Chapter 1: What is the main topic discussed in this episode?
It's the Real Estate Podcast across every state, city and town of Australia.
And welcome to another episode of the Real Estate Podcast available on iHeartRadio and also Spotify and Apple Podcasts or wherever you get your podcasts from. Well, July has arrived on our Friday morning. Yes. the 1st of July for 2022. And coming up, we're talking as always on a Friday to Rich Harvey. And today we're covering property headwinds and property tailwinds.
Well, I see the Australian house prices continue to see widespread falls in June as interest rate hikes spark They say the sharpest slowdown in more than 30 years. That's according to a report from PropTrack's latest home index, and it shows national home prices fell 0.25% nationally last month. However, this is the big takeaway. Nationally, prices are still up 34% since March of 2020.
So it's all about keeping things in perspective.
Grab your coffee and switch on your real estate breakfast every weekday morning from 6.30. It's the main centre forecast with propertybuyer.com.au.
All right, let's have a look at your weather for today around Australia. First, we go to Sydney and good morning to you. Expect the rain to increase today and your high of 15 degrees. Melbourne, the rain is back with one or two showers and 13. Brisbane, rain around two for your Friday morning, expecting 18 degrees.
And Perth expecting the sunny blue is back again and 19 degrees is your forecast high. If you're celebrating a birthday today, Pamela Anderson, she is turning 55 years young. And Johnny Farnham, he's turning 73. Having a look at a couple of deaths on this day. It was on this day that Diana, Princess of Wales, died. She died at the age of just 36. We kind of forget just how young she was.
And on this day in 2004, Marlon Brando died at the age of 80. It was also on this day the birth of the Walkman. makes its appearance in stores for the very first time. This, of course, for the millennials, is the portable audio cassette player which was made by Sony and went on sale in Japan on this day in 1979.
We are just as addicted to property as you are. It's the Real Estate Podcast, across Australia, seven days a week. Let's Talk Property, a podcast series with Rich Harvey.
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Chapter 2: What are the current trends in Australian property prices?
I wonder why with rapidly rising inflation, interest rate hikes and share market instability all really taking a toll in the mind of a consumer. But is it all bad news? And what opportunities are out there right now in the property market? Well, let's carefully examine both the economic headwinds and the tailwinds. And I've got Rich Harvey, CEO and founder of thepropertybuyer.com.au with us.
Must be a Friday morning. Good morning to you, Rich. Welcome back. Good morning, Craig. How are you doing today? Not too bad. I was just saying the headwinds might be Melbourne and the tailwinds might be Brisbane with that weather because, boy, there's two sides of the weather going on in Australia. It's a nice little juxtaposition.
Well, certainly, I mean. It's pretty cold. There's plenty of snow down in the Snowy Mountains at the moment and in the Victorian Alps, whereas it's still pretty crisp and chilly in Sydney, but Brisbane is still pretty mild. You know, I think they have pulled out a jumper or two there, I believe. But yeah, the weather is very much cooling down in most areas of Australia.
All right, well, let's have a look at the headwinds and the tailwinds this morning. What is happening with consumer sentiment and what does it really measure, do you think, in your mind?
Consumer sentiment, Craig, simply measures what people feel about the economy and the economic outlook both here in Australia and abroad. But the problem is we've all been living on this diet of like negative media news. And it basically leads most people to have a really negative outlook and really depressed outlook. In fact, I reckon we're all suffering a bit of what I call doom fatigue.
But consumer sentiment really plays a major role in determining the direction of real estate markets. But there's little doubt that it impacts the market. But the Westpac Melbourne Institute, they're the ones that undertake a survey every month of what consumers are thinking and feeling. And they've reported quite a significant drop. So in June, it was measured at 84.6.
Whereas in May, it was 90.4. So 100 is the baseline. And when it's below 100, there's negative sentiment. When it's above 100, there's positive sentiment. And Westpac have been doing this for 46 years. They've been running this sentiment. And if you look at the really times when there was major economic depressions or dislocations, during COVID, it got down to 75.
During the GFC, it got down to 79. And in the 1990s, in the major recession in Australia, it got down to 64. So, you know, currently we're sitting at 84. So it's not like we're in the absolute dire straits at the moment. I think everyone's just got to remember that these consumer sentiments are surveys and these feelings aren't facts.
But the problem is that there's a herd mentality, which really does have a big impact on the direction of the market.
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Chapter 3: How does consumer sentiment affect the property market?
That's right.
That's right. And we are talking headwinds and tailwinds. So just before I let you go, how should the average consumer or potential property buyer approach the market right now?
Look, Craig, a lot of people are saying, Rich, I'm just going to sit on the sidelines and just wait and see what happens. The problem with that approach is that, again, you're going to miss the market. You'll miss the opportunity. It's not to say you have to buy now, but the conditions for buying have absolutely swung back in the buyer's favor. There's so much less competition out there.
Auction clearance rates have declined. We're in the 50% now. Vendors are far more negotiable. There are some vendors that are holding back, but what I'm saying is you need to be careful with your property selection and what you offer, but there is some great opportunities there.
What I think is going to happen, Craig, is that once prices stabilise and they find a new what I call plateau or sort of a trough where they're not going to decline anymore, that's not going to get picked up in the media until three to five months down the track. So as I said, markets overshoot or undershoot.
So the expectations are not always accurately reported in the media as to what's happening on the ground. So I'm saying the next six months, are going to give some of the best buying opportunities that we've seen since the beginning when COVID hit. When that three-month period, when COVID hit March 2020, that was a brilliant time to buy.
Similarly, back in the GFC in 2008, when the market thought it was going to crap itself, I bought three properties that year because there was just so much negativity and it was great to buy. That sort of same negative sentiment is very pervasive right now. So to answer your question, how do you approach the market?
The best way to approach the market is with an open mind, a discerning mind, and the ability to do really thorough property research. So the market's constantly moving, constantly adjusting, and it's going to reach a plateau a lot sooner than most people think. But the trick is to get ahead of the herd and not adopt that typical herd mentality.
All right, plenty of headwinds and tailwinds information and very valuable stuff coming through there from Rich Harvey. Rich, I'll let you go. I know that you've got another busy Friday as you wind down towards another weekend.
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