Episode 112: Two Hikes In, Nowhere to Hide

The RBA just hiked rates for the second time this year and the board was split 5-4, which is rare and significant. In this episode, Ciaran O'Brien and Peter O'Malley unpacks what that split really signals, why markets are already pricing in a third hike on May 5th, and how the combination of rising rates, a Middle East conflict and growing recession talk is reshaping the property market in real time.

If you're a buyer, seller or investor trying to figure out your next move, this is the episode to listen to. You'll learn why auction clearance rates have dropped into the low 40s, what conversations agents are actually having with sellers right now, and why Peter believes buying before you sell in this market is one of the most dangerous moves you can make. You'll also hear how the rental crisis has quietly disappeared from headlines even though nothing has improved, and why the current environment ranks alongside the GFC and the pandemic in terms of market disruption. Whether you're actively in the market or watching from the sidelines, this episode gives you the real picture so you can make smarter decisions while everyone else is reacting to noise.

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

Transcript

Welcome And What We Cover

SPEAKER_00 0:09

Welcome to the current Muck and Summer Podcast, brought to you by Hummer's Hummel's Real Estate. Awesome, an industry leader, Peter O'Malley, to discuss the current property market conditions and provide insights to assist you on your property journey.

SPEAKER_01 0:32

Hello and welcome to another edition of Current Market Insights. I'm your host, Kieran O'Brien, and with me is Mr. Peter O'Malley. Peter, hello.

SPEAKER_02 0:39

Kieran, good evening to you.

Clearance Rates And Local Surprises

SPEAKER_01 0:40

Great evening to you, my friend. I want to talk tonight, Peter, about the Sydney property market, which really is the focus of this podcast, even though we do waver on occasion. But I know that we're we've been in the new year for a little while now. The market is starting to make some moves. So I thought what we might do is break down what's actually happening across your area of expertise and the pocket of Sydney you look after. But also what's happening more broadly across the market? What trends are we seeing? What kind of buyers and sellers are we seeing? What are the numbers telling us? I really am hoping we can do a bit of a deep dive into what the Sydney market looks like as we are approaching the end of February in 2026.

Why Campaigns Fail At Auction

SPEAKER_02 1:19

Yeah, thanks, Kieran. Uh on Saturday night when Damain's numbers came through, um, the number that instantly caught my attention was that the auction clearance rate for the same weekend last year was higher than what we recorded on uh on the weekend. And I just uh that was as I said, that that that caught my attention. Um the other number that caught my attention on uh on Saturday evening was four out of five um auction campaigns in Marrickville failed. Right. Now Marrickville's been pretty hot for a long time, and we've got a really great listing that's just come to market in Marrickville. So that caught my attention to see four out of five uh properties uh uh fail to sell on the day. Um and that's not something that you would have seen in the last uh three or four years in Marrickville, to be honest. Um, then when I look at a social media post from um our preferred analyst Louis Christopher, he uh he wrote on social media, I've read media reports that the housing auction market in Sydney and Melbourne has opened up strongly. But I'm not so sure that is the case in both cities. Auction clearance rates on our numbers, SQM researchers' numbers, are slightly weaker compared to this time last year. It is entirely normal for auction clearance rates to increase following the December period. So the only real way of measuring the strength of the property market in February is to compare against the same period in previous years. And on that measurement, I see nothing particularly exciting for our two larger cities. None of that, Kieran, is to suggest that there's not good results being achieved in isolation out there. Going back to what I saw uh locally in the inner west on Saturday night, the sales that were recorded were at about the right price, and there was only one sale that I went, wow, that's that's a really strong price. So the uh examples of property achieving overs at the moment is is minor. Um, there's a lot of sales happening in the marketplace because you know there's buyers and sellers that want to transact essentially, um, but it is an interesting market.

SPEAKER_01 3:31

It certainly sounds that I want to go back uh just to one of the earlier points you made and just unpack slightly, if we can, the Merrickville example. Uh and I ask because Merrickville, as you say, has been a really hot in-west suburb for the last few years. It's been growing in terms of infrastructure popularity, you know, it's become quite a hub, a trendy hub, as it were. I'm really interested to to get your thoughts on whether the or whether you think the four out of five campaigns that aren't going well are the result of a change in buyer sentiment or uh maybe seller price and the difference therein. Or could it more be a reflection of people trying to ride the uh, I guess the wave of of auction success in inverted commas in Marrickville and listing the wrong properties for that sale type, just thinking that you know if everyone else around them does it, they'll have the same success as well?

SPEAKER_02 4:22

Kieran, a lot of the um properties and and fair in fairness to the agent, they reported these uh failed campaigns. Which is rare. Uh which is rare when they've had a run of outs. But the the majority of those uh um five auction results were with the one firm. Yep. Now, um, what happens as a real estate agent? You try to sell your stock finishing the year off in December, as you know, you come back in January after a break, you've got a full year in front of you. You might have one or two listings, maybe three or four from the previous year, but you say to yourself, hey, I've got to get I've got to get cracking here. So you go out and fight for listings, maybe um uh in January, um, as was the case this year, there was a lack of stock, there was a number of buyers around. You're a tad too aggressive on the price that you quote the vendor. You get to auction day on the 21st of February, and the buyers don't want to uh play ball with the expectations that uh um you and your vendor have. That's one scenario that's I think is playing out in the market at the moment. Yep. Another scenario that is absolutely playing out across the city at the moment is because we've had a rate hike and the threat of further rate hikes are coming, sellers are in denial that that's had any impact on the property market at the moment, which is fair enough, they might be right. Um, and buyers are factoring in Armageddon in some cases and trying to weaponize um not just the rate hike that's occurred, but the one that's supposedly coming against vendors, and understandably vendors don't want to play ball. So if we look at another anecdotal market um uh fact, uh auctioneer Tom Panos said on the weekend in his auctions that he had seven out of seven sell. Yep. But he said, make no mistake, there was no boom out there. He said normally where I'd have four or five bidders at a property, I was getting twos and threes if I was lucky, yeah. And it was very, very hard going. It's just that we had motivated vendors prepared to transact on the day. So um there's there's some interesting stats out there that would suggest that the market's more evenly poised than what it was in 2025.

Practical Advice For Buyers And Vendors

SPEAKER_01 6:29

So do you think then, and and you know, not to labour on the point, but I'm I'm really intrigued by this because I I feel like we were talking early in the year about the carryover and the layover of stock that was higher than usual, slightly uh out of character for the new year compared with previous years, coupled with the the rate rise, which um I'm sure people are now at least worried about. I I know I got my email this week saying, hey, your rate's going up, um, which which always puts the the kind of fear into you. But um I I'm really interested to know, do you think that it is the the excess stock that is causing just the softness in buyer activity? Or do you think that it is like is it one way or the other? Do you think that they're scared the buyers or a bit of both? Yeah, okay. So it's evenly measured.

SPEAKER_02 7:14

There's people that are trying to overtrade. So there's vendors that are in complete denial that a rate hike has any impact on a property market. Yeah. Um, well, that's wrong to take that position. And then there's buyers who think one rate hike crashes a property market, yeah. And that's equally wrong. But the majority of people in the middle accept that a rate hike pushes a few more vendors into the market and takes a few more buyers out of the market, meaning, as Panels has said in his his uh commentary over the weekend, there's a much tighter balance in terms of bidders per property and balance between the numbers of buyers and sellers in the market. And um, as a buyer, you need to know that you don't need to go out and overpay for a property at the moment unless you really, really love it. I tell buyers who miss out on properties or friends who ask my advice during a negotiation, and if they're unsuccessful, um the thing about listings, they're like buses and other ones coming. Yeah. Um, so that's how you've got to behave as a buyer at the moment. And as a vendor, we we gave a listing back two weeks ago. We uh we we we had an unconditional 66W contract um uh at above the midpoint of what we told the vendor the property was worth. Yep. Uh it was very, very clear that campaign was exhausted and we'd established what it was worth, and the vendor wanted to hang tough for for a price in excess of what we valued the property at. We said, Look, this is not the market for you, and this is certainly not a situation that we want to stay in. So we're actually going to take the property down and we'll come back another day in more buoyant circumstances, and maybe you'll be keener to sell then. But our job is done here and we're out.

SPEAKER_01 8:51

Yeah. Which which is a tough conversation, right? But they they understood. Yeah. They understood. So my final question on this point then, before we do move forward, just and it's an extremely small sample size, but looking at the failure, the failed campaigns in Marrickville versus the ones that Tom Panos had, have you seen, and you know, I'm catching you potentially off guard here, but have you seen any trends in terms of certain areas of Sydney that are still continuing to transact regardless of the number of buyers, as opposed to others? You know, are we seeing a dip in the kind of traditional inner west versus outer western Sydney? Uh, is you know, and we have seen growth in different areas. Is there any indication that there is some regionality at play as well here?

Sydney Auction Volume And Sold Prior

SPEAKER_02 9:33

I I think those fully capitalized, superbly presented uh family homes are uh are most in um demand, whether it's the North Shore, the eastern suburbs, the inner west, or uh, or the greater west. Um, there's no doubt about that. Um, but look, just to give uh our listeners some further sort of insights, nuanced insights into the property market, Kieran. Um this time last week, so the third weekend in February, there was about a thousand and fifty auctions in Sydney. On the weekend just gone, there was thirteen hundred and sixty-six. Yeah, wow. So the point we've been making here is that a lot of vendors rush to market for the new year is bearing out statistically across the city. Now, um the best data that I've got for you today, we always talk about the number of auctions or the percentage of auctions that sold prior v those that sold under the hammer. In the week uh weekend just gone, 258 properties sold under the hammer. 39 were sold after the auction, but a whopping 379 was sold prior. Yeah. So that's a that's the that I think that's the most extreme example we've we've put to the audience about properties that have sold prior. It's normally, if you remember, a neat 50-50 or swing.

SPEAKER_01 10:57

Well certainly has been this year. Uh end of last year there was a trend, I think, prior as well. Uh, but we've we evened out and expected that it would continue along that way.

SPEAKER_02 11:06

Yeah, but that's that's that's an extreme example. 379 versus 258.

SPEAKER_01 11:10

Yeah, definitely the biggest we've reported, I think.

SPEAKER_02 11:12

And excuse me, what what I put that um what what I put that down to is the vendors took the early money, which was the smart move, and the auction clearance rate um uh for by Louis Christopher's numbers was 46.6%. Yeah. Um on domains numbers, they had the auction clearance rate, I think, at 60% on Saturday night for the corresponding weekend last year at 66%. Yeah. So what you're seeing here is that um um these numbers were stronger this week than what they're likely to be in weeks to come for the simple reason that um yeah, we got an auction clearance rate of 46-47% according to Louis. But a lot of those sales didn't happen around the 21st of February. Yeah. They probably happened in the first week of February, and they were only recorded or captured as an auction sale on the 21st. And I think there is, and we're experiencing this on the ground ourselves, there is a subtle shift to how the ma property market was behaving in late January, early February via the end of the month. So as the as the you know, people get the letter in the mailbox that you've just outlined saying the mortgage is going up, um, the reality um that interest rates have risen and and you know will continue to rise in all probability is hitting the market now and it's still to come.

SPEAKER_01 12:39

Yeah, it's uh the dreaded letter. I don't uh yeah, I don't begrudge anyone for not liking that. Interestingly, uh, and this is not exact, but if you look at the difference in sold prior versus sold under the hammer, uh it's it's not far off six percent of the total number of auctions, which is the difference between this year and last year, for example. Uh, and you could argue in a way that some of those uh have been captured through this the sold prior, you know, even though they do capture now, uh they could have impacted the stats, which I find quite interesting and and really does hammer home your point that uh there is an excess volume. So vendors that are smart are taking the money that's there as opposed to rolling the dice on a campaign where they may not get any interest, they may not get the bidders, you know, they they recognise that well, they've got a good agent guiding them that the signs are not there for a strong auction day.

SPEAKER_02 13:25

Uh in in a lot of cases, not every case, but in a lot of cases, the the the elements are not there for a strong auction. Yeah, it's very difficult to have a strong auction with one or two buyers, I can tell you that. Oh, certainly.

Rate Outlook And Market Direction

SPEAKER_01 13:37

Yeah. Uh look, before we wrap up tonight, then Peter, given that we're coming to the end of February, we're not not far off at all, actually, by the time this uh this episode goes to air, I'd love to just get your thoughts on where you think we're going to go in the market over the next couple of weeks. And obviously, we'll visit a market wrap uh early in March, and and you know, what you say may or may not be prophetic. Um but I'm interested, just based on the trend over the last few weeks, based on how the year started, uh, based on the conversations you're having with buyers, the sentiment, the seller sentiment, there, the appetite, all of the factors that you consider as an agent, where do you think the next few weeks is going to go? Uh, and even you know, project it slightly further as we come to Anzac Day uh with the new public holiday this year on a Monday. Uh, where do you think the market is likely to head in terms of uh buyer versus seller, you know, whether they're aligning on price and expectation?

SPEAKER_02 14:30

Well, look, I I guess the first big call is it looks like the RBA won't hike again in March. They'll wait till May. Yep. So if we're on the old system, the first Tuesday of every month, the RBA would be meeting and deciding next Tuesday what to do with interest rates. Instead of that will occur mid-May, I think. Yeah, um, not on Tuesday, March 3, but St. Patrick's Day no less, Tuesday, March 17. Great day. And lucky the Irish, we'll have a hold there. Hopefully, the inflation numbers settle down, but I'm not optimistic. I'm just waffling now. Um that's that's that's that's probably absolutely no chance. But hopefully, um the numbers suggest that another rate hike is not warranted and the RBA's um you know blatant um efforts to jawbone the market into place um work, and and and and we do see some cooling in the inflation. But the the reality about that is it's not really the consumer that's driving the inflation this time, it's the it's the government and um the government's problem here is that now the person uh the man in the street, so to speak, who has no interest in economics knows that the government's the one that's causing the rising inflation through their excess spending. Yeah. I just saw down in Victoria building some new road or tunnel down there, they've just given them an astronomical pay rise. Yeah. And it's like, oh yeah, well that's going to fix the inflation problem, isn't it?

SPEAKER_01 16:00

It's uh well, it's it's always a challenge, right? The government is always uh unfortunately politics this day, these days, is all about positioning yourself for the next election as opposed to doing the right thing in the in the moment. Um so all of all of the governments are look are sadly looking to just spend for the sake of uh you know capitalizing on whatever advantage they might have, which is causing more damage. And people unfortunately are gonna pay the price.

SPEAKER_02 16:24

Ultimately it causes more damage, yeah, in the short term. Infrastructure's great.

SPEAKER_01 16:27

Like no one's gonna argue with that, right? But if we put ourselves in a position where the economy collapses as a result, that's not a great outcome, right?

Seasonal Stock Through Easter

SPEAKER_02 16:35

Uh ultimately, that's right. So um the next few weeks um we'll probably hopefully um the RBA will um hold on March 17. Um, I don't think the volume of stock will will stop during March for the simple reason being is that uh Easter falls on the first uh weekend of April. Yeah, so it neatly just puts a line under Q1 2026. It's coming. Quite remarkable to think that's already in sight. Um so I think you'll see, and we we ourselves have got a lot of campaigns ready to come to market in March, with people with a you know get sold for April mindset. Um, for Easter mindset. Coming out of Easter, maybe stock levels heading toward the winter will be uh um a little bit lower than what they have been for the first quarter, as they usually are. April is a messy month. Um, you have Easter, and as you've just highlighted, the Anzac Day um long weekend at the end. So two of the four weekends of uh uh in in April are long weekends, which is why a lot of people look to get on the market who want to sell in the beginning of the year and get resolved by the uh the forthcoming Easter. So there'll be the odd property that goes overs just because a number of spirited bidders turn up or buyers play at a property and really want it and will pay a premium to stop it from going to auction or in either in a heated off-market negotiation. But I think you'll find that um the majority of transactions will follow a trend line, and vendors that are trying to supersede or beat that trend line will um fail in many cases, and um there'll always be bargain hunters in any market, and um the the bargain hunters may find their bargain here and there, but by and large, I think the housing shortage is too acute for there to be any massive downside to property prices if the economy uh does does does hold at its current metric. So I guess what I'm saying to answer your question in short is I think the existing trend will run through to April being Easter. Yep. Coming out of Easter, stock levels will uh drop, then that will benefit vendors as it usually does from post-Easter till the start of spring. Um, and then we'll wait and see what the numbers say about a May rate hike, which is when money markets have one factored in.

Final Takeaways And Get In Touch

SPEAKER_01 19:04

Yeah, really good recap, Peter. It certainly be interesting to see from my view what happens in May, because I know we've spoken before on the podcast uh to potential sellers about the challenges potentially or the differences in campaigns in the winter when your house is is a different beast to market, uh, combined with a possible rate rise, combined with you know coming off a busier start and maybe a slower middle. So I think that the property market's up for an interesting few months ahead, that's for sure. Uh look, as always, really great discussion today. I'm sure our listeners have found something valuable. Um, and I encourage any of our listeners who do want any particular insight to just reach out and let us know, and we can cover it for you. But as always, Peter, thanks for coming in. Good on you. Thanks, Kieran. Thank you, and thanks to everyone for listening to Current Market Insights. We look forward to speaking with you next time.

SPEAKER_00 19:50

Thanks for joining us on the Current Market Insights podcast. Brought to you by Hummer's Partners Real Estate.