# Inflation, Melbourne's Green Shoots & Negative Gearing | Wilson Monthly Market Update July 29

An episode of [Money Mentor Podcast™](https://invisiblenetwork.ai/podcast/1632604767), 28 Jul 2026, 59 min.

Audio: https://episode.flightcast.com/hzhfg8onstdr36f8lmi28vpp.mp3

This month's Wilson Monthly Market Update kicks off with a hard look at the Prime Minister's recent comments on negative gearing reform — and why the reasoning behind restricting it to one or two properties doesn't match how Australian tax law actually works. From there, the conversation moves into what's shaping up to be one of the biggest questions facing renters and investors alike: as investors exit the market ahead of new taxation changes, what happens to an already undersupplied rental market?The episode also breaks down the government's expanded Help to Buy scheme and asks whether shared equity solves affordability or just shifts ownership (and risk) onto taxpayers, before moving into the regular data deep-dive: the RBA's rate-hold heading into a bigger August decision, a mixed inflation print with underlying inflation ticking up to its highest level since 2004, an easing unemployment rate, home building approvals split sharply between the booming Perth/Brisbane markets and the still-struggling Melbourne/Sydney unit sector, and the latest auction clearance rates — including early signs of a possible turnaround in Melbourne.As always: rents, rates, building approvals, capital city price trends, and the long-term data that puts the current cycle in context.Money Mentor YouTube Channel: @moneymentorauDr Andrew Wilson on LinkedIn: /dr-andrewIf you enjoyed our podcast, make sure you follow and subscribe to stay up to date with the latest episodes.👉 Follow the link https://bit.ly/43V2jKN to watch the free webinar and start your Infinity journey now!

## Transcript

[0:05] Welcome back to the Wilson Monthly Market Update.
[0:09] I am not going to give you an introduction this month because we have a lot to talk about and a lot to break down.
[0:15] Doc, I want to start this podcast off this month with something very different.
[0:19] Okay.
[0:20] There is a lot going on with our government and policies changing at the moment.
[0:25] It has.
[0:26] And as you said before we started recording today,
[0:28] you know we look back 12 months it is a very different climate um and we've got a lot to talk about when it comes to that so i want to show you a couple of videos and we're going to talk about that i want to get your take on it so the first one here is this i'm going to ask everyone here if you have an if you negatively gear to put up your hand i have you negatively gear i have yeah nothing wrong with that
[0:47] OK, there is nothing wrong with that, except young people who can't get in the market and find it harder to build wealth can't.
[0:53] The other thing that we're trying to do with tax reform is to remove distortions.
[0:59] And advice was if you had negative gearing on two properties, then what people could do essentially is stack up, if they had ten properties, stack up their debt onto the highest one, improve their deductions, and that it would distort the market towards basically the...
[1:16] allocation of debt because of the nature of negative gearing and how it works.
[1:21] Stop, stop, stop.
[1:22] This is bullsh**.
[1:24] This explanation from the Prime Minister genuinely left me scratching my head and seriously concerns me.
[1:30] One of the reasons Anthony Albanese gave for not allowing negative gearing on just one or two investment properties was that investors could simply load all of their debt onto those properties and maximise the tax benefit.
[1:41] But that's not how negative gearing works.
[1:43] And more importantly, that's not how our Australian tax law works.
[1:47] Interest isn't deductible because of which property the loan sits against.
[1:51] It's deductible because of the purpose of the borrowing.
[1:53] If you borrow money to buy an income-producing asset, the interest may be tax deductible.
[1:57] If you borrow money for private purposes, it generally isn't.
[2:00] Simply moving debt around between properties doesn't suddenly create a bigger tax deduction.
[2:05] Changing the security doesn't change the purpose of the loan.
[2:08] He either doesn't understand our very own Australian tax laws and rules and made a decision on this incorrect reasoning that has impacted our mum and dad investors, or he has knowingly made a false statement and lied to us again.
[2:23] Australians deserve policy that's based on facts, not misunderstandings.
[2:29] Wow.
[2:33] That's a very concerning statement that Calvo has made about negative gearing because it's not how it works.
[2:40] Well, look, obviously your view is in relation to how the tax policy works, particularly in relation to property.
[2:47] I mean, my view is about the big picture, which is that there's almost viewed as a truism that if you reduce negative gearing or get rid of negative gearing,
[2:58] you're going to bring more people into the housing market, particularly first-time buyers.
[3:02] But you noticed in the clip it was perhaps or it may happen because we have to wait and see how this pans out, you know, that finally we actually have the reality of a reduced taxation system for investors.
[3:20] So, you know, the theories over the years, particularly from, I guess, the left of the political spectrum, that this creates more opportunities for first-home buyers because there's fewer investors, they're going to be put to the test, Rachel, over coming years.
[3:34] But then you've also ostracised investors when you're making those policy changes.
[3:39] Absolutely.
[3:40] That's right.
[3:40] And where is our supply going to come from for housing?
[3:44] You know, we're already miles behind the targets that the federal government set for new housing two years ago.
[3:51] In fact, we're 30% down on those targets with the latest data.
[3:55] That's a huge number.
[3:56] Of course.
[3:57] We're talking tens of thousands of homes fewer than were forecast by the Labor government.
[4:03] to improve our supply-demand imbalance.
[4:06] But the real question is, what happens when you have fewer investment properties to rents?
[4:13] And that's what we're going to talk about today.
[4:15] That's an interesting topic because we're already seeing them rising.
[4:17] And we've seen a breakout in rents following perhaps a year, 18 months of steady rents.
[4:23] Yeah.
[4:24] And a lot of that was to do with the change in the migration mix from the government.
[4:28] But now, you know, all good things come to an end, particularly in housing when you're undersupplied.
[4:33] We're seeing a real breakout in rents.
[4:36] In fact, almost unprecedented over a shorter period of time breakout in rents.
[4:41] And what's to come is fewer rental properties.
[4:45] That's the plan.
[4:46] Fewer rental properties means more first home buyers, according to the Labor Party's theory.
[4:51] But what about those renters that can't buy or they're years away from buying?
[4:55] They're not just sitting there waiting with their stacks of dough to put down their deposit.
[4:58] They're not going, great, policy change, we can get in.
[5:01] It's not always the case.
[5:02] And in the short term, which we must know as a more realistic prospect,
[5:07] is that already steeply rising rents in record low vacancy rate markets will continue to rise.
[5:14] Yeah.
[5:14] So what does that do for the capacity of first home buyers to save their deposit going forward?
[5:22] So it's, again, the government has sort of alluded to the fact that, hey, don't you worry about that.
[5:28] We've got some plans and we've spoken to the states and we're going to fix the rental market.
[5:32] Because that's what they forget, right?
[5:33] They make these announcements on a federal level, but there's so much that happens at a state level.
[5:37] Well, they really can't do anything in relation to rental policy.
[5:41] That has to be initiated by state governments because they have that responsibility for housing, generally at a local level, for land planning.
[5:51] So we've sort of got this...
[5:54] unknown sort of we're lurching into the darkness are we not yeah in terms of whether we will a get this um this surge in first home buyer activity uh and whether or not the imbalances in the rental market will will create you know again skyrocketing rents which will only impede first home buyers in terms of um
[6:18] their capacity to save and get into the market.
[6:21] And, of course, you know, the other thing is that as that capacity is reduced, you know, the capital, the potential for capital growth is also reduced.
[6:33] And isn't this about the, you know, redistribution of wealth from one generation to the next?
[6:38] Yeah, absolutely.
[6:38] But we're taking away those opportunities from the younger generations to have the same opportunities as the older ones.
[6:44] We've changed the model fundamentally.
[6:46] The model has changed fundamentally.
[6:48] The model that has worked for generations.
[6:51] Yeah.
[6:52] You know, we still have...
[6:54] It's almost an urban myth that Australia's housing market is unaffordable because we have consistently low numbers of defaults and arrears and we still have high numbers of first-home buyers in a relative sense, around about 20% of the market are first-home buyers
[7:12] coming into the market consistently.
[7:13] Of course, that changes according to the business cycle and according to house prices.
[7:18] But this is a big step into the unknown, Rachel.
[7:22] And, of course, it brings back, you know, beware the law of unintended consequences.
[7:27] Yeah, that's a term that's being thrown around a lot, but it's absolutely relevant.
[7:30] But there's nothing you can challenge other than, hey, don't you worry, we'll fix that, particularly if you get fewer rental listings.
[7:37] And we're going to have a look at a slide that shows that, and it's logical, obviously, but we've actually got a slide that shows the relationship between rental listings and rents.
[7:47] Rising rents.
[7:48] Yeah, and rising rents.
[7:49] And that says it all, really.
[7:50] And that's the question that needs to be answered specifically,
[7:54] is how you are going to address the prospect of more sharply rising rents in our capital city markets.
[8:03] And look, there's not a direct correlation between changing the number of investors and straightaway you're going to get the same number of first home buyers coming into the markets.
[8:15] Well, we're already seeing a drop of first home buyers taking up loans.
[8:18] So I know in the March quarter it was down by about 9.1%.
[8:22] It's actually risen since then in the next quarter, which I've got to do another video on.
[8:26] So it's quite interesting to see that we're seeing that drop in number and that maybe the restriction there is actually the borrowing.
[8:32] It's not necessarily the unaffordability.
[8:34] So I do actually want to show you another video that we'll get your thoughts on because this is where the government is saying we're going to, you know, up our support in these schemes.
[8:43] Well, we're seeing a lot of with the 5% deposit scheme, they're talking about people going into negative equity.
[8:48] They've now expanded the help to buy scheme.
[8:50] So this is another video.
[8:52] I think the government has just accidentally admitted what the real problem is, and it's not just house prices.
[8:59] For years we've been told affordability is all about expensive homes.
[9:02] But what if the bigger issue is Australians simply can't borrow enough anymore?
[9:06] Banks assess your loan at interest rates much higher than what you'll actually pay.
[9:10] This is risk mitigation.
[9:12] We've also had living costs increase, hex debts reduce borrowing capacity, credit cards are reducing borrowing capacity, so are personal loans.
[9:18] Little to no financial education around this topic either.
[9:21] Even good incomes are struggling to qualify for the loan they need.
[9:24] What is the government's answer to try to bridge the gap?
[9:27] Well, they've expanded the Help to Buy scheme, another 10,000 places.
[9:31] They have increased the income limits, but really I'm not impressed with by how much.
[9:36] This scheme sees the government contributing up to 40% of the purchase price for a new home or up to 30% for an existing home, meaning your loan is smaller and easier to qualify for.
[9:46] So sure, this is a way to help first home buyers get into their first home,
[9:50] For some people, it could be the difference between buying a home today or waiting another five years.
[9:55] But we need to consider something here.
[9:58] If the government owns up to 40% of your property, who benefits when the property doubles in value?
[10:04] It's not just you.
[10:05] The government also owns their share as well.
[10:08] So are we solving affordability or are we normalizing government co-ownership of Australian homes?
[10:14] Because yes, it helps people get into the market sooner.
[10:17] and bridges that gap between borrowing capacity and affordability.
[10:21] But it also means first home buyers may spend years building equity that they don't entirely own.
[10:26] I genuinely think this policy tells us something important.
[10:28] The government may finally be recognizing that Australia's biggest challenge isn't only rising house prices.
[10:34] It's that our borrowing system has become a factor that means our first home buyers may also be struggling to access the finance they need.
[10:40] But is the answer really allowing us to enter into this type of relationship with the government?
[10:45] What do you think?
[10:46] could also be considering that they have an invested interest for the Australian housing market not to go down.
[10:54] Guess what's happening to the Australian housing market at the moment?
[10:57] It's...
[10:58] Yeah.
[10:59] Yeah.
[11:00] And a lot of that is being fuelled by these policy changes that have impacted confidence.
[11:06] You know, I mean, there's almost a complete agreement amongst those that comment on the housing market, economists and government, that the real problem in our housing market is we don't build enough new homes.
[11:21] They've admitted that.
[11:22] You know, everybody says, yeah, well, that's a solution.
[11:25] We need to build more new homes.
[11:28] And yet the consistent data shows that not only aren't we building enough to match today, we're going backwards.
[11:36] The government's target set in two years ago is down 30%.
[11:42] And, you know, if you're not getting the new homes coming through,
[11:46] you're just shuffling the deck chairs on the Titanic to try to make it work.
[11:51] I mean, the prospect of shared ownership from governments is just public housing by another name.
[11:58] It's just public housing.
[12:00] And as you say in the clip, it's shared growth, but it's also shared risk as well because, you know, what happens?
[12:08] They're sharing the losses as well, absolutely.
[12:09] They're sharing the losses.
[12:11] And, you know, what happens to the government?
[12:13] when their business cycle turns downwards, when unemployment rises and people start losing their jobs and incomes start to not grow as much or fall because of the downturn in the business cycle.
[12:29] And all this is supported by taxation.
[12:32] Yeah, so with more pressure on taxpayers.
[12:35] Yeah, that's right, because they're basically paying for
[12:38] at the, I guess, offsetting other areas where taxation money could be, you know, spent health, education, et cetera, to get people into the housing market.
[12:50] And it was a model that's worked consistently well for generations.
[12:54] And, you know, without going into the nitty-gritty of why and why not, just the whole basis of this is because, this policy is because it's been an unfair distribution of wealth
[13:05] to previous generations.
[13:06] But if the system worked to create that wealth and to create that financial stability, why don't we keep it as it is?
[13:15] Yeah.
[13:15] You know, for some pie-in-the-sky prospect of a nirvana, you know, with thousands more first-home buyers getting into a market...
[13:24] even though they might have to pay, you know, incredibly higher amounts of rent and might not get the same capital growth that their parents and grandparents.
[13:34] Well, that's like we said, right?
[13:35] I think we're going to see those people that we're trying to help, that's what they're saying, be quite disappointed that they're not going to have the same opportunities to build that wealth longer term that their previous generations did.
[13:46] Right.
[13:47] Yeah, well, this is a market-controlled ideology.
[13:49] This is the basis to this.
[13:51] It's something that, you know, comes out of the, I guess, the ethos of perhaps Britain in the 50s, you know, where they have genuine issues around about, you know, the distribution of wealth.
[14:03] But this country is very much, you know, an unclass society in a sense, and yet we're trying to implement policies based on an ideology that just doesn't fit the model.
[14:15] If you look at our investors, most of them, 90% of them have one to two maximum.
[14:21] So you've got Albo talking about people with 10 properties, you know, gearing all their debt against just the two properties if we allowed negative gearing against two.
[14:28] But you're like, you're not talking about a market that really exists.
[14:32] And the other point is that if rents rise in an environment where prices aren't rising at the same relative rate as they used to, won't returns and gearing actually improve?
[14:45] The gearing for investors, they might start thinking about it.
[14:48] hey, I'm getting a really good return now because rents have risen sharply.
[14:53] It's not the same sort of benefit that I used to get in a more controlled marketplace, which we've had during the old system.
[15:02] So there might not be the same hook for negative gearing as a driver of demand for rental properties that there was because you'd be getting some perhaps moving into positive gearing with their rental properties.
[15:14] Well, that's why we're seeing the increase of rent now because we've got to consider that with the loss of the negative gearing benefits that they've got to drive those prices up to then cover loans and expenses that they can't claim anymore against wages.
[15:26] Right.
[15:27] I think governments have got to answer, the federal government has to answer the one question, what are you going to do to control extreme rises in rents as a result of this policy, which logically is likely to happen?
[15:44] What are the policies that are designed to offset the potential for extreme rises in rents with a sharp drop, potentially a sharp drop in investment properties coming into the market?
[15:56] Yeah.
[15:56] Yeah.
[15:57] Well, on that note, Doc, thank you for looking into that.
[16:00] I think that was a bit of a change of pace.
[16:02] Yes, it was.
[16:03] Answer the question.
[16:04] But I think it was good.
[16:05] I think it was good.
[16:05] Let's get cracking on your slides because we do have a bit to talk about in some of those as well.
[16:11] So it's July.
[16:12] Happy winter to everybody.
[16:13] It's the middle of the month here.
[16:15] Well, everywhere it's the middle of the month.
[16:17] But it is the middle of winter, which means actually we're sort of moving into the period where it does get a little warmer.
[16:24] Welcome in some capitals, I guess, getting warmer because it's been pretty cold.
[16:28] But it's also the same story in the housing market, that this is typically the midpoint of the cycle in terms of the seasonal cycle.
[16:37] We always have quieter housing markets through July and into August.
[16:41] It's got nothing to do with the weather.
[16:43] It's because we have a very significant autumn selling season where people act the plans that they made over the Christmas break, buying and selling, and that usually takes about six months to start.
[16:54] to end and then we have our mid-year pause and then people start thinking about, hey, I want to buy and sell before Christmas.
[17:00] Yeah.
[17:01] And then we get the spring selling season as a result.
[17:03] And we usually start to see a revival in the middle of August.
[17:08] So this year, of course, we've had the winter selling season, usually the quiet part of the year, exacerbated by these government policies that have been introduced and, again, we've had the winter selling season,
[17:20] And that comes off the back of three consecutive interest rate increases.
[17:23] So, of course, it was going to mean that we will have a more subdued winter market.
[17:28] And we're seeing that.
[17:29] But it's interesting, Rachel, that if we look back 12 months, we're the complete opposite.
[17:35] Yeah.
[17:35] We had a raging midwinter housing market.
[17:38] We had clearance rates in capital cities pushing up towards 80%.
[17:43] Prices were just going through the roof in most capital city markets.
[17:47] So it was the complete opposite, which just shows you how markets can drive their way even through seasonal constraints.
[17:54] So here we are.
[17:56] Here we are.
[17:56] And, of course, you know, we've seen it all before.
[17:59] And I've got some slides today which I want to look at in terms of where we did have previous periods of interest rate increases and what happened to the market as a result of that.
[18:10] But we're all now waiting for...
[18:13] the August revival, which comes every year, just as the blossoms come out in Melbourne in spring.
[18:20] And we're looking for the spring revival in the housing market.
[18:24] So maybe, and I'm probably getting a bit ahead of myself here, but I'll take a chance.
[18:28] But we are starting to see a couple of markets maybe showing some quite early signs of changing from the down down to maybe at least flat.
[18:38] and thinking about rising again.
[18:40] Yeah, we're seeing that in your data, which we'll talk through today.
[18:43] It's good to see that some of those markets are on.
[18:45] Well, we can talk to that because it reinforces the fact that it is a cycle.
[18:48] Yeah.
[18:49] And as we've always known and I've always said that winter is usually the best time to buy.
[18:54] Yeah.
[18:54] Because a couple of factors...
[18:57] there's a much higher proportion of non-discretionary sellers in the marketplace.
[19:03] Because it is the low point of the season, because it's a distracted market, you still get those that have to get into the market, those, you know, divorce, death, changing jobs, these sort of things.
[19:14] So you do get a lot of non-discretionary sellers in the market.
[19:17] So that's a good time to negotiate if you're a buyer.
[19:19] Yeah.
[19:20] But you also have fewer listings to choose from.
[19:23] So it's six of one, half a dozen of the other.
[19:25] So it's a bit of that scenario here.
[19:27] but exacerbated by, you know, the issue with confidence.
[19:31] And, of course, you know, there's a lot of negative headlines around, particularly given that we're seeing the results of lower house prices.
[19:39] Got to remember, 25% over three years, the national house, capital city house price is up.
[19:44] which is a tremendous result.
[19:46] Some capital cities have recorded spectacular growth.
[19:49] Perth, Brisbane, Adelaide have all recorded nearly 30% plus growth over the past three years.
[19:57] So what we're looking for here is the green shoots, Rachel.
[20:01] Are there any green shoots out there?
[20:03] Well, we'll look for it.
[20:04] But we'll have a look firstly at the data that's come through over the past month, which sort of reinforces our notion of how our housing market's performing.
[20:12] So the latest housing market news, we look, as usual, as rents and prices, our auction markets, the home building environment.
[20:19] Of course, the economy.
[20:20] It's interesting this month we haven't had an interest rate decision from the RBA because I guess they don't like the cold weather.
[20:28] No, they're off on holidays, but we certainly only have those eight decisions this year.
[20:33] Yeah.
[20:33] We used to have 11.
[20:35] We only have eight.
[20:37] And we have no decisions in July, which is interesting, you know, given that we've got a lot of concern, particularly over inflation, particularly over oil, that it might be an opportune time for the Reserve Bank to be...
[20:53] meeting and looking at just the prospects for inflation.
[20:55] But that'll come, of course, in August.
[20:57] Well, that's why there'll be a little scrutiny for them in August.
[20:59] In August, that's right.
[20:59] But what it goes is it goes from an environment where everybody's, yeah, okay, there's no interest rate decision to everybody.
[21:05] Oh, we've got to really watch this.
[21:06] So it emphasises, it amplifies the decision of the Reserve Bank in August, particularly given, which we'll look at shortly, that the latest inflation data was a little bit mixed.
[21:17] Yeah.
[21:17] And that we have another inflation number to come out at the end of July.
[21:22] And also, unfortunately, we're seeing more upward pressure on the price of oil because Arada and the US are back at it again.
[21:29] Yeah.
[21:30] Our treaty didn't quite go to a plan.
[21:33] But, I mean, we sort of said there were risks here and we've just sort of got to wait.
[21:37] At least we have a scenario where we saw that it did improve.
[21:41] And hopefully that'll happen again.
[21:42] But, you know, who knows going forward?
[21:44] So I've got all that data to look at and let's get started.
[21:47] So the economy, of course, no interest rates.
[21:50] But the last meeting, the Reserve Bank said that they were pretty happy where rates were.
[21:54] So they were likely to keep them on hold.
[21:57] Obviously, they're going to be on hold over July because there's no meeting.
[22:01] They're also making some comments regarding
[22:03] the economy, which I think reflected on the labour market.
[22:08] And we did have a bit of an ordinary labour market result over April, where we saw the unemployment rate rise to its highest level in a couple of years.
[22:17] But we've got the latest unemployment rate number, which was released just over recent days, and that actually showed an improvement following up from the improvement that we got in May.
[22:29] So official rates were steady, as we know.
[22:31] There's our interest rate cycle.
[22:32] Looks a bit funny.
[22:33] doesn't it, Rachel?
[22:34] There's like that big hole there.
[22:36] What's going on?
[22:38] But I think the one thing about where interest rates have been, Rachel, is that it gives us a sign that if and when we can get, you know, a control of inflation, if the oil price starts to be managed, that's where we're going back to, where those rates were at the beginning of 2025.
[22:56] So it's actually a bit of a target.
[22:58] And I think those that were, you know, that are wise and are attuned to that will realise that there's still probably a pretty fair chance of interest rate relief in the foreseeable future.
[23:08] Fingers crossed on what happens to inflation, because the Reserve Bank has already shown us where it wants to go with interest rates once it feels inflation is under control, which it did feel it was a year ago or 18 months ago, but it was wrong.
[23:22] So, as I said, inflation is an important part of that, obviously an important part of that decision.
[23:28] So let's have a look at the latest inflation data.
[23:31] So this is the May inflation data, Rachel.
[23:34] We'll get the June data, as I said, soon.
[23:38] But this is the latest data.
[23:39] It was up and down because headline inflation actually fell from 4.2% to 4%.
[23:45] Now headline inflation covers everything, everything we buy.
[23:47] But the Reserve Bank looks at what it calls underlying inflation, which takes out the volatile elements.
[23:54] So underlying inflation or headline inflation actually included electricity and oil, which actually fell over the year because this is the yearly change in prices.
[24:04] It actually fell.
[24:05] So that gave us a better headline inflation rate, but the underlying inflation rate, it
[24:13] increased.
[24:14] And that's the measure that the Reserve Bank uses.
[24:16] So we've got to be a little bit nervous about this.
[24:19] And that's why it's important to wait what occurs to see with the June numbers that are out very shortly.
[24:25] So 3.6% underlying inflation, up from 3.4%.
[24:30] And that's the highest since July 2004.
[24:32] So the Reserve Bank's going to be looking at that.
[24:36] And I would suggest they would need an improvement on that.
[24:41] with the June numbers, as I said, out shortly, to start to have less perhaps potential for a higher interest rate.
[24:48] But, of course, with oil still rising now, they may join the dots going forward.
[24:53] But that's why it's very important.
[24:55] that we've, you know, sort of focused on that, the next inflation data.
[25:01] So as I said, the headline result reflected an improvement in electricity prices.
[25:06] I mean, it's a bit, I'm saying improvement.
[25:08] It had an annual rise over April of 22.5% and went down to 21.1%.
[25:15] So is that good news or is it good, bad news?
[25:17] You know what I mean?
[25:18] It's like 21%.
[25:19] Yeah, well, that's better than the previous month's annual increase, but it's still not good.
[25:23] And oil actually fell over the month and that went down to 7.7% over the year compared to the previous month's 18.6%, which was driven by that first surge in oil that we had when the Iran-US issues started.
[25:39] But the other end which pushed up underlying inflation was that rental growth was higher.
[25:43] Now, we've already discussed rental growth.
[25:45] The ABS is now reporting higher rental growth already.
[25:48] And it didn't take long.
[25:50] That's also what's quite interesting.
[25:51] That is interesting.
[25:52] The budget was only announced in May, so it didn't take long at all.
[25:56] And the thing with the ABS data is it covers all rents.
[25:59] Yeah.
[26:00] So what we look at here is rents at the coalface.
[26:03] They're asking rents.
[26:04] Yeah.
[26:05] So that's what's coming through every day in new rentals.
[26:08] So that shows the energy in the new rental market.
[26:11] But the ABS covers all the other rents, the whole rental market, which includes properties that are on lease.
[26:17] And that usually takes longer to reflect what's happening in the existing market or the new listings market.
[26:25] But they're already starting to consistently report higher rents in their rent among 3.6%.
[26:31] New dwelling prices, again, that's the cost of house building, again, up from 4.7% to quite a strong 5.6%.
[26:40] It's a little different to what we're reporting.
[26:42] We actually reported some easing in new house construction costs, but still that's what's pushed up the underlying rate, which is still well ahead of obviously highest since July 2024.
[26:52] and well ahead of the target range of 2% to 3%.
[26:55] So this is the most important slide probably we're going to look at, is the inflation data is not good going forward.
[27:04] You see, the Reserve Bank could have made a statement if they had a July meeting regarding this data, but now we're going to have to wait for the next inflation data and then get the result of that in terms of what the RBA is thinking for interest rates.
[27:20] So there's the measure.
[27:20] We can see there we've never really got to that target point, which is the gold dotted line there.
[27:26] That's the underlying inflation target for the Reserve Bank, the midpoint.
[27:31] And if we look at the end of that, we can see the trend is now rising above the mid-three.
[27:36] So watch out for that.
[27:38] Electricity, we can see that electricity and fuel actually went in the right direction, downwards, but rents and new home prices, new house prices, costs, sorry, went upwards and that pushed underlying inflation upwards as well.
[27:55] But underlying inflation was down to 4%.
[27:59] We know the story with electricity.
[28:01] We had the subsidy.
[28:03] It came along in the middle of 24, pushed electricity prices down.
[28:07] Thank you.
[28:07] And this is another lesson in the government pace, paying for housing, we're going to pay your electricity bill, but we can't do it forever.
[28:14] We give you these schemes and these subsidies.
[28:16] That's right.
[28:16] We can't do it forever.
[28:18] So sorry, we paid it for a year, which just happened to coincide with the beginning of the election cycle.
[28:24] Funny that.
[28:26] Right, but then halfway through, oh, well, we can't pay it anymore because it's costing us an arm and a leg and we've got to put taxation money into something else.
[28:33] So as soon as the subsidies started to wear out, look what happened at electricity prices and look what happened to inflation and that started to rise as well.
[28:41] So, you know, beware the gift, you know, and the gift from the government was great to start with and it did relate to, I believe, cynically what was happening in the election cycle.
[28:54] Because I think if a lot of people knew these numbers at the time, they were getting those subsidies, we probably would have said don't give them to us.
[29:00] Well, you've got to pay it back now.
[29:01] Yeah, exactly.
[29:02] I mean, electricity is still rising way above what it was projected to rise when we were doing the transition from the carbon economy into the renewables economy.
[29:10] Yeah.
[29:10] It's taken longer and costing more.
[29:12] Okay, we've had a nice little bit of relief maybe which helped the Labor government get re-elected.
[29:18] But we've got to look back.
[29:19] beyond.
[29:20] But we're paying for it now.
[29:21] Exactly.
[29:22] 21% increase over the last 12 months in electricity prices.
[29:25] That's why we encourage this critical thinking.
[29:27] You've got to look beyond what they're telling us to get elected.
[29:30] There's no such thing as a free gift, right?
[29:33] Exactly.
[29:33] Okay.
[29:34] So that's the story with electricity and that reflected, of course, what happened with interest rates at the time.
[29:40] They went down, yeah, whoopee, and then they've gone back up again, not so whoopee going forward.
[29:45] Yeah.
[29:46] Now, this is the big one.
[29:47] We saw a big change, and this is what's changed over the last month since we did our last podcast, Rachel.
[29:53] We saw a big fall in the oil price as the, I guess it was a peace treaty per se,
[30:01] was agreed to between Iran and the US.
[30:05] But now we're back in town in terms of another revitalisation of that war and we can see how the price of oil has picked up again.
[30:13] So we've just got the fingers crossed that that doesn't last too long, but we can see what happens when there is some resolution.
[30:20] We do see quite a sharp decline in the price of oil.
[30:24] And look, you know, Rachel, when we did see that, it went from doom and gloom, oil crisis, et cetera,
[30:30] The predictions were that we were going to have an oil glut next year.
[30:34] So what?
[30:35] Hang on.
[30:36] One day it's a shortage and we're going to be paying, you know, whatever.
[30:41] Yeah, that's right.
[30:42] And then it's like, oh, no, we've got an oil glut.
[30:43] Way too much oil.
[30:44] Oil, anybody get some free oil.
[30:46] Get your free oil, right?
[30:47] And now obviously we're getting some more.
[30:49] Not as much the negative headlines this time because I guess those doom and gloomers don't want to have their fingers caught twice.
[30:55] I don't think they care really.
[30:56] Yeah.
[30:57] going forward.
[30:57] So that's the oil story.
[30:59] We're looking for some, and again, the Armageddon headlines that we always look at that reflect that the media is after clickbait and that's how they get it.
[31:09] They forecast the end of the world today.
[31:10] Oh, no, it's not on today, but you wait till next week.
[31:13] We're going to get the end of the world, and that's what we're in at the moment.
[31:16] Yeah.
[31:17] So we saw that the unemployment rate had bounced around a bit this year, Rachel.
[31:22] We saw in April that the unemployment rate actually rose to its highest level in some time.
[31:26] And that gave us some indication that maybe the Reserve Bank wasn't just going to look at the inflation data.
[31:32] They had to start looking at the economy in terms of inflation.
[31:35] the unemployment rate because their mandate is to provide full employment as well as controlling inflation, right?
[31:42] And it just started to say, well, yeah, we've had a great labour market for a number of years now and just started to look like it was losing a little bit of its energy.
[31:51] But then it bounced back strongly over May and, of course, the latest June data has reinforced that because the unemployment data for June, which was released just a couple of days ago, steady at 4.4%, a good low number,
[32:05] Look at the increased number of jobs.
[32:07] 76,000 increased in the number of people in work.
[32:12] Unemployed was up also.
[32:13] That's not as good, obviously.
[32:15] But the balance between those finding work and losing work is certainly well in favour of a steady unemployment rate.
[32:22] And the participation rate actually went up as well.
[32:24] And that measures the proportion of people in the population who have work up to 67%.
[32:29] So good news on the labour market.
[32:33] which means the Reserve Bank can focus on inflation,
[32:36] Not sure about that.
[32:39] But whatever it is, at least we don't have generally concerns over the condition of the economy in terms of the labour market, which is a good thing because I'm always a great believer that the labour market is really the key to the success of Australia's housing market.
[32:56] Because once you start getting higher unemployment, people obviously are concerned about job security, not just losing their jobs.
[33:03] And that puts downward pressure on incomes.
[33:05] And, of course, you're not going to be buying a house if you've got...
[33:07] Slower spending.
[33:08] Yeah, all those sort of bits and pieces.
[33:09] But we don't have to worry about that.
[33:11] It's still, at this point, it's still a strong economy.
[33:14] And we can see that the unemployment rate is reasonably steady over the past 12 months.
[33:19] And at lower levels than we've seen...
[33:23] lower levels than we've seen generally and similar levels to previous very strong periods in our economy, such as the mining boom of the 2000s and the mining boom of the early 2010s.
[33:36] So, and the participation rate, which is an important measure, also is high, historically high compared to other periods of strong economic activity.
[33:47] Yeah, New South Wales was actually the best performer over the month in terms of the lowest unemployment rate, 4%.
[33:54] But Victoria continues to lead in terms of the highest unemployment rates, 5.1%.
[34:01] That's the first time Victoria's been over 5% for some time.
[34:05] So interesting comparisons there.
[34:08] GDP is still quite strong.
[34:10] So along with good numbers on the labour market, our gross domestic product, and this is looking backwards a bit, March quarter, is still quite good.
[34:20] Where are rates going to go?
[34:21] I think really we have to wait for that latest inflation data.
[34:25] We've already discussed a little bit of concern over the last inflation data.
[34:29] We're looking to the next one, no meeting.
[34:31] in July, but we will have one in August imminent.
[34:35] So we need to watch out for that latest data to determine how the Reserve Bank will jump.
[34:42] Let's hope it's a better number than we had for May.
[34:46] But at the moment, they're certainly saying that
[34:50] with their last meeting that they're pretty happy where the interest rates are at the moment.
[34:57] But watch this space.
[34:58] Well, it's interesting to see we've had quite a few banks start decreasing interest rates a little bit.
[35:02] So it's interesting that they're probably feeling the same way, that maybe we won't have that rise at the next meeting.
[35:08] Yeah, and I also saw there was, which is more in your space, that people are starting to lock in term deposits on those higher numbers over one and two years.
[35:19] in anticipation that this might be the peak of the interest rate cycle, which, as I said, we've already alluded to because we've seen last year they went down over three months when the Reserve Bank was happy that inflation was under control.
[35:33] So that's sort of a bit of a look into the future once we can, fingers crossed, get inflation under control.
[35:38] I think people have sort of taken that as, well, maybe it's a good time to lock in one of those longer-term deposit rates.
[35:45] Yeah.
[35:48] But as I said, it's a wait-and-see approach over the future.
[35:53] So home building, no good news here.
[35:55] Again, home building was lower over May following the fall in April.
[36:01] Units were down.
[36:02] That really dragged it up.
[36:03] The trend that we're starting to see now, Rachel, is an improvement in house building approvals, which is quite interesting, particularly in terms of some of the booming housing markets, states and capitals.
[36:16] So let's have a look.
[36:17] Units down over the month.
[36:18] The year-to-date units are just flat now, but there's still very strong unit development over the full year-on-year comparisons.
[36:25] But we are seeing that surge that happened last year now starting to diminish.
[36:29] And that shows the trend's just really flattened in terms of national housing building approvals.
[36:36] Still higher than where it was a year ago, but nothing to get too excited about, really, in terms of resupplying our undersupplied market.
[36:43] And you can see how it's become very volatile, that unit trend, the unit building approvals and houses just picking up a little bit.
[36:50] I think the state breakdowns are really interesting, as usual, Rachel, because we're seeing, if we look across to Perth there, look how many houses were approved for building in Perth over the year to date compared to the same period last year.
[37:03] It's the second highest amongst all the capital city markets, the Perth market for house building approvals.
[37:10] Yeah.
[37:11] And also Brisbane, quite a solid number there in terms of house building approvals.
[37:16] But the interesting thing is when we look at the percentage changes, this is the percentage over the year to date compared to the same period last year.
[37:25] Brisbane up 25% the number of houses up.
[37:28] approved for building and Perth up 20%.
[37:31] And Sydney also 17.4%.
[37:32] So some good news there for house building approvals.
[37:37] And for Brisbane also, when we look at units, look how Brisbane units have surged, Rachel, over this year to date versus the previous year, up 40%.
[37:45] But Sydney down 17.4% and Melbourne down 1.6%.
[37:50] That's now offsetting that really big surge we had at the beginning of last year out of Melbourne and Sydney, which came from an expedited policies from those state governments for unit approvals, multi-density approvals.
[38:02] So quite interesting then that the boom states of, well, the boom capital cities of Brisbane and Perth are certainly activating more supply coming through because there's plenty of demand for that.
[38:13] So this is the big picture.
[38:14] It shows how we've lost a lot of new development on the trend compared to our previous peak.
[38:20] Overall, capital city is down 24%.
[38:22] And units there, that's the black column of houses, but units are the background, a lighter colour, still down by 41% unit building approvals over the year trend compared to the peak way back in 2015, 16.
[38:38] We're just not building enough.
[38:39] Rachel, we know that.
[38:41] Everybody knows that.
[38:42] Unfortunately, the solutions are not there.
[38:44] So the government particularly is starting to look at other ways of, you know, interfering.
[38:50] House building costs, we've just seen with ABS, they were reporting some higher building costs consistently.
[38:56] We actually saw a little bit of a levelling off with our model over the three months to May.
[39:02] And the actual rise in house building costs down to 2.7%.
[39:06] which is certainly an improvement and will be welcomed by house builders because that has been a constraint to producing more houses.
[39:15] More new houses has been the high cost of building.
[39:19] Land prices, interestingly, just quickly, Rachel, when we look at house prices, this is building blocks for houses.
[39:26] We're still seeing a very big increase, particularly in the boom states, Brisbane,
[39:30] Adelaide and Perth house building costs are increasing.
[39:33] But what's interesting here, the latest data is showing us actually that the
[39:38] The rate of increase has diminished slightly in terms of the median price growth.
[39:44] It's still growing.
[39:45] But what's happening is we're seeing smaller building blocks coming through.
[39:49] So developers are saying, okay, well, you know, we can get people to buy smaller building blocks because there's so much demand, prices are skyrocketing, and the actual, the dollar per square metre value of land, look at it in Sydney, it's $2,285 per square.
[40:04] for a square metre of land for a building block, and that's rising sharply.
[40:09] Which is almost like double the rest of the state.
[40:11] That's right, double the rest.
[40:12] So, you know, that dirt is very, very valuable in Sydney, but it's valuable everywhere else as well, and that's been the change.
[40:19] And we mentioned the target.
[40:20] It's down around about 30% that year.
[40:22] target the government set a couple of years ago.
[40:25] So I guess it's about don't talk about the war.
[40:28] Don't talk about supply to the government.
[40:30] We'll talk about other things like those rotten investors.
[40:33] We'll get rid of them before we build any new houses, I guess that's what we could say.
[40:37] So we've already discussed rents, the latest rental data, no joy there.
[40:40] Look at Sydney up 2.9% over the month.
[40:43] The median asking rent for a house in Sydney is 875.
[40:46] Melbourne also up 1.7%.
[40:51] Sydney's now starting to push up near 10% growth in house rents.
[40:55] Unit rents, similar story.
[40:56] Melbourne, unit rents up 6.8%, Rachel, over the month and over the year, 5.9%.
[41:03] Sydney unit rents also pushing up towards a 10% growth.
[41:07] So...
[41:07] Some really bad news there for tenants and we're seeing that not just with our data but with the ABS data as well.
[41:14] And of course, as usual, if you're looking for a copy of our latest rent report, there it is.
[41:18] And we've looked at this chart before and this shows the relationships between rental listings and rents.
[41:27] as a trend and you can see how that gap is now widening, which we would expect between rents rising.
[41:33] You see how rents are rising there at the end, Rachel?
[41:35] That's a very sharp increase.
[41:37] Yeah.
[41:37] Well, we're seeing less rental supply.
[41:39] And see how supply has fallen away, eased a little bit.
[41:43] But, of course, the future is, and we've already discussed, fewer rental listings.
[41:47] What's going to happen to that chart for rent already increasing sharply?
[41:51] I mean, this is the big question.
[41:52] Because we're seeing some investors are getting scared and there are some wanting to sell these properties before the new CGT
[41:59] indexation model comes in on the 1st of July, 2027.
[42:03] So for their, you know, getting rid of the tenants so they can put it on the market, that's where we're seeing that shortage of rental supply now and the unintended consequence is the rents going up.
[42:13] Yeah, and what's going to happen in the future?
[42:14] And the question is to the government, what are you going to do about this?
[42:18] Please, not just...
[42:20] platitudes and truism.
[42:21] But do we want them involved in that?
[42:22] Well, we don't, of course not.
[42:23] We don't want them involved in anything, really.
[42:25] I mean, it's good to help the people who are marginalised in our housing market, and Australia's have always done that, and it's good to give some incentive to first-home buyers.
[42:33] We've always done that, well, since Bob Hawke started it way back when.
[42:37] Are we pushing too much?
[42:39] Well, that's the point now.
[42:40] You're getting government involvement directly in the housing market in a broader scale and starting to mix around the taxation system in a system that's worked for our housing market to create that generational wealth.
[42:54] You know, from the 50s onwards, well, certainly the baby boomers took advantage of changes that were made in later years to government policy, taxation policy.
[43:03] So, you know, beware the law of unintended consequences and, you know, don't fix it if it ain't broken, you know.
[43:11] And so going forward, we'll see what the consequences are.
[43:14] But that, to me, is a sobering chart in terms of the outlook for the housing market.
[43:19] And again, what's the government going to do to offset what will likely be even more increases in rents?
[43:27] Yeah.
[43:27] And that could create, depending on the results of that question and policy issues, that could create an even bigger slippery slope going forward for the housing market.
[43:39] So let's have a look at the latest home price data.
[43:41] Of course, we had a boom last year, but that's ended.
[43:43] We're starting to see the cyclical downturn, not just higher interest rates, not just confidence lacking from those new government policies that we've discussed in depth, but also it's winter.
[43:53] And we would expect to see a more distracted market.
[43:56] Sydney and Melbourne have led the charge downwards.
[43:58] We'll look at the daily prices in a minute.
[44:00] Rachel, which are even more sobering, as you would expect.
[44:03] But this is the latest data for our house prices there, both units and houses, but particularly houses, suffering more than units.
[44:13] If you want to get a copy of our latest house and unit price report, there it is so you can get a look at that in some depth.
[44:21] So let's have a look at what's happening today with our housing market.
[44:24] This is what really surprised me, Rachel, actually.
[44:26] And that was the decline in the Sydney market.
[44:28] So these are daily, quarterly house prices.
[44:30] If you understand, this is what the house price is on a day-by-day basis going back to yesterday.
[44:38] And we can see there that's the Sydney market, which has really fallen in a hole.
[44:42] this year so far.
[44:44] It's a bit of a surprise because it's usually one of the more, I guess, structurally stable markets, but we'll see how that works its way out.
[44:50] Melbourne market likewise.
[44:52] But if we just look at the end of that chart, Rachel, is that a little base starting to fall?
[44:57] Yeah, this is a little baby jump.
[44:59] A little base.
[45:00] A little baby base.
[45:02] And we can not just say, okay, well, we're being a little bit optimistic here, but we've got some supporting data from that.
[45:08] We've
[45:09] we'll look at very quickly.
[45:10] But like we always talk about with property being cyclical, we're now seeing a market in Melbourne that maybe is more affordable.
[45:16] And we saw what happened in birth.
[45:17] Yeah, it was a very affordable market.
[45:19] For a long time.
[45:20] Yeah.
[45:20] And then people woke up eventually.
[45:23] And that market has been Australia's strongest market in terms of prices growth for the last 12 months.
[45:28] So that's Melbourne just starting to show maybe those Melburnians are, you know, a little bit more savvy than the other markets.
[45:36] But Melbourne, Brisbane, it's also just, and we saw that with the data, just eased a little bit the Brisbane market.
[45:43] after a massive increase over the past two years.
[45:45] Look how strong that market has been.
[45:47] Just starting to go a little bit sideways, but that's what we would expect, not only winter, but also those interest rates and changes to taxation policies.
[45:55] Perth market, similar story there.
[45:57] Sorry, that's Adelaide.
[45:58] Similar story to Perth and Brisbane.
[46:01] We'll look at Perth now.
[46:02] And there's Perth, yep, just flattening out a little bit.
[46:05] But you can see that was the strongest market over the past 12 months, a very strong incline in house prices.
[46:11] So you can see the effects there of those factors that we've discussed.
[46:15] Now, Sydney units actually are a lot better than houses.
[46:18] So Sydney units are actually standing up quite well.
[46:22] And so are Melbourne units, Rachel, which have really just been flattening for most of this year.
[46:26] Despite what we saw for houses, Melbourne units are really standing up quite strongly.
[46:32] And Brisbane units also flattening.
[46:33] As I said, this is part of the cycle, part of the mechanisms that are pushing prices sideways and pushing buyers out of the market.
[46:39] But even Brisbane units, which have been spectacularly strong, are starting to move into pause mode now.
[46:46] So weekly auction markets as usual.
[46:49] We follow our auction markets because auction clearance rates follow house prices.
[46:54] So it's always good to view them on a weekly basis because they tell us how the underlying strength of the housing market is.
[47:01] So that's Sydney versus Sydney.
[47:03] House prices versus clearance rates.
[47:04] Same deal with Melbourne.
[47:05] You can see how clearance rates have fallen this year and so have house prices.
[47:09] So the latest results.
[47:11] This is interesting, Rachel.
[47:13] Now, dare I say it, but early signs of improvement continue in midwinter home markets, particularly in...
[47:20] Adelaide and Sydney.
[47:22] Sorry, Adelaide and Melbourne, not Sydney.
[47:24] There was a lot of doom and gloom around the auction market for the few months after the budget announcement.
[47:29] Absolutely.
[47:29] Yeah.
[47:30] But it's just starting to look.
[47:32] And maybe, because we did say here, the winter market has come early this year.
[47:36] Yeah.
[47:36] Maybe the spring market's going to come early for some, you know, in a sense.
[47:41] That's where it's interesting to say we can't see those small periods as like that's a permanent change to buy a sentiment, right?
[47:48] It was a wait and see for a lot of people but now we're starting to see, like you're saying, early signs of improving.
[47:54] Yeah, well, the good news is always, oh, yeah, I knew that.
[47:57] The bad news is, oh, it's going to last forever.
[47:59] You know what I mean?
[48:00] It's like, you know, people focus on this not changing, not getting better.
[48:05] Yeah.
[48:05] Whereas when the good news is, oh, it's going to keep rising.
[48:08] Yeah.
[48:08] You know, that sort of thing, in a sense.
[48:11] But so let's have a look at the results.
[48:13] Sydney, a big fall in Sydney, 54.2% clearance rate.
[48:16] And this reflects what we saw in the prices, Rachel.
[48:19] So that's the lowest this year so far for Sydney, a clearance rate.
[48:22] Auction numbers round about the same.
[48:24] And around about what we expect in winter for auction numbers in Sydney.
[48:27] But look at the clearance rate a year ago in Sydney, 75.7% mid-winter clearance rate.
[48:33] That's crazy.
[48:34] But that just shows you how the cycle implements the seasonal factors.
[48:39] But Melbourne, have a look, Melbourne, 61.5, it actually improved.
[48:44] And that was back-to-back 60% clearance rates for Melbourne.
[48:47] And that's the highest clearance rate Melbourne has had since May, you know, before all the negative stuff started to implement the market.
[48:55] So some really positive news there for Melbourne.
[48:58] So let's obviously wait and see what the following weeks bring.
[49:01] But certainly good news there for Melbourne.
[49:03] Brisbane up a little bit.
[49:04] It's had some really low clearance rate, Brisbane.
[49:09] is an atypical auction market.
[49:11] Yeah.
[49:12] So this is no surprise because, as we've seen from the charts, Brisbane market, yes, flattening, but still plenty of buying activity happening there.
[49:19] But they're probably more inclined to go for private sales rather than auctions in this type of a subdued atmosphere.
[49:25] Adelaide up a little bit too into the mid-50s for Adelaide, but well down on where it was a year ago and higher listing numbers.
[49:33] And Canberra pretty consistent but certainly low.
[49:36] But I think the real news out of that,
[49:38] which is the, you know, we need to put a watch on, is the Melbourne market particularly.
[49:43] Is the Melbourne market now starting to show?
[49:46] We call them, what comes before green shoots?
[49:48] Seeds?
[49:50] I don't know, but it's a tiny little green shoot in that Melbourne market.
[49:54] All right.
[49:54] We'll wait and see.
[49:55] We were planting and then, yeah.
[49:56] Well, it's always there.
[49:58] It's just we've got to wait for the warmth to generate some growth.
[50:04] So this is the Sydney market down and down.
[50:07] That's the average clearance rate.
[50:10] It's falling over July compared to June so far.
[50:15] But look at Melbourne.
[50:16] It's actually higher over July than it was over June.
[50:20] And as I said, those clearance rates that we've seen recently are higher than
[50:25] are the highest since May.
[50:26] So, again, the trends are positive for Melbourne.
[50:30] Brisbane, yeah, we've seen a very quiet July in Brisbane and June, very atypical clearance rates in Brisbane, but it is an atypical market.
[50:39] Adelaide down also, so they're all pretty much down except the Melbourne market.
[50:44] So I don't want to harp too much on that, but there's a clear sign there.
[50:48] If you're looking, of course, for those latest auction clearance rates, you go to my LinkedIn site, which is doc.com,
[50:52] Andrew Wilson at LinkedIn every 6 o'clock.
[50:55] Every Saturday at 6 o'clock you get the headline results and Sundays at 9 o'clock you get the full regional breakdowns for Sydney and Melbourne and the top 10 sales under the hammer over the week.
[51:05] So if you missed the latest report, there it is.
[51:07] You can get a QR code to get a copy of that latest report.
[51:10] So as usual, we've covered all these factors today.
[51:13] But the basic thing is we're still under supply for houses and land.
[51:17] House building costs are a little bit better, but they're still rising, particularly according to the ABS.
[51:22] Migration is lower, will remain high.
[51:24] Rental markets are tight.
[51:25] Rents are still rising and rising and rising.
[51:28] Significant first home buyer government policies in the marketplace create more demand, but chronically underperforming share market.
[51:36] Investor incentives still remain clearly for new homes with negative gearing.
[51:40] That's been offset to try to improve supply.
[51:42] We still have, you know, a strong aspiration for home ownership and investment.
[51:48] Please, if it's not broken, don't try to fix it.
[51:50] And, you know, the underlying truth of our housing market has its work for just about everybody and those it hasn't worked for are usually covered anyway in terms of, you know, marginalised potential home owners.
[52:04] Higher rates influence confidence in the short term and clearly provide buy opportunities.
[52:11] Maybe we're seeing that.
[52:12] emerging in Melbourne.
[52:13] Governments are at risk from that, what I'd call, housing socialism, the unintended consequences we've discussed.
[52:20] Incomes and wages are still rising.
[52:21] Support affordability as prices and rates rise.
[52:24] And as we've said before, Rachel, the strong economy is a fundamental driver of housing markets.
[52:29] This is the long-term story for Australia's house prices.
[52:33] We show this every month.
[52:36] And, of course, it shows the worst we did was 5.5% in terms of the loss.
[52:40] of capital city house prices, and that was in 2018.
[52:43] You can see that 25% increase over the past...
[52:48] three years, I still think that we will be in the black this year.
[52:54] But there is a lot of water to go under the bridge, and particularly in relation to interest rates.
[53:01] We need to keep a key eye on what's happening with oil.
[53:04] And if we can get that underlying inflation back under control, the Reserve Bank might have some Christmas presents for Australia's home mortgage payers.
[53:13] What do you reckon?
[53:15] And this is the other chart that I wanted to show.
[53:17] Between May 22 and May 21,
[53:21] November 23, do you remember back that far, Rachel?
[53:25] Interest rates actually increased 13 times.
[53:28] Yeah.
[53:29] Say it again, 13 times, interest rates.
[53:31] So you can see that, see the gold line there, that's interest rate increases up and up and up and up.
[53:38] The black columns are house prices.
[53:41] You see how they've gone, obviously.
[53:43] It was a little steady but then it just shot up.
[53:45] Yeah, but it went down and down and down and down.
[53:48] Right.
[53:48] As interest rates went up and up and up.
[53:50] And we're used to that.
[53:51] Yeah.
[53:52] But look, interest rates keep going up and up and up and up.
[53:55] And what's happening to house prices?
[53:57] They start to go up and up and up and up.
[53:59] So it's not a truism that interest rates in the short term, yes, because of the influence on confidence.
[54:05] Yeah.
[54:07] impact house prices.
[54:08] But as you can see there, that confidence returns.
[54:12] And then people start saying, hey, you know, it's not a bad time to buy.
[54:15] And then it turns into, gee, I wish I had have bought that.
[54:18] Yeah.
[54:18] You know, that's to say, God, I remember when I could have bought that for, you know, blah, blah, blah.
[54:23] But that's.
[54:24] what confidence is about.
[54:25] It has to build on something, bravery, whatever you want to call it.
[54:28] But it has to be really built on the real confidence, and that's the confidence in the long-term performance of Australia's housing markets, which history clearly shows us, which we saw before going forward.
[54:39] So we've mentioned the share market.
[54:40] This is the latest data showing that Australia's share market has clearly, like what...
[54:47] The Prime Minister has said in relation to other asset classes, we're talking about superannuation, particularly being involved in home purchases, investment, but all of them is up just 36.2% since way back in the end of 2007.
[55:03] Sydney house prices are even adjusting for the falls that they've had over the past month or so, still up 195%.
[55:09] And it's not just share markets because the Dow up by...
[55:17] pushing up towards 300% increase in the share values in the US, even a term deposit up 80% over that time.
[55:23] So just reinforcing the value of that asset class.
[55:27] And our little saying goes, as usual...
[55:31] That fear and ignorance remain the curse of Australian housing markets.
[55:34] We're getting a lot of fear and ignorance at the moment, Rachel.
[55:37] So except for those that maybe in some parts of the market early days are rationalising on that fear it generates and getting into the market at the right time.
[55:47] Yeah.
[55:47] in terms of the downturn.
[55:49] And, of course, there is nothing to fear but fear itself, which is what we say all the time.
[55:52] But we must be alert to changes that are occurring and to make rational insights into that and opportunities knocking on the door, as usual, at this time.
[56:02] But we are into a period, because of these significant changes to the mix of our housing, not just taxation, but housing,
[56:10] other factors that the government is trying to change the market and it will play itself out sooner rather than later.
[56:17] This is a copy of the whole file if you want all the slides there, a QR code, and that's it.
[56:22] That's it.
[56:23] That was a huge July monthly market update.
[56:26] There was a lot to talk about.
[56:27] Yeah, but we have to present the data and it's a bit repetitive, but I think people have to know that we're not just providing an opinion here, that it's evidence-based, that we're providing them with.
[56:37] If they want to argue, some people want to,
[56:39] take a positive view.
[56:40] Some people want to take a negative view.
[56:41] But if you've got the data that supports your view one way or the other, at least you can say, well, that reflects that.
[56:48] And if you're wrong, it's because the data's wrong or the data's changed, right?
[56:54] And I think that's the big picture from today is what are the consequences for the rental market with these changes to taxation?
[57:02] That's a longer-term journey.
[57:04] But I think the shorter-term journey is what is going to happen to inflation.
[57:08] What is the Reserve Bank going to do in its next meeting?
[57:11] And what's the inflation numbers that will be coming out shortly, the June inflation numbers?
[57:17] And, you know, fingers crossed that the price of oil starts to head downwards again.
[57:22] Not as high as it was, so that's a positive sign.
[57:24] So it's less of a journey backwards.
[57:26] But interesting times in the market.
[57:28] This is a really interesting time because are we at the inflection point?
[57:33] Because that's the next thing that happens.
[57:35] Inflection point in the cycle is where it changes.
[57:38] Now, people can predict the trends and everybody's going to say, well, it's likely to be lower again.
[57:42] the July numbers for the housing market.
[57:45] But the real trick is to pick when it turns, right?
[57:48] And it's the same when it's on the upswing, when it picks.
[57:51] It's easy when interest rates are obviously increasing to pick that.
[57:55] So like I said, I wouldn't put it completely out of the question that we're getting a cut in interest rates this year sometime, but there's certainly a lot of factors that have to be positive between then and now.
[58:09] So I guess we'll see you next month, Rachel.
[58:14] Because we'll be filming after the August RBA meeting, so we'll have a bit to talk about after that.
[58:18] Yeah, yeah, yeah, yeah.
[58:19] And hopefully we're not talking about oil again, seriously.
[58:24] But, yeah, so I hope we keep everybody informed.
[58:27] And as we always say here, there's nothing to fear but fear itself and keep hope alive.
[58:34] And clickbait-free zone.
[58:36] Evidence-based opinions always.
[58:39] That's what you want from an expert, from experts, isn't it?
[58:43] Yep.
[58:43] Okay.
[58:44] Awesome.
[58:44] Well, that is a wrap on our Wilson Monthly Market Update for July.
[58:47] We will see you next month.

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