What happened 5 weeks ago, has hit today 🗞️ Real Estate Market Wrap

When uncertainty hits - war, interest rates, capital gains tax, inflation - confidence disappears. And when confidence disappears, so do the buyers.

If you’re a vendor - April may not be the best time to sell. Although this is the prefect upgraders' opportunity:

• 0:00 – My clearance rate: 2 out of 9
• 1:00 – What was happening 5–6 weeks ago (this is the key)
• 2:25 – Fear, uncertainty, and frozen buyers
• 3:00 – What great agents are doing right now
• 3:40 – Should vendors sell… or wait?
• 4:45 – Interest rates, inflation & what’s coming
• 7:17 – The danger of rejecting pre-auction offers
• 8:50 – The reality vendors need to accept
• 10:55 – When will things improve?
• 11:20 – Why this could be an upgrader’s opportunity
• 12:00 – The truth about clearance rates

Transcript

Two Of Nine: The Day’s Result

Tom Panos 0:00

Today, my friends, was two out of nine. And up until up until the end, there was a possibility that this was going to be zero out of nine. And I was very surprised. I was very surprised because what happened is unlike the last month or so, what had happened is these properties were going ahead. As you know, over the last month, you've been following my auctions. Most of the properties haven't been going ahead. They've either been cancelled or sold prior. And today I just had a look and everything was going ahead. So I thought, wow, this is going to be an okay day. But it ended up being exactly the opposite. There was just low buyer engagement, right? And I can tell you why today was a bad day. Because if you think about it, an auction campaign begins like five, six weeks ago. That's when it begins. So what was happening five, six weeks ago? Well, it was the end of Ramadan. So you would have seen that. Then we actually had the war started five weeks ago. Then you had this ongoing commentary about wall coming going. Then we had the commentary that interest rates were going to be going up again. Then there was the commentary about capital gains tax and negative gearing on the May 12th budget, right? So if you think about it, if there was a time in the marketplace that would have been not ideal to be doing a four-week marketing, it was right now. So if you're a vendor that's watching this right now, right? And you haven't had a good run in recent weeks, there's a good possibility it's not your property. And it's very rarely that I say that because I think at the right price, everything sells at the right price. But I don't think you would be wise to reduce your price to low, low offers now because there's so much noise going on, particularly with that war and the uncertainty that it's gonna cause to inflation, which then causes interest rates going up. And I think that that is what is on everyone's mind. And you know what happens when there is fear and uncertainty, people do not take action. So Simon says, of the 13 properties my team sold last month, one was that reserve, the rest weren't. However, all of them, yes. Okay, well, obviously you're doing great work, Simon, because um I think good real estate agents are amazing at being feedback machines in this market. I actually think when I was working in this market in 1990, 1991, you know, during that recession that we had to have, that Keating said, all I've got to tell you is that I was actually talking to my vendors every single day. You can't over-service in a marketplace that is like now. Um so I also want to say to you that right now, if you don't have to sell your property, and if you were selling, you're only cashing in and you're not gonna buy ever again or for a long time, right? Like if you're buying and selling in the same market, it sort of makes sense that just do the business because it's a revenue neutral market, right? But if you're only going to sell and not buy, and your number one thing is I just want to actually wait for a better period, probably selling this month is not the ideal thing, right? Until we get certainty. But having said that, again, it's a bit of a gamble because come May 11, May 12, if our government decides that they're gonna be super aggressive with how they're gonna tax property, so hypothetically, if they turn around and say we're gonna actually cut the capital gains threshold from 50 percent to say 25 percent, which is not what's on the table at the moment, I'm hearing 33 percent. And if they decide that they're gonna actually not grandfather it either, all of a sudden you think to yourself, hey, we might end up having a marketplace that actually gets worse and worse, right? However, I'm keeping my fingers crossed that that doesn't happen. I'm keeping my fingers crossed that where the government's gonna land is actually gonna be uh fifth uh thirty thirty-three percent threshold and be able to negative gear uh at least a couple of properties, because that's also being spoken about, and to grandfather it. That's what I'm hoping. But I've got to tell you one of the reasons why I'm getting really nervous, I'll tell you. It doesn't feel good. It doesn't feel good. To me, it feels like even when the war comes to an end, and they do eventually, even if it comes to an end, do you think that the damage to infrastructure, logistics, all that, do you think it's like, hey everyone, everything is fine, life is good again? No. Inflation was a problem before Donald Trump decided to march in. Now, inflation is a problem on steroids. And you heard what Michelle Bolloch has been saying the whole time. We need to get inflation down to the two to three percent range. That ain't happening anytime soon. So we might be living with long high interest rates that aren't gonna come down. So we only need another one or two rate rises to be back at the GFC level of interest rates of 2008, right? Um, so yeah. All I can say to you is it doesn't feel good. It doesn't feel good, and what is propping up the market at the moment is around the country there are still areas that have got low value real estate, Adelaide and certain parts of Perth and what have you, and Darwin, right? And we still have the uh stimulus of the five percent grant, so there's lots of paddles around. Lots of paddles around. I sort of get all of that. Um and that's why the lower price point um still has activity. And I'm really hoping that what's going to actually offset a big downturn is that the migration and the fact that supply is even gonna be harder now. Like right now, they've actually just said today, building materials have gone up again automatically, right? And when building materials go up, cost of labor goes up, right? All that stuff there, developers don't build, developers don't build, supply's not, you know, um increased. So anyway, you get the you get where we're at it. What's uh Eli saying, Tommy brother, do you think rents should increase 60 percent in the next eight months? I don't think they'll increase sixty percent in the next eight months. If they did that, there'll be people living in the streets. They can't afford that. People are in pain. People are in absolute pain. And I've got to tell you, if you get a pre-auction offer that is even a little bit short, it takes a brave vendor to go to auction. I had a property today where they'd had a pre-auction offer of twelve fifty, one million two fifty, they decided to go to auction and the buyer buckled and wouldn't pay the price today. So they probably should have actually wrapped up that deal at twelve fifty because what's actually happening is vendors sometimes go to auction trying their luck to see that they might actually get more, but they're not, they're getting less because what actually happens is the buyer goes there and sees that no one else is there or no one else is bidding, and what actually happens is they turn around and they reposition what their bid's gonna be, and in this instance they reduced it by 20,000. And obviously the vendor got upset because the vendor thought, hang on a second, you gave me 1250 the other day, 1,250,000 the other day, now you're telling me 1230. So what I'm saying to you, thanks, Pedro, what I'm saying to you is that what you do need to know is that if you're a vendor right now and you get an offer prior to auction, please consider it because you might end up getting a worse result on auction day. Um in addition to that, by the way, I want to thank you. I've had so many nice, beautiful text messages from people uh uh in the real estate industry today with love. Thank you so much. Thank you. It means a lot to me. Thank you. Um in addition to that, what I've got to say to you is that today is um Easter for Orthodox people, and just for your own information, uh it's my name day tomorrow. Um and it is the one day of the year. My family, this is i.e. my mum and my dad, like it's the big thing, you know. Easter name day, my uh Greek names uh Anastasios. Don't ask me why, don't ask me why I'm called Tom. I have no idea. All I know is that when I was age five, at home I was called Anastasios, and then when I went to school, my mother just said, when they say what's your name, say Tom. And that was it. That was my name. So, ladies and gentlemen, I've got to let you know that completes today's video. I'm gonna head off right now to watch Sydney and to see play The Wanderers. It's the Derby. Here it is the Derby. Here it is the Derby. David Gray says, when do you see things improving? I don't want to comment. There's too many, I don't want to comment. There's too many variables. At the moment. Think about what we've got here, think about it. We've got May 11, 12, we've got a budget. They're not gonna be positive on property. Do you think they're gonna wake up and they're gonna say, I've got good news. You know what? We've been thinking a little about it. You know what? We're not gonna touch any taxes on property. We're gonna leave them exactly as it is, and in fact, what we're gonna do is we're gonna bring in another stimulus for property. I don't think it's happening, right? I don't think it's happening. Right? Number two, we've got uncertainty with the war when there's gonna be closure, right? That is uncertain, right? So we've got that issue as well. Um so the answer is I don't know. But the answer that I can say to you is if you're a buyer and you've wanted to upgrade into a nicer upgrade, this, my friends, is the perfect upgraders opportunity. I want to let you know that you do you know if you've always wanted to get that special property. Well, let me tell you, the one that you're upgrading to is probably dropping faster than the one that you're going to sell. So that's why I think to myself, it is a good opportunity. Thank you to everyone for your beautiful messages there. And Danny says, Tom, what was your clearance rate today? Sorry, I must have missed it. It was terrible. It was two out of nine. Two out of nine. And while I've got you there, don't look at today's clearance rate. It's called the preliminary clearance rate. When you look at tomorrow's papers, they give you a preliminary clearance rate. And you know what? That clearance rate goes down by Tuesday. Do you want to know why? Because real estate agents don't report to the media the properties they didn't sell. So they need to get captured by data companies on the Monday and Tuesday. And I want to let you know that normally the clearance rate goes down by five percent. And we're at the moment one of the lowest clearance rates we've had. But I've still got to tell you, good luck to you, those in Adelaide, you're still having a good run. Spoke to Philly Harris the other day, and he said to me that Adelaide is still good, though the days on market's getting bigger, but he goes, it's still really good. Perth has changed. Perth has changed, days on market are growing a lot bigger, right? Sydney and Melbourne is uh a little bit harder. Labor says Alba Socialism Medicare is the best system in Australia. Why do we need capitalism in housing? Well, listen, we got a decent healthcare system in Australia, but all of a sudden I thought I was gonna have a cruisy life. My daughters have gotten older. I'm not gonna go broke at this stage in my life. My health is good, and I thought son's out, guns out, and then it hits me on the weekend last weekend. Being at hospital with my mother and seeing my 89 year old father just shuffling has just uh made me realize I've got a new job. I'm no longer having to look after the family home. I've got to start looking after the parents' home.