okay.
SPEAKER_01Uh so we've been bullish on Brisbane uh really since the announcement of those Olympics. That said, though, we must remember what happened in Sydney when we had the lead up to the Olympics and then the Olympics themselves, and it's happened in other countries. Housing prices outperform in the lead up, and then post the Olympics they underperform, as what happened in Sydney in the second half of 2000 and the first half of 2001. Um, and it'll probably happen for Brisbane as well, I suspect.
SPEAKER_00I know in all of our recent discussions you've uh uh spoken about the outer ring of Sydney performing, outperforming the inner ring. Yeah. Um during 2020, late 2025, we had a number of family, friends, clients say to us, hey, can you sell this property for me in Western Sydney, whether it be Black Blacktown, uh, Glenwood, Quakers Hill, Merry Lands. The outer ring of Sydney is particularly strong, isn't it?
SPEAKER_01Yeah. And it's been driven in part by the first home buyer 5% deposit scheme.
SPEAKER_00Yes.
SPEAKER_01Uh the middle to lower end of the market are more sensitive to interest rate movements. And recall we had three interest rate cuts last year as well. And then, of course, the Sydney population is still growing. And so with the additional people, where can they live? They increasingly go to the outer fringes. That's what occurs. So demand, underlying demand for accommodation, is stronger in Sydney's outer ring than what it arguably is in Sydney's inner ring.
Spillovers To Satellite Cities
SPEAKER_00Oh, well, that would be my experience. So uh uh just just being um uh clinical in my assessment of things, um, the Indian community, they they they are in Western Sydney in huge numbers, and I'm talking to to give you some some sense. You will put a house on the market, and on the first weekend, you have five families giving you offers on this property, and it's it's it's exceeding expectations. Correct. It is particularly hot, and the the Western Sydney economy is not a beat-up, that's a very real, real thing out there.
SPEAKER_01Absolutely it is.
SPEAKER_00Yeah, now when I when I was growing up, Glenwood was um essentially cow paddocks, yeah. And um I'm seeing basic mastered and built type brick veneer homes selling for 2.75 million. Like that's serious money.
SPEAKER_01And what this does is that over the long term, you'll see a spillover into satellite regions around Sydney, the central coast. Well, we've already seen a bit of that. Newcastle, down in Wollongong, and further down south towards, say, uh Kayama, uh, the Blue Mountains themselves as well. Just these satellite areas are increasingly correlated to what's happening with the Sydney market. When the Sydney market moves up, these outer areas move up more.
SPEAKER_00Throughout 2026, if we go a little bit more granular again, what do you think will be some of the best performing segments of the market?
SPEAKER_01Oh, once again, the outer ring of Sydney. If we're speaking of Sydney, instead of just Sydney, yeah, look, I I'm a still strong believer that the outer ring is going to outperform the inner ring uh uh in the marketplace. So uh you know, we're forecasting as a base case for Sydney as a whole, sort of mid-single digits in terms of price rises. Well, I believe that the outer ring of Sydney is likely to do uh more than that. It's going to be at the top end of our range that we have, possibly getting up to maybe eight to nine percent. I think the upper end of the market, assuming an economic slowdown, will probably be most challenged. Not that we're going to not that we're expecting an absolute rout, uh, we're not. Um yeah, I I I think that's that that's one market. Um inner city apartments potentially, though that's been underperforming for some time. And one thing I must say is that previously, when cities inner city apartment markets been underperforming, so have other capital cities. But we're now seeing a lot of activity in the Brisbane uh inner city apartment market right now. That's going through a bit of a boom. So they they would be the areas that are all the locations and the property types where I would be more negative on.
SPEAKER_00And that's been the case for some time with Sydney's inner city apartment market, hasn't it?
SPEAKER_01It's been underperforming for quite a while.
SPEAKER_00Yeah, now to give people an idea of some specifics, because specifics help people conceptualize. We sold a property in Chippendale.
SPEAKER_01Yes.
Inner‑City Apartments: Risks And Defects
SPEAKER_00And I had local real estate agents ringing me and just wanting to talk through the sale. And um one of the agents was telling me that he sold inner city apartments for clients that sold them for less than they paid ten years ago.
SPEAKER_01Yeah. Is is is that showing up in our data. It's showing up. So you see that particularly in the CBD of Sydney.
SPEAKER_00Yes. You've got to think at some stage that's going to reverse.
SPEAKER_01Now, you do have to see it on certain buildings.
SPEAKER_00So there's certainly I was going to talk to strata. You've got to talk to strata plans first. You if you're buying the wrong building, it'll be a lifetime of pain. Absolutely. But there has to be some gems, good buildings in there that are underperforming. People want to get out and they represent a good investment.
SPEAKER_01Uh yeah, but you have to do a lot of research on it. You've got to be careful, you do have to read the strata minutes. You need to find out some of the floors in the building. And basically every tower is going to have some type of floor. It's just how bad the floor is in terms of building defects. Uh, of course, then you can have the disaster scenarios that we had a few years back over in Mascot. My concern is the build quality. What happens on the resale price for the for these owner occupiers? Because quite frankly, in City, we haven't had a great track record over the past 10 years of people buying in off the plan and then reselling. More often than not, they've sold at a loss.
SPEAKER_00Yeah, that's devastating when that when that happens in 10-year investments.
SPEAKER_01Well, you've destroyed a lot of your wealth. Yes. Keeping in mind a lot of people gear up going into property. They take out, you know, a loan-to-value ratio of you know 80-90%.
SPEAKER_00Not everyone's a winner in the property market, that's for sure.
SPEAKER_01No, you've got to be very careful in many respects.
SPEAKER_00Yeah, so my winners uh coming into next uh into 2026, Louie, is that I think um in the next year ahead, uh I think home buyers will will get a little bit of a better run in terms of the guidance from real estate agents. I think the underquoting uh uh laws and improvement will will make uh assessing what a property is likely to sell for a little bit more predictable. Gone are the days where agents will deliberately and systematically quote 20 to 25 percent. I think so, Tid.
Underquoting, Auctions And Transparency
SPEAKER_01It's been more active monitoring, as we know, and more activity from the Department of Fair Trade in New South Wales. What I wouldn't want to see is the extremes that we've had in Victoria, where they've moved now to publishing reserve prices. I think that's actually gone too far, uh, and that's rather counterproductive uh for the transparency in the industry, believe it or not.
SPEAKER_00I I do believe it, but the industry bought it on themselves. Uh in Queensland, they've gone the other way. You if you've got a property going to auction, you can't promote any price. Yep. So Victoria and Queensland have gone in completely uh different directions out of management.
SPEAKER_01I think the New South Wales direction is the right way, clamp down on uh the uh dummy bidding, clamping down on the underquoting, uh have an active department there uh that's prosecuting uh uh agents who are regularly doing this uh and fudging data, uh, make examples of them, the rest of the industry will fit in line.
Land Tax Bracket Creep And Investors
SPEAKER_00Uh let's hope so. And then um the people that I think will be losers in 2026 as such in the property market is uh anyone with substantial holdings, notwithstanding the points we've discussed today. I think th freezing the land tax threshold is going to see a lot of people hit with hefty and unexpected land tax bills in uh in in in 2026, unfortunately. Uh it was a very, very sneaky tax. Um because they didn't actually increase taxation, they couldn't be accused of driving tax up on property investors. But that's essentially what's happened because 2025 was a good year, so the land value is going to increase, the rateable land value is going to increase, but the threshold that normally moves in sync with the increasing uh land price has not.
SPEAKER_01Uh so unfortunately I think it's a bit of bracket creep that's going on there. Big time. Um but I just don't think it's going to directly play out in terms of big changes in housing prices. Correct.
SPEAKER_00But in individuals will cop it in the net.
SPEAKER_01Individuals will cop it. It'll be tougher for investors in some respects in terms of trying to get these properties to run cash flow positive or at least cash flow cash flow neutral. Look, I I you know from my side, I've had a strong view that one of the biggest reforms we can do is get rid of stamp duty altogether and have a broad-based land tax. Yes. Uh you do that, you're increasing the liquidity in the market. That was not Dominic Perritet's policy, of course. Exactly. But the answer certainly isn't keeping stamp duty where it is and lifting land tax overall, that is counterproductive in many respects. It will not help affordability in the housing market.
Rents In 2026: Tight Or Tighter?
SPEAKER_00Well, I can assure you it's driving landlords out of the market into other asset classes. Um that will flow into, I think, who will be um the other um victim out of the 2026 property market. I'm actually forecasting a very strong rental market. I'm not suggesting we're going to see 20%, but I think all of the elements are in play where if you dump another half a million people or 400,000 people into the country and don't provide adequate housing with them for them, as I don't see happening, combined with the uh landlords under cost of living pressures and inflation edging up, I think landlord uh tenants could find rents start rising again this year. I'm not saying I want that to happen, but everything that I'm seeing suggests that uh uh tenants might do it tough, and I wouldn't be surprised to see a 10% jump in Sydney rents in 2026.
SPEAKER_01Wow, all right. Well, when we get to the end of the year, Peter, we'll see who's right about that. I'm I'm not forecasting such uh gigantic rental increases for Sydney. I think the net interstate outflow will offset the net migration inflow, and I do think we'll see a moderation net migration inflow. Uh and I think given how the economy is stretched in Sydney, what people are going to be doing, let's assuming that I'm wrong about migration, they're going to be sharing more, they're going to be grouping together more, and perhaps those net interstate outflows to Queensland and Western Australia and other states might increase.
Closing Thoughts And Mid‑Year Check‑In
SPEAKER_00Happy to be wrong on that one. I'm not hoping that we're going to be able to do that.
SPEAKER_01The man on the ground versus the man with the data.
SPEAKER_00Yeah, happy to do so. Louis, uh, it'll be an interesting year, we know that, and we'd love to see you mid-year if that's okay. Sounds good. Thanks very much for your time today. Thank you, Pete. And thank you for your time today on Talking Property. We look forward to catching up with you next time.
