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Chapter 1: What is the main topic discussed in this episode?
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Well, it's another Monday and some fresh property data to digest. Property sales continue to slow with the latest data from Cotality showing a drop in auction clearance rates. Meanwhile, a new report into Australia's tax system says young people are carrying more than their fair share of the load.
And did Friday's Senate inquiry into KPMG mark a major milestone in holding the professional services firm to account? Welcome to ABC Business Daily.
Music
I'm Carrington Clarke.
And I'm ABC News Business Editor Michael Yarder.
Michael, thanks for joining us.
Always a pleasure.
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Chapter 2: What recent property data has been revealed in Australia?
In fact- For someone like me who's in a position where maybe I need a bigger house because I've got a few kids, and when they get bigger, I need more space, it might actually be a benefit because in dollar terms, the more expensive bigger house is going to have a relatively bigger fall. than the house I'm currently in.
But that can be the problem. So I think it absolutely depends on your stage of life. So yes, it might make sense for somebody who wants to upsize and get an extra couple of bedrooms. But if you're somebody who is facing an empty nest, you might actually, you would still be more upset about property prices falling even in percentage terms, because you won't bank that extra bit of equity.
And if you're downsizing that, you know, you're not going to get as much money in your bank account potentially.
So Even then depends where you're downsizing to.
Chapter 3: How are young Australians affected by the current tax system?
If you want to go to a coastal lifestyle market, maybe you'll get an even bigger discount there because there's a lot of properties, you know, what really are people's holiday homes, but they rent them out enough to try and claim them. and claim the negative gearing on them, which the tax office has already been tightening down on.
But with these rule changes, that strategy is out the window because you can't negatively gear it. So if you want to retire to a coastal market, might even be good news for you in terms of property prices.
So let's look at this latest data. And I agree with you. In some ways, people might be like, I feel like we keep hearing this same story because we keep talking about clearance rates being the lowest since April 2020, which remember is the COVID period.
Chapter 4: What insights emerged from the Senate inquiry into KPMG?
But it is lower again. The big headline this week, was Tim Lawless suggesting that actually the final auction clearance rate, so these are preliminary figures that we're focused on, the final rate, which we'll get in a couple of days, might actually be below 40%. Now, there is this very crude rule of thumb, which is below 60%, people say that probably means prices are falling.
If it's above 60%, prices are probably going up. And it is Interesting watching how these trends work.
But I think there can be no doubt at this point that both the interest rate rises that we've seen this year, but also then the speculation about the potential tax changes, which were then realised when we had the budget announcement, coupled with what's happening when it comes to inflationary pressures, kind of weariness about what's happening globally.
And until recently, the fear that there could be one or two more rate rises, although maybe less likely now.
Well, I want to go on the interest rate predictions because I think they are interesting, but it's pretty clear, isn't it, that there has been a marked shift in the property market between late last year and early this year, and we've seen this play out. There definitely doesn't seem to be as much speculative activity in the property market.
People are just piling in there as a one-way bet when it comes to-
Less panic buying as well, Carrington. Yes, exactly. You've got the investors with the speculation, but in terms of the owner occupiers and first home buyers, there's fewer people feeling like I have to rush in now or I'll never get in because the prices do seem to be coming down rather than going up.
I think that's exactly right. I think people have more time up their sleeve and many people are thinking, well, now I'm hearing people talk about prices are going to actually fall this year, maybe continue to fall next year, maybe I wait. They've got more time to negotiate. There's not that fear of missing out that we were really seeing late last year.
But the question does become how low can they go? And so all the data shows that we have a very low vacancy rate when it comes to rental properties in Australia. We've also seen rental costs continuing to rise at really an extraordinary rate.
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