Stephen Koukoulas

Well, even before these budget announcements, we had clear signs that the housing price market was weakening.

So we're getting a construction lift, but prices were starting to weaken.

And I think there's a combination of factors there that we are seeing a slowing in net immigration.

So to the extent...

And there is some extent that population growth does add to housing demand.

So that is actually calling off, that was confirmed in the budget as well.

But we've also got this issue where the affordability is sort of hitting people very hard.

The prices are so high now that people are sort of stepping back and saying, I can't afford to buy.

So that fall in auction clearance rates that we've seen,

The fall in house prices in Sydney and Melbourne that we're seeing is starting to permeate even into what we call the boom cities, Adelaide, Perth and Brisbane, where prices have been very, very strong.

They're now starting to slow down as well.

So in the next couple of years, we're probably going to have house prices broadly flat to slightly down in just dollar terms.

So affordability will improve as wages go up even moderately.

We're going to have new supply coming on stream.

And we're going to have that hot demand that had been there in the post-COVID period starting to cool off as well.

So for home prices, probably flat to slightly weaker and improved affordability.

And that is something that the Reserve Bank will digest, even though they don't target house prices, obviously.

They do look at house prices as signs of financial instability or financial sort of ructions within the banking sector.

So

I think that they'll be looking at that and sort of think, well, we probably don't need to hike too many more times to meet our inflation and full employment objectives.