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Chapter 1: What is the main topic discussed in this episode?
A Listener Production. Hi, Natasha Belling with you and welcome to the afternoon edition of The Briefing. Coming up in our deep dive, what's ahead for Australia's housing market? As prices slide in Sydney and Melbourne, other areas are booming. And as experts warn, we should get ready for more interest rate increases. We ask, what's the outlook for house prices?
And could the cooling real estate market be a good sign for first home buyers? All those details in just a moment. But first, let's check the afternoon headlines this Friday, 5 June. One Nation's policies are under scrutiny after a train wreck interview with Barnaby Joyce last night on Sky News.
Presenter Andrew Bolt was asking Mr Joyce about One Nation's housing policies and whether permanent residents would be forced to sell their homes under a proposed crackdown. Here is the original interview between Mr Bolt and Mr Joyce.
I'm just wondering, does it apply to permanent residents as well? Well...
We want, yeah, it does. That's my belief in the policy. It does, right. It does, and we want to make sure that, yeah, we want to make sure that you become a permanent resident, you know, become a permanent resident and, sorry, become an Australian citizen, excuse me, become an Australian citizen and that's going to deal with the issue, isn't it? Become an Australian citizen.
After Mr Joyce gave that answer, he apparently called his team to check policy details and then requested to come back onto Mr Bolt's TV show to clarify One Nation's policy. Take a listen.
But on further investigation and discussions with One Nation, no, we are not going to be kicking permanent residents out of their house.
Pauline Hanson has defended Mr Joyce's performance, suggesting it demonstrated honesty.
MUSIC
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Chapter 2: What did Barnaby Joyce say about permanent residents and housing policies?
The rental income for Andrew has raised more concerns in the UK, although the audit body did not suggest any wrongdoing on the part of Andrew. Now it's time to get into our deep dive on the Australian housing market with economist Meeboy.
With major tax changes, sliding prices in some suburbs and warnings of more interest rate rises on the way, we ask, will the housing bubble finally burst or could all this ongoing uncertainty actually provide a silver lining? Mi, thanks so much for joining us. In regards to, there's a lot of speculation at the moment that the property bubble is about to burst. Is that true?
Well, this is definitely not the first time I've heard a call for a crash or for the property bubble in Australia to burst. I think I've only been in Australia for six years and I think this is like the third and fourth time that these headlines made the news. I don't think that there will be a property bubble burst. So that's the short answer. There's definitely a lot of nuance to it though.
Yes, over the last month, we've seen national prices kind of down if you look at it on a capital city basis on average. But number one, different markets are very, very different. Brisbane, Adelaide and Perth actually reached new record highs in terms of housing prices last month. You do see some falls in Sydney and Melbourne, but Not even in every segment of the market.
If you look at units on the lower end of the markets, they're actually still gaining in prices. So I think that calls for a property bubble burst. Even if there is one, it tends to be very nuanced. Maybe Sydney prices are quite overpriced versus affordability, but there's still a lot of juice to go in the booming cities, mid-tier cities of Brisbane, Adelaide and Perth.
And I think ultimately, when we want to think about housing prices, ultimately, it comes down to supply and demand. And we do have a shortage of supply in terms of dwelling units in the market at the moment on a national basis. We at AMP estimate that Australia needs to build at least 200,000 more dwelling units for the market to be a bit more balanced, basically.
And every single year, we're only building around 170,000 dwelling units.
so yes there will be some slowdown markets on the national levels we do see a five percent dip in this next coming financial year by june next year but i don't think we'll have a major crash you make a great point because it depends on where you're living which suburb and even you mentioned there even in the biggest cities at the moment it depends on which suburb because it's so variable at the moment
Let's talk about, we've seen a decrease in some of the prices in some suburbs across the country, and there has been concern raised about what is called negative equity. So that basically means, especially with the increase in interest rates, that you're actually now paying more for your property than it's actually worth. How much of a real risk is that at the moment for people?
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Chapter 3: What is ASIC investigating regarding KPMG?
So that's something you can do as an individual if you're under stress.
Yeah.
Now, you just mentioned just there you're predicting two more increases in the official cash rate. Is that something that you think will really, you know, is a concerning development for an economy? We know the GDP figures that came out this week for a struggling economy, but also put a lot of pressure on a lot of people that are really struggling financially right now.
Yes, the economy is definitely slowing and obviously our recession probability has gone up, but there's always some recession probability at any time in Australia. It already ranges around 10 to 15%. Right now, we say that the recession probability will probably go up to around 30% with rate hikes, as well as with all the developments coming out of the Middle East war.
But let's also look at things into context here. The GDP growth number was softer, and that was on the quarterly basis of 0.3% quarter on quarter. But over the last year, we've grown about 2.5%. So that's actually a pretty decent pace for a developed country like Australia. It's actually higher than the potential growth rate that the RBA estimates for Australia, which is only about 2% to 2.2%.
So we're actually growing a bit faster than what we should be growing as. And the reason why the RBA has to hike rates further this year is actually because businesses can actually put up prices because, again, the consumers were actually starting from a strong base, so they can take some of the price highs. So the businesses actually have a bit of pricing power there.
The RBA also probably has to hide more because we've had quite a lot of wage growth pressures in the economy. So just two days ago, the Fair Work Commission handed out their next financial year's decision for award and minimum wages growth. So basically people on minimum and award wages will get a pay rise between 4.75% to 6%, which is a very decent number, I would say.
So all of that pressures kind of just mean that, you know, people are getting actual wage rises, which means that they can pay for a little bit more mortgage, I would say. You know, it's not a great outcome for mortgage holders, no doubt with that. But the reason why the RBA has to hike is because there's inflation pressures and the economy was actually starting from a strong base.
Me, I love your positivity in such a challenging financial time for so many Australians right now, but I guess a lot of people would want to know as prices are starting to come off a little bit and we know the clearance rate is falling, could now as a silver lining be a good time to try and get into the property market?
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