2GB with John Stanley: Property Downturn Spreads Beyond Sydney

On 2GB Nights with John Stanley, Peter O'Malley from Harris Partners explains why Australia’s property downturn is no longer confined to Sydney and Melbourne. As auction clearance rates weaken across more capital cities, the discussion explores the widening disconnect between buyers and sellers, and why confidence—not just interest rates—is shaping the market.

They also discuss:

•  The property downturn spreading into more Australian capital cities 
•  Why slowing property activity affects both federal and state government revenues 
•  What weak auction clearance rates reveal about buyer and seller expectations 
•  The risks of agents accepting unrealistic listings in a falling market 
•  The negative feedback loop where buyers expect even lower prices tomorrow 
•  Why spring alone won’t reverse the market without rate cuts or meaningful policy changes 
•  Immigration continuing to outpace new housing supply 
•  Whether something as simple as wet weather can influence buyer perception on auction day

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

Transcript

The Meeting Notes Problem

SPEAKER_01 0:00

Do you spend meetings switching between listening, writing notes, and trying to read the room? The more you focus on getting the notes right, the less present you are in the actual conversation.

Granola AI Notepad Explained

SPEAKER_01 0:11

Granola solves that. Granola is an AI notepad that runs in the background and captures everything, while you focus on the conversation. You jot down what matters, granola handles the rest. When the meeting ends, you get perfect structured notes. Try granola for free at granola.ai slash podcast. That's granola.ai slash podcast.

Property Downturn Spreads Nationwide

SPEAKER_04 0:36

Our guest tonight is Peter O'Malley from uh Harris Partners. Peter, good evening. Uh good evening to you, John. Well, this this downturn in the property market, it is getting more pronounced. Is that fair to say?

SPEAKER_03 0:47

Yeah, I think the front is widening, is probably the most accurate description of what's happening, John. And by that I mean um we're not just seeing price falls or a slowing market in Sydney and Melbourne. It is moving to other capital cities that were doing well before the budget. Now that spells bad news for the government because it was fair to say that there was a downturn in Sydney and Melbourne before the budget. So it was very unfair in some ways to target the budget as being the key cause of the property downturn um for those markets. But now that you're seeing places like Brisbane and Adelaide begin to come off and they could start falling um between now and Christmas, that will uh put pressure on the government and their budget.

SPEAKER_04 1:32

That well, that's the federal budget, but of course uh less property activity, less stamp duty, that's state government budgets as well. So that's the that's the economic picture.

Clearance Rates And Vendor Expectations

SPEAKER_04 1:41

But these clearance rates where in Sydney it's just a tick over 50 percent, Canberra 45 percent, Brisbane 16 per cent. So that that means that um buyers and sellers, they're a long way away, aren't they, in terms of what they think the property's worth?

SPEAKER_03 1:57

Oh, that's right. And I don't think real estate agents decline listings enough, John. I think they say to a prospective vendor, if you're prepared to give me the listing, even if your price expectations are disconnected from the current market reality, I'll take it and give it a go. And when you put a property to auction where the vendor wants a premium to the market reality, it's almost certainly going to fail and therefore push the clearance rates down or contribute to it. So I think um real estate agents should be a little bit more circumspect about the number of properties they put to auction, and they shouldn't be putting vendors to auction that think they're going to get a premium because those days are well and truly behind us. 16% clearance rate in Brisbane, as you've just highlighted there, John. Like, wow, it's a long time since Brisbane's been on its knees like that, I can tell you.

The Fear Loop In Pricing

SPEAKER_04 2:47

Yeah, and and how much of this becomes almost uh self-perpetuating? So the more we talk about it, the more these property prices go down, the more demand starts to to fall off uh and clearance rates go down, then people say, Well, um if if I'm gonna buy, I'm not gonna buy at the price you're listing. I I want a discount.

SPEAKER_03 3:07

Yeah, that's right. So we call that a negative feedback loop, of course, or the only thing to fear is fear itself. And uh we've experienced that in the market firsthand, John. Well, you'll you'll have a vendor agree that the market's on the downturn. They agree to reduce their price expectations and their asking price to the market reality, and a buyer will come along and say the market's falling, so I want to take even more off the price. And it's like, but we just reduced it last week to market price. This is fair, and they can't see past the fact that the overall market's falling, so they're trying to price they're trying to price the next six months' falls into their offer, and it's like the vendor is only entitled to accept best market price today. Maybe the market will keep falling from here, maybe it won't, but buyers can't expect a vendor to uh you know o underprice their properties just to give the buyer a bargain.

SPEAKER_04 4:00

Because th there's also the view, and you know yourself, there are so many different views on all of this uh everywhere at the moment.

Spring Optimism Versus Economic Reality

SPEAKER_04 4:06

But we're in the middle of winter. When spring starts, we get more properties on the market. There is uh among certainly people I've heard some optimism that buyers will come in, the market might start to move when we get to spring, we might even find that uh that problem with not building enough houses might start to to emerge then.

SPEAKER_03 4:26

That's if the immigration rate stays elevated, and that is a that is one fundamental point as to why the market downturn is not as deep as many people think, the immigration numbers and the lack of housing. Um this is an economic downturn and a policy downturn with the budget. Yep. So it's not seasonal. Uh that's the one thing I would say, John. So anyone who's hoping for better conditions than spring, and I know that it's a very chilly evening in Sydney this evening, um, but spring is only seven weeks away. And there won't be any fundamental turnaround in the property market in the next seven weeks without interest rate cuts, which aren't coming, or the government backing down on their policies, which is isn't happening either. So um I think at some stage the immigration numbers and the lack of dwelling will support the market, but at the moment um it's under enormous pressure and and no signs of abating.

Immigration Pressure And Housing Supply

SPEAKER_04 5:22

So just on the immigration numbers, because we know at that at the peak uh net overseas migration was about 550,000. It was that big surge post-COVID when we stopped immigration altogether. It's now down to just a tick over 300. That's uh net overseas migration. That's uh that's still fifty, sixty, I think seventy thousand more than the government in its projections, in its budget projections is saying. Its budget projections are to get it down to around, I think, 225,000, 230 in 18 months' time. If that happened, that could have an impact on on the housing market, couldn't it? Uh in fact it could it could reduce demand.

SPEAKER_03 5:57

Look, they've pushed so many people through the front door over the last four or five years relative to the number of dwellings we had, and they clearly haven't built anywhere near enough dwellings when they had immigration red lining that I think you could even cut immigration to 150 and that would still be too much for the housing market to bear. Now, other sectors of the economy might catch up quicker, um you know, services, um health, um, transport, infrastructure. Um, you'd have to go to someone with more knowledge than myself on that. But no, I I think any anything that's above 150,000 is too much for the property market to bear at the moment because we're just not seeing new dwellings come into the market.

SPEAKER_04 6:44

All right. I can ask you just one final one, if I can, on this.

Does Rain Change Auction Results

SPEAKER_04 6:48

When you just talked about, and look, I know it's been wet and and cold middle of winter. If you wake up on a Saturday morning, you're gonna wash in your house, you look outside, it's raining, that misty rain, it's cold, uh, you have to have an umbrella if you go outside. Are you gonna think I'm gonna get less from a house than a bright sunny day? Is that it's is is that is that just superstition or or is is is there something to bear that out?

SPEAKER_03 7:12

Oh look, as a vendor, um if you're if you're waking up nervous on auction day, that's normal. As a real estate agent, if you get to auction day and you don't have a good sense of how it's going to play out or could play out, you've let your client down. So I think I think good real estate agents know whether they've got a a strong auction on their hands or otherwise. And and and if they don't, the agent's not.

SPEAKER_04 7:36

Maybe it won't make a difference, you say. Yeah.

SPEAKER_03 7:38

Uh not really, that's right.

SPEAKER_04 7:41

Unless you get those situations which which we all hear about. They're very rare where someone's driving past like that, they'll go and register and and someone ha it's someone's lucky day.

SPEAKER_03 7:52

And and look, I've seen it go the other way. Some properties, John, do present better in sunshine than than you know in in in um dark, wet days, if you like, like we've had it today. So a buyer might have seen the property during the campaign, for example, uh, only on a sunny day. And then lo and behold, yeah, when your auction day rolls around, it's a filthy, wet day, the buyer turns up, it feels dark, it feels damp, and suddenly, right at the last moment, they have a different vibe or energy towards the property, and even though they're registered to bid, they don't put their hand up.

SPEAKER_04 8:24

But as always, very interesting. We'll talk again very soon. Thank you. Thanks, John.

Sign-Off And Next Podcast Teaser

SPEAKER_02 8:29

What are the common personality traits of individuals who murder their spouse?

SPEAKER_00 8:33

Why does the Catholic Church have a child abuse problem? I'm criminologist and forensic scientist, Dr. Zanthe Mallet.

SPEAKER_02 8:40

And I'm Tim Watson Munro, a criminal psychologist.

SPEAKER_00 8:42

Motive and Method will follow our analysis of questions just like these, delving deep into what really makes the offenders tick.

SPEAKER_02 8:50

Motive and Method is a podcast focused on the facts, the motive behind the criminals.

SPEAKER_00 8:55

The method behind why they do what they do and what we can do about it.