7 figure Attraction Agent
Tom Panos interviews leading real estate attraction agents. These agents share their strategies for writing 7 figures year after year. Simple, powerful and effective - you can apply these tips to grow your real estate business today. For more FREE tools visit: www.tompanos.com.au
7 figure Attraction Agent
Louis Christopher | How the RBA Rate Cut Impacts Agents & Homeowners
Louis Christopher, is one of Australia's most recognised and respected property analysts. He reveals:
00:00 - The impact of rate cuts on Australian real estate market
01:49 - Why Reserve Bank of Australia likely to cut interest rates again
05:35 - How population growth and rate cuts drive economic forecast
07:34 - Perth’s housing market outperforms amid Sydney and Melbourne
10:50 - Interest rates, rental market trends, and selling strategies
13:39 - Rising vacancy rates
15:27 - The potential impact of rate cuts and super access on the housing market
This webinar is sponsored by LocalAgentFinder
So good evening, good evening. I've got with me Louis Christopher, who is the head and owner of SQM, I would say one of the most accurate forecasters in the last couple of decades. In Australia, today's a big day because for the last couple of years we have been having rates going up and today rates went down, and I thought it was absolutely fitting to have Louis Christopher come in and actually talk about what he believes this will mean for the real estate market in Australia, by city, around the country. I want to let you know that this webinar is brought to you today by Local Agent Finder. Local Agent Finder, a big supplier of real estate support to the real estate industry but, more importantly, helping vendors across Australia make considered decisions when selecting an agent, and we know that there are a lot of people sitting on the sidelines at the moment. They have been waiting. These are potential vendors. They have been waiting. Louis, good evening and thank you for joining us in your family time on this. Is it Tuesday night? It is Tuesday night, it's.
Speaker 2:Tuesday night Tom.
Speaker 1:Sydney. I'm in New Zealand and I'm going to talk.
Speaker 2:You're in New Zealand. Okay, I'm in New.
Speaker 1:Zealand. Yes, I'm in New Zealand, so we're two hours. It's actually nine o'clock here. So, louis, I think we were expecting what was going to happen today, but we weren't expecting a month or two months ago that it would be happening so soon. This year, would you say.
Speaker 2:I think that's a very correct view. So just two months back we had not had the December quarter inflation results come out. When those numbers came out, which was just a few weeks ago, we had not had the December quarter inflation results come out. When those numbers came out, which was just a few weeks ago, it really showed very much a benign inflationary read for Australia. The quarterly change in the CPI was just 0.2% and that's a second quarter straight where the CPI only lifted by 0.2%. That means for the last six months, according to the ABS. I don't necessarily agree with it. Inflation has just increased by 0.4% and what this means is that the Reserve Bank now is at risk of undershooting on their inflationary target of 2% to 3% per annum. Now you can imagine that. Let's say that inflation does fall below 2% per annum and we're on track for that. It's not a very good look for the Reserve Bank of Australia to still have the cash rate running at, say, 4.35%.
Speaker 1:It was.
Speaker 2:The Reserve Bank of Australia really had to move today, because if they didn't move they would have egg on their face if inflation were to fall below their target range and they hadn't cut interest rates. What's interesting as well today is not the fact that they've announced the rate cut today. I think if you read the statement closely, they are essentially putting the word out there, reading between the lines they're going to cut again, and history does show us that when the RBA does change rates, they don't just do one rate change at a time. They often do a series of them at a time. So I think when they meet again which I think is the 1st of April, april Fool's Day they may well cut interest rates once again. There is a real chance that they're going to do this.
Speaker 1:Okay, so, Louis, that will make it half a percent. I mean in history, when rates history we saw, when rates go up, it appears you don't have a rate rise or a rate cut and then nothing happens for a year. It seems like there's a continuous, consistent, repeatable behaviour.
Speaker 2:That's exactly right. History has shown time and time again the RBA doesn't just do one move and then let it go. They will do a series of moves. So the probabilities are quite high I think they're greater than 50% that when they meet in April they will cut interest rates again. Now they are data dependent. I think there is another CPI number coming out before they meet again. If that number was to be a really bad result, then maybe they might just hold for a little bit. But I think that's unlikely. I think they're going to cut. So I think we can safely assume another rate cut Thereafter very much data dependent. They might just sit on their hands for the remainder of the year and we only get a 50 basis point cut in total until, say, 2026. But if that were the case anyway, we think that would be more than enough to start a rally in the housing market across the country. Okay.
Speaker 1:So, Louis, late last year you produced your report giving us four scenarios. When I spoke to you early on today, you've said to me you have now reduced it to one scenario. That's right Down to one. Yeah, it would be good if you could actually share it visually to help our viewers actually understand what you think is going to happen now.
Speaker 2:No problem, I'm going to do that right now. Let me know, can you see that?
Speaker 1:Yes, we can see it. We can see Red Cross, Red Cross. Then we see Scenario 3 with a nice green border around there, which means that's what you think is going to happen. And then you've got scenario four, Red Cross. So you actually had rate cut March quarter. Population continues to grow by 500,000. So I presume both those things to you are important.
Speaker 2:Those two things are critical to our forecast. We've had one happen already the rate cut. Now the next thing, which is the population growth rate, growth running at over 500,000 people plus, and, based on some numbers that we had access to regarding net overseas arrivals for the month of January, we're feeling pretty confident that we're going to see the population expand by another half a million people in 2025. Now, do I personally agree with that? Well, that's another matter. All together, I'm here to say what we think is going to happen rather than what I think should happen. I don't necessarily agree with such a strong population growth rate, but I think it's going to happen. I don't necessarily agree with such a strong population growth rate, but I think it's going to happen. And if we're right about those two key factors, then we're feeling pretty confident that our forecast we've got in there, and that is for national dwelling prices to rise this year between 6% to 10% is going to come in.
Speaker 1:Yeah Well, louis, I think people have jumped the gun early too, because I've noticed, since I've come back doing auctions on the weekend, I've noticed that the buyers are out there. There obviously is a group of buyers who think that they'll outsmart other buyers and jump in early because they're gambling that this was going to happen, and agents have been reporting sales that couldn't take place October to December are happening now right around the country. You're still very bullish, perth. You love Perth, louis.
Speaker 2:I do love Perth at the moment. Yeah, that's true. So Perth had a sensational last 12 months. It was up by about 14%. I noticed that there's been some discussion of maybe the market could be slowing down. The thing is with Perth is that when we look at the rental market, we're not seeing any slowdown in the rental market in Perth, and why that is important to us as a research house is that we've found historically that the rental market in Perth leads the for-sale market, leads it by about 12 months. There's a strong correlation there and if we bring up more charts later on, I'll show you what I mean about Perth and why we're so bullish. Because the rental market is not slowing down. There is a very tight vacancy rate in Perth and rents continue to rise at double digits, so we're pretty convinced Perth is going to be the outperformer for 2025.
Speaker 2:But, importantly, what's really changed here is our outlook for Sydney and Melbourne. So those who follow our research closely may recall when we wind back to November and we release these numbers, we said Sydney and Melbourne are looking likely to have another negative year, and you can see it there in our base case forecast. We said look, it's looking like they're going to fall between minus 5% to 1%. Well, that's all changed. So we think now that we're going to see growth in Melbourne of somewhere between 2% to 6% and for Sydney growth of 3% to 7%. Now I've already had someone say to me oh look, those numbers look a little bit low given the rate cut.
Speaker 2:But I think we need just to keep in mind that we have started the year off with negative house price growth in those two cities. Housing prices have been falling in January in those two cities and so we need to, when you consider our forecast, say for the full calendar year, so we've fallen, say 1% to 2% so far in Melbourne and Sydney. We've got to wind that back and that's what I'm taking into account. So yeah, we do believe we'll see the recovery in Melbourne and Sydney, but the biggest price gains we think are going to be in Perth, brisbane and Adelaide, as they were in 2024.
Speaker 1:Okay, okay. So, louis, was there any other part of the commentary that you heard the Governor or anyone else say that was worth talking about? Yes, and is there any other graphs you want to show us today?
Speaker 2:So one thing that really stuck out in my mind when I was.
Speaker 1:Maybe you can stop sharing so we can bring you back onto the screen. Good idea, Tom Good idea.
Speaker 2:All right, here we go. You get to see my beautiful face. Okay, now, one of the things that came out from the statement was the Reserve Bank of Australia stated unequivocally that monetary policy settings, even after today's rate cut, are still restrictive. That monetary policy settings, even after today's rate cut, are still restrictive. That means that they don't see the current interest rate of 4.1% as being normal or accommodative. They still think it's slowing the economy down, and that's why I have a lot of confidence that they will move again, given they use that language today.
Speaker 1:Okay Now is there any other charts that are worth looking at? That send a message out to our viewers.
Speaker 2:Yeah, yeah, I think there is. I think it's worthy of bringing up what we think is going on in the rental market now, Tom. So what I'm going to do is I want to show what national vacancy rates are doing, Because last year we were talking about the fact that it looked like rents advertised rents are starting to slow down. Vacancy rates were picking up a little bit. Well, it's been a little bit of an about face on that at the start of the year and once again, I'm just going to share the screen on this particular point. Just bear with me one moment.
Speaker 1:By the way, while Lou is bringing up that slide, I know that we've got a lot of potential sellers that are vendors that are here as well, and I would suggest this information's changed sentiment. If you are thinking about going on the market, timing couldn't be better. You want to have first move advantage. You want to move before a glut of sellers come onto the market. Always better to sell in isolation. And when you're making your decision in agent selection, our group friends at Local Agent Finder are going to allow you to make a comparison of agents and also look at their performance, including their fees and their reviews. What's that graph that you've got there, louis?
Speaker 2:Okay, so this is national rental vacancy rates. The pink line there represents the vacancy rate across Australia and the blue bars represent the number of rental vacancies right Now. You'll see here this period, here this is 2024. Vacancy rates are actually starting to rise a little bit over the course of the year. But at the start of this year and it'll be the case of February as well, because we've seen the February rental listings and they're not good. They've actually below the January listings Vacancy rates have sharply declined once again across Australia. This tells me quite clearly the rental crisis rolls on. Now let's have a think about this for a moment. Tom, let's assume we're having another year of a tight rental market across Australia. Yeah, we now know rates have cut.
Speaker 2:If you were a renter at this point in time and you've been saving some money and you're a potential first-time buyer, do you think maybe you'd start looking at the housing market? I think you would. You would. You would because the rental market sucks if you're a renter. It's been terrible for some time now. It's been terrible for some time now.
Speaker 2:And the beauty of the housing market, with the rising interest rate environment we have between 22 and 2024, is it slowed down housing price growth, at least in our two largest capital cities. It certainly didn't do that in Brisbane and Perth and Adelaide, as we know, but for our two largest capital cities housing prices have largely treaded water. There's been some gains, a little bit in 23 that were reversed a bit back in 24. I would argue that the valuation or pricing compared to interest rates is looking pretty good for home buyers and especially if they cut rates again, and especially if you're a renter right now and you're facing this tight rental market, I think you're going to have a look at the homebuyer market, given the fact that the banks, your serviceability with the banks, have improved. So in other words, your borrowing power, given today's rate cut, has automatically increased and if they cut rates again it'll increase further. I think we're going to see a lot of first-time buyers out there.
Speaker 1:So, Louis, the other thing which I want to get your view on. So in New Zealand, where I'm now, I was talking to some people who were part of the REI here and a lot of real estate agents, and they said to me that what Peter Dutton has announced as a policy, which is, if he was successful to get in, that he would allow a first home buyer to access $50,000 out of their super. Now there's a lot of people and even if it's not 50, I'm sure that they've got 40. I mean, there's a lot of people that have got money in super that don't have that money sitting in their bank account. They're going to become a buyer in the marketplace. This happened in New Zealand in 2010,. Louis and I looked at the data of New Zealand 2010 for a decade and I looked at Australia. New Zealand went crazy during that period and it appears that one of the biggest drivers was the fact that you had a lot of buyers that ended up accessing their super. Surely, that's going to impact prices.
Speaker 2:Well, we would need to see the detail, tom, yeah, broadly I would agree with you and actually it's not something I personally agree with that we should do, but nevertheless it is on the cards for that to happen, assuming the LNP actually gets up when we have the federal election. And when you look at the polls, yeah, they've got a good chance.
Speaker 1:Stop sharing, Louis, so you can come back on.
Speaker 2:Yeah, I thought I actually stopped sharing. No, that's strange, okay.
Speaker 1:Here you are, You're back in, so, Louis, I'm with you. I actually think the winners are going to be the homeowners, not necessarily a purchaser, but it stands to. I mean, if you can borrow more money, if the sentiment is down and there's more buyers because they've got the actual deposit that you need the 10% or the 20% deposit surely that is going to impact prices. It certainly could.
Speaker 2:Like I said, we need to see what the detail is from the L&P if they do allow home buyers to access the super. But yeah, I would agree with you that, combined with interest rate cuts, low unemployment of course we still have low unemployment and a tight rental market I think you're going to see more first-time buyers, for sure.
Speaker 1:Okay, well, look, I'm also going to say we've got a lot of people, louis, here who are not just, you know, vendors and buyers. I've noticed a few faces here who are real estate agents. So if you are an agent and you aren't registered on local agent finder to meet potential vendors, then they should register a profile, as it's absolutely free and LAP has a pay on success model. That's right. You only pay when you're making money and you get the bulk of it. And, louis, it's been an absolute pleasure. I've never seen you as upbeat as this. By the way, You're very upbeat. I noticed it in your voice when I spoke to you a few hours ago. It's been an absolute pleasure. I've never seen you as upbeat as this. By the way, you're very upbeat. I noticed it in your voice when I spoke to you a few hours ago.
Speaker 2:You're pretty confident it's a good day for the Australian real estate market. Oh, that's just the vitamin B pills I've been having, tom. No, look, I am more confident, absolutely so. Look, there's a lot of X factors that are still out there, a lot of global factors. I'm reasonably bullish on those global factors. So I think you know the ducks are lining up and I'm pretty sure we're going to see, as early as this weekend, a rise in option clearance rates in Sydney and Melbourne. I think the buyers will be out there. I think we'll see the fear of missing out starting to creep in a little bit into the market. And there is seasonality at this time of year as well. I think you see generally less autumn listings compared to, say, the spring selling season and you see seasonally more home buyers out there. So, yeah, I'm pretty confident the market is going to turn and we'll see some indicators of that fairly quickly.
Speaker 1:Yeah, and for those of you that are watching this, I often find that homeowners think to themselves you know what? Okay, this is a positive sign, maybe there'll be more rate cuts, maybe I'll just ride it and put it on the market when prices have gone up even more, and that's not a bad strategy. However, if you're a seller-buyer, that means that you're buying and selling in the same market. I think you've got to take into account if you're selling in Newtown and moving to Lane Cove and you decide that you're going to wait for six months for Newtown to keep going and milk it as much as you can and then you're going to say to yourself I'll buy in Lane Cove, lane Cove ain't staying at today's prices. Lane Cove will also go up. So I think trying to time things like that is probably not a great idea. Thank you, susan, for putting that in the chat box.
Speaker 1:Louis, it's been an absolute pleasure having you A webinar, that you've come in and joined us a couple of times. Local Agent Finder has put this on. The data has been sourced by SQM. Louis hasn't changed his beat. He gave us four scenarios. He said if this happens, then I think this. If this happens, I think this. We now have a clear runway. Those three scenarios have been cleared. There's one left, and he has shared it with us. You can, by the way, follow him on Twitter or X or LinkedIn. He has that data on there.
Speaker 2:I'll put up the website now for everyone.
Speaker 1:Yeah, so if you can put that there. By the way, louis, I love checking your auction results early in the week and the reason is that I think there you go. By the way, everyone it's there. I use listen, since I've been having you on both with Local Agent Finder and before. I've invested in some of the products that you've got. They are good value products. I look at there from your boom bus reports. There's a hell of a lot of stuff there. By the way, those of you that don't like to spend money, there's a lot of free stuff on there as well, I'd say.
Speaker 2:A lot of free stuff. We've actually had quite a few real estate agents who, let's just say, haven't been too happy with our peers.
Speaker 1:Yes.
Speaker 2:And they've been actually buying out what we call our property explorer, which is, you know, let's just say, the equivalent of what our large appears often to real estate agents. So we've been having more interest with that by agents. It's certainly a more cost-effective product. One disclosure there it doesn't have ownership details in it, so we don't publish any ownership details, but it's got all the property sales transactions you could ever want.
Speaker 1:Okay, to all our real estate agents and gym members, I suggest that you've heard the forecast from an analyst, you use it in your own words and you make sure you get on the phone and you speak. Who you've got to speak to tomorrow buyers, sellers Let them know. It's all a good news story. Good evening, louis. Thank you so much. Thank you to all that have tuned in. Thank you and we'll see you next time.