TRANSCRIPT

Tom Panos: 

For those of you that are joining, i want to let you know Louis Christopher. Apart from being a friend, a long-term colleague, he is the Managing Director of SQM, a data specialist organisation that services both property and financial services organisations. He’s had a pretty accurate assessment of markets over the last decade and I always bring him in at times of announcements to get his view on and his take on it from a data person. So, louis, thank you for joining me.

Louis Christopher: 

It’s nice to be with you once again, Tom.

Tom Panos: 

I want to ask you, louis, unchanged, it didn’t go up. Were you expecting it to you individually? were you expecting it to go up? Did you have a bet or a view? What was going to happen today?

Louis Christopher: 

I’ve been very uncertain in recent months in terms of what the RBA was going to do in terms of decision-making. They threw me. When they lifted rates back in the month of May. I was expecting to say on pause for longer than what they did. So I’ve been more cautious in terms of making any rank pronouncements in terms of what the RBA may or may not do. But the money markets leading into today’s decision were suggesting that they would probably pause, that the probability was up to 70% that they would pause, and sure enough, they have paused.

Tom Panos: 

Okay. Do you think that’s been fuelled by some positive news about inflation going down? What are the metrics you reckon that probably skewed them to make that decision today?

Louis Christopher: 

I think inflation the recent inflation readings from the ABS may well have driven the decision today. The RBA statement did note that the slowdown in inflation and when you look at the monthly numbers the ABS has got annual lives inflation running now at 5.6% Recall earlier this year and late last year was actually as high as 8%. So it is slowing down. There’s still questions in terms of whether we’ll slow down much further than what we have now, given what we know, what’s going on in the rental market, with wages, with services, inflation. But nevertheless the RBA has noted the slowdown in the CPI today is one of the key reasons why they did go on pause.

Tom Panos: 

So Louis, i haven’t read any other commentary that comes with an announcement and I don’t know whether there’s any information that you can give. Was there any suggestion that this might be at the end of the rate rises, or was the dialogue more or less that there will probably be more, or what was the dialogue.

Louis Christopher: 

No, they’ve left the door open to more rate rises, so that they’ve made it clear that getting inflation down is front and centre of their objectives. And look, they want to do it in a way which, hopefully, they can achieve a soft landing in the economy. But they’ve long noted that that would be a very narrow pathway. So inflation is definitely front and centre of their minds and the Governor has stated in the past that, look, if we don’t get on top of inflation now, it could seriously have a resurgence and then interest rates would have to go much, much higher. So their view is let’s get on top of inflation first and foremost, and hopefully by doing that we won’t put the economy into a hard landing. But first and foremost we’ve got to get inflation under control. So to an extent that they’ve made it clear that they’re willing to take a bit of a hit on the economy so long as they can get inflation under control.

Tom Panos: 

Okay, Now, Louis, you’ve been pretty accurate. I mean, real estate forecasting is a hard gig. right, It’s a hard gig. I get it right And no one.

Louis Christopher: 

I’m glad it’s not the only thing we do here, tom, you know. But look, i do enjoy looking at the markets and looking at the economy And I like to look at our forecasting in terms of various scenarios that could play out. I’m not sure what the RBA will do with interest rates sitting in the future, but I can forecast reasonably well in terms of well, if the interest rates do this and this is what it does mean for the housing market or if inflation does that, this is what it could mean for the housing market. And I’ve got to say this year comes more back into our bread and butter where, look, this year we’re not worried so much about so many X-factors such as a virus breaking out. It’s more in line with what is inflation doing? what are interest rates doing? So back to the normal things that the housing market moves on.

Tom Panos: 

Okay so, louis, i was speaking to someone yesterday who showed me a letter and it was a letter from their bank telling them what their new rate is going to be. There have been the cohort of people which apparently there’s 1.3 million households that are coming off fixed loans, going on to variable, and this guy is one of those and his loan repayments are going up from $6,000 a month to $10,000 a month. So that’s an extra $4,000 a month, which is $1,000 a week. That’s a huge jump. He said to me I can’t, he goes, i’m going from 1.9% and I’m going to 6.5%. He says I’ve exhausted all my options, including going to refinance. The bank has basically said well, we gave you a very big amount of money when rates were 2%. You’ve got a high loan to value ratio, sorry, a low loan to value ratio. He actually then went on to say that he was on the maximum period of time, which is, i think, 30 years alone. He couldn’t come up to any solution with the bank. So he then said to me what do I do, tom? I’ve got no choice, but I have to sell. I can’t come up with an extra $4,000 every month to keep my mortgage going. There’s got to be a lot of people living in that category of people And I don’t think that that has actually spilled on into people’s lives yet, because a lot of those people are expiring now And the way it works with banks, it does take time before the rate goes up that you get impacted. I can’t help but think to myself come spring which you know, louis, has a seasonal spike in listings that we might have an oversupply of listings and some distress sellers amongst those listings.

Louis Christopher: 

Look we made, tom. I got to say that so far, when it comes to distress selling activity, the numbers overall have remained benign. So we’ve just come out with our numbers earlier today. On the market right now, nationwide there’s about 5,300 properties selling under distress conditions out of some 230,000 listings, so it’s still a relatively low number and it’s actually lower than what we recorded pre-COVID. So, yes, i agree with you that there is this caution in the market and concern surrounding the resets which we’re now about to reach the peak, from going from fixed rates to variable rates. Those who actually bought a property in 2020-21 on a very low fixed rate, other ones which are most exposed, and there will be some damage there by a number of property owners who did not basically take into account such interest rate rises that we’ve had, and so there will be some property owners who will have to sell. But I’ve got to say to Tom that certainly in this country, more so than, say, the United States, the property is the last thing to go. People will cut back on expenditures elsewhere. They’ll cut back on holidays, they’ll cut back on restaurants or cut back on buying a new car. The house is a very last thing that goes, and that is because if you own more than what you own in a property, the bank will still come after you. It’s essentially like it’s a fully recall situation for property owners. And so in this country certainly, there’s also a lot of stigma in terms of having to possibly sell your own home, but in terms of cutting expenditure elsewhere, that’s what creates a slide down in the economy And that’s what also, in turn, creates a rise in unemployment. And I do believe if we were to see the economy going to recession, resulting in a spike in unemployment say unemployment getting over 5%, 6% and staying up there, then at that point you would see a lot more falls sales. So once you don’t have a job, once there’s no income coming in, that’s where, okay, everything’s just got to go, just to survive.

Tom Panos: 

You’ve got me excited, thinking hey, you’ve got a report that’s identified 5000 properties that are in that distress category. Do you actually sell that report?

Louis Christopher: 

Yeah, it’s on our website. It’s called our distress properties report And it basically tells you how long the property’s been on the market for, what its last sole price was and why it’s been noted down as distressed. And we use key words INDIAD, so you see something that’s labeled mortgage in possession, deceased estate, moving overseas, divorcee sale. We capture all that and essentially create a list of those properties and account and monitor those counts.

Tom Panos: 

So Louis Susan’s just put up the link to purchase that report. Can I ask you how much?

Louis Christopher: 

that report is. I think we’re selling for $39 for a month subscription. You can unsubscribe anytime you want or you can subscribe for longer, and it’s a further discount on a per monthly basis, so we don’t charge too much for it.

Tom Panos: 

I’ve got to say to you, if you’re on here right now and you’re in the category of being a property purchaser, investor or even a real estate agent, i would tell you that is a very useful bit of information to actually have. And, louis, i’m fascinated and I want to get your view on it. I’m going to tell you about two case studies. On Saturday, one property was 1371, hannery Road, punch Bowl, sold a year ago for $2,725. Sold on Saturday I auctioned it for $2,450,000. That’s a drop of around $300,000, thereabouts $300,000, and that doesn’t include the transaction cost stamp duty on that kind of property. So the guy’s taken a serious hit. Then I had another property at mascot. They purchased it a year ago for $2,250,000, and they were selling as well. And, louis, there was no takers. No one wanted it, didn’t have to put in a vendor bid. It appears to me that the vulnerable cohort of people are the ones that are selling, that have bought recently.

Louis Christopher: 

Would that be that That would make sense too, and that they would be the ones certainly most vulnerable, particularly if they bought in, say 21 or 22, on a very low fixed rate and had no budget for lending rates at running at, say, 6.5%? Yeah, they are the ones most in trouble because they’re selling essentially into what’s been a downturn. as we know, housing prices fell in Sydney and the greater part of the nation over the course of later 2022. Now there’s been a little bit of a pick up in prices in Sydney for the first half of this year, but it hasn’t really offset yet the falls that were recorded from peak to trough over the course of last year. So, yes, i’m not surprised to hear stories of people selling at a loss compared to what they paid for, say, 12 months ago. That would make sense to me, tom.

Tom Panos: 

Okay, I’ve got a question that’s coming here from Anthony. It says how would this impact investors who have multiple investment properties? would they be more likely to sell as rates increase? I’ll get your view there. but, louis, i’m having real estate agents tell me that they’re also a very vulnerable group of people, the investors. And the reason why is that often investors not only have loans on their investment properties, they’ve got loans on their own principal place of residence, and when mortgage interest rates go up, mortgage payments go up, and whilst rents have gone up, louis, they haven’t gone up to the level of what the extra interest is costing you on your mortgage repayments. Would you say that there’s a bit of an investor sell-off or investor selling stuff?

Louis Christopher: 

Well, investors are generally less emotionally attached to properties as well, tom, outside their principal place of residence. So when it comes to investment property, yes, i’ve found in the past investors generally a little bit more flippant, more happy to move on market conditions. I’ve always said investors generally are the ones who are first to sell in a downturn and generally will be like the last to buy in an upturn in many respects. So we do often see that. Now you mentioned that look, okay, rents have gone up, but it hasn’t completely offset the interest expense, the mortgage repayments, and you’re right about that, despite the fact that on our numbers in Sydney over the past 12 months, rents have risen now by about 18%. But we also know, tom, there’s been a lot of debate and discussion about capping rents, having rental freezes. that seems to be coming up a lot, especially from the Greens, and I would suggest there’s probably some concern by investors out there too that there’ll be more restrictions placed on their investment property in terms of what they can do, given this political discussion that’s been occurring due to the rental crisis. So I’m not surprised to hear more and more investors potentially are looking to sell. I think, too, that early this year, though, there’s been some investors entering into the market to try and capitalise on those rental increases and price falls that we actually had last year.

Tom Panos: 

Yeah. So, louis, this is listen, it’s a fascinating. I get asked because I’m a real estate person. All the time. I’m a real estate guy. I get asked by people all the time oh, how’s the market, how’s the market? It’s the most common thing I hear when I’m buying a coffee, when I’m walking through the streets, when I’m going down an airport, when I’m at a shopping centre. But I’ve got to tell you it’s now on absolute steroids, louis, because people don’t. On the one hand, they read in the media on a Sunday that there’s a mini boom going on And we’ve seen some great prices on houses in recent months, which has been surprising, louis, but I can only put it down to an absolute shortage of listings. The data that you’ve got must indicate stock levels have been low right.

Louis Christopher: 

They have been low, tom, and one thing that sets the 2022 downturn apart from other downturns was that we really didn’t get a rise in listings. So normally in housing downturns weaker markets all the stock starts accumulating and you see a rise in total listings. Now that’s, yeah, driven by all the stock not selling, maybe less so new listings coming into the market, but this time around, well, there’s just been hardly any new listings coming through with this downturn. There’s been a. We did record a little bit of a pick up in Sydney over the month of June. That was a 9% rise in new listings compared to the month of May, but overall, new listings are about the same levels as this time last year And those numbers are down on the 2021 numbers, which was a pretty strong year for new listings. The overall trend in Sydney for listings is well and surely down. If we were to look at listings, say, eight or nine years ago, we’re down by about 25, 30% compared to those levels. So people are holding on in Sydney at least they’re holding on to their properties for longer. They’re not willing to sell as much And I suspect it’s because of the transaction costs and the concern about being out of the Sydney market which we all know long term has risen quite substantially And so I think a combination of those factors have meant that there’s been less sales turnover over the long term in the Sydney market. I think agents so have been kind of offsetting their commissions because we know prices have risen. So there’s two factors at a volume of price, but overall volume is definitely down And given their prices have been flat to falling over the past 12 months, notwithstanding the rise in the last couple of months, it has certainly been a tough time for agents.

Tom Panos: 

Yeah, louis. there’s a question that’s coming here from Greg Willman. It says is Louis aware of whether there is any significant talk of APRA relaxing buffer regulations as to allow for dollar-for-dollar refinancing? Is the need for the 3% buffer now redundant?

Louis Christopher: 

There has been some discussion, i think you find that it’s actually being moved down to 2.5% in some situations. So I’m not so sure we can say it’s redundant, because we still don’t know the full scope of the outlook for interest rates yet. We don’t know for sure whether we’re at the top, and it’s fair to say that, as mentioned before, those people who bought in 21-22, they had a buffer as well at the time, ranging from 2.5% to 3%, and interest rates have moved by more than that. So this is a thing right now, and the reason why we will see some pain on the mortgage resets is that the variable lending rate is currently in uncharted waters for many people who bought in 21-22. They haven’t been stressed, tested on these current interest rates.

Tom Panos: 

Yeah, i find it fascinating, louis, because just even in my own travels today, i started my day in the Eastern suburbs and I finished my day out in Penrith, st Mary’s, and I can’t help it that it seems to me like we’re using interest rates as the tool to get inflation down. Yet around the kitchen table, around the dining room, the conversations are different in St Mary’s than what they are, say, in Bellevue Hill, And the reason I say it is that the young family that’s borrowed $600,000 on a $700,000 property in St Mary’s that are now paying close to 7%, they’re feeling it. And then, on the other hand, you’ve got the 60-year-old retired guy with his partner who are flying business class, paying $25,000 tickets. Luxury travel is booming. So suppose what I’m saying is it doesn’t appear that All citizens are equally impacted in this because there’s a one tool that’s being used across the board. Is there any other way it could be achieved?

Louis Christopher: 

We’ve great difficulty, tom. No question about that. There are definitely ways to slow down an economy beyond monetary policy, for example, fiscal policy running a surplus, changing taxes based on wealth distribution can have an impact as well. No doubt that you’re absolutely right. There are people out there who are in debt up to their eyeballs just trying to get by, who bought at the top of the market, and then there are those you mentioned, retirees. I would also like to put, say, medium sized and business owners into that equation. We’ve been doing very well out of the Sydney economy, which may well explain why I’ve seen in the data the top end of the market really pick up nicely for existing property owners in the Sydney marketplace. But we need to also keep in mind that if we are to go into an economic hard landing, the top end of the market could take a big hit Because at that point that you’re mid-sized business owners take a hit on their business. Smaller business owners certainly take a hit on their business. Senior executives lose their jobs. That’s when you can see a big correction occur in the Sydney market for the top end. I’m not saying that’s going to happen for sure. It much depends on whether we’re going to recession or not. But if we do go into a recession, if the RBA has gone too high to the point where we get a hard landing in the economy, i’ve no doubt that that’s what’s going to happen to the top end of the housing market in Sydney.

Tom Panos: 

You find, Louis, the definition of a recession is what.

Louis Christopher: 

Two negative quarters of GDP Okay.

Tom Panos: 

And Commonwealth Bank has said a few times over the last month their rods are where there’s a 50% chance. this Commonwealth Bank it’s not all banks, commonwealth Bank have said 50% chance that we’re going to go into recession 50-50,.

Louis Christopher: 

Yeah Well, their housing forecast, I mean great time. In fact, most banks their housing forecast has been really off over the last few years. Look, let’s hope we don’t go into a hard landing. But the probabilities have certainly increased, especially since the main June interest rate rises. I believe they’ve increased because there are a lot more people who are now facing this massive big mortgage reset. Excuse me, you’re right, i’ve been talking too much today. Yeah, i could imagine.

Tom Panos: 

I could imagine that you know, as you’re getting your throat soothed by the way, mine’s the same Right now. I feel like and for those of you because I did have a Zoom before they said oh mate, you’re drinking Zoom, you’re drinking a beer bottle, but it’s ginger beer. I want to make it clear, louis. There’s a question that’s come in here and it’s an interesting one. Inflation has not returned to the two to 3% range, but we are in recession with unemployment at over 4%. Do you think the RBA is more concerned with recessionary pressures or with inflation pressures?

Louis Christopher: 

Well, so far I haven’t been really tested on a hard landing in the economy, tom, so we’ll find out, but for now they’re focused on inflation And I think I’ll stay with that until such time that we do see unemployment start to rise significantly.

Tom Panos: 

Okay Now, darius. we’re going to finish up soon, louis, because I want you to get a nice strip soothed, one of these.

Louis Christopher: 

Sorry, no, i’m better now actually. Yeah, I’m just getting over a cold The typical Sydney winter cold.

Tom Panos: 

Darius has said and this is useful to know some banks have already have a refinance policy of just 1% assessment buffer. Well, that’s interesting, Listen. You’ll have to go off and speak to individual banks to find that out, But, Louis, it’s fascinating. As you said, the good thing is we don’t have any variables that are uncontrollable, because I remember when we were sitting through the COVID period, you were going through multiple scenarios, like I think you had scenario 1, 2, 3, 4. And a lot of it had to do with outbreaks and getting on top of COVID and lockdowns and what have you? And this time, really, it’s 1KPI. It appears to be inflation.

Louis Christopher: 

Yeah, inflation is definitely a key driver behind the housing market. So, as by way of background for this year, we did forecast that there would be a recovery in a housing market, but the cash rate would have to stay, would have to rise not higher than 4%. We’re now 4.1%, of course, so that brought into what we called our false-drawn scenario And I was pretty active on Twitter when this came into play And that false-drawn scenario was a situation where the market would rise for the first half of the year but then start to fall away in the second half of the year because we have a cash rate that’s too high for home buyers and home sellers, for that matter, and we are at 4.1% now. Maybe we will go on pause now. Maybe we could be wrong in terms of are we at that crunch point, but I suspect that we’re right And I suspect, looking at the auction clearance rates that have occurred over the last few weeks, where it is showing signs of the market calling again, that we could very well see, even if the RBA does stay on pause at this point, the housing prices start to fall away again over the course of the second half of 2023. Most anecdotals, but it’s things that. I know that’s going on in the wider economy, people being very concerned about expenditure, concerned about an economic downturn I’m hearing more and more talk about it. As mentioned, the auction clearance rates have weakened a little bit in very recent weeks on our numbers. So for today, for last week, we’ve actually got a final clearance rate of 52% And so it’s just holding above that 50% mark, which I’m sure you’re well aware is a pretty critical threshold for the housing market.

Tom Panos: 

Yeah, and Luya, listen. The way that you come up with your auction results, i think, is. I mean, you could quite easily you could sit through three or four media, newspapers or online stories on a Sunday and come up with four different clearance rates. Right, clearance rates are a fascinating subject.

Louis Christopher: 

Well, it’s really I don’t think look, sorry, i speak for bias, but I don’t think my peers do the industry justice or service by coming out with overly glossy clearance rates, because many agents use the clearance rate as a benchmark for their own success. So if you’re getting, you know, if you, on your own numbers, are getting a clearance rate of, say, in the 50s, and you’re reading in the papers that the clearance rate is actually, you know, 70%, well, you know you’re probably going to be downbeat upon yourself, but then again, and on top of that, you don’t look too good to your customers. But the truth could be that the clearance rate is actually below 50%. Well, so you’re doing better than the real market average, and that’s why we’ve all got to as an industry, we’ve got to make sure that we get these numbers right and not juice them up as what some of the listing providers do.

Tom Panos: 

Well, i’ve got to tell you I had a situation on Saturday a really good offer on a property that I actually thought it was 50 to 100 grand more than what I anticipated it would get. I tried to get the owner to accept the offer because I actually think it was better for them to sell now than wait for a few months time. And the owner said to me Tom, i’m not going to accept it, because why would I, when the clearance rates are 80% and I, you know, like you’ve got people that are using numbers right to actually come up there Now I don’t even know. I wonder whether the Reserve Bank uses clearance rates at all in any of their decision making.

Louis Christopher: 

Do they do, tom. They occasionally publish the option clearance rates, so I know they keep one eye on them.

Tom Panos: 

Right, Okay, Well. Well, I’ve got to tell you I’d hate for them to be making decisions, because you know people decide that they’re going to exaggerate numbers because they believe it’s going to actually enhance their model somehow. Right, But all I can say to you is, as far as I’m concerned, a property that’s listed for auction, it might get sold prior, it might get sold on the day, it might get sold afterwards, But I’ve got to tell you there’s a hell of a lot of people that are not reporting properties that don’t sell, which I think would change the numbers dramatically.

Louis Christopher: 

Oh, they do So. We know our peers. They regularly miss 30 to 40% of what’s happening on the day. By their own numbers, their own numbers, they will show you what was listed for auction versus what’s been reported And they’re regularly missing that number. Domains numbers show that, corelogics numbers show that, and our view is okay. Let’s just wait until we get an update from the advertising Because, as you know, tom, every agent needs to update their ad, their listing. They’ve got online to show whether the property is sold on the day or it’s still available for sale, which, of course, the agent is very keen to let the market be aware that the property is still available for sale, and so we capture all that, and hence the reason why our clearance rates tend to be a little bit more conservative, because we can pick up these properties which have been withdrawn, which sold after the day, which are still on the market now, and so we have a reported rate effectively of 100%. Okay.

Tom Panos: 

Anyway, team, there’s another. James McGee has basically said the option clearance rate is really only a fraction of the total market. I agree with that. I mean less than half the poppies in Australia actually go to auction.

Louis Christopher: 

I mean that’s right, tom, it’s nationwide, it’s probably about 15%, 15%, and in Sydney it’s bigger, it gets up towards 25% And in the inner-city areas it’s even higher against still, as you’d be well aware. But Sydney’s a large city and it includes the outer ring where you see lower proportions of properties going to auction.

Tom Panos: 

Yeah, James is asking is there a better metric than clearance rates to monitor the state of the property market?

Louis Christopher: 

Well, the reason why we do focus on clearance rates and even though you have these assortions, i still think it’s valuable to follow as best one can is that it’s a very timely indicator of the market. It’s probably the most timely indicator of the market that we have. The next most timely indicator would be total listings, which we publish on a monthly basis. So it’s useful in terms of understanding what’s happening here and now in the housing market, and hence the reason why we do like to follow it as best we can and why it’s all the more critical to ensure that the numbers are right.

Tom Panos: 

And listen, louis, to all the real estate agents that are doom and gloom. I want to remind them and I’d like to get your view on this, and that is we are paid for volume in the market. We get paid for number of widgets that transact. Hey, so what? So let’s assume we move into a marketplace where it is challenging that there is some distress selling, but what you’ll have is most likely a bigger volume of transactions, and real estate agents and mortgage brokers for that matter live off transactions. Look they do, tom.

Louis Christopher: 

It’s an interesting Sydney market. As mentioned, we’ve got this long-term downtrend in terms of listings people holding on to their properties for longer So that’s not great for real estate agents per se but, as mentioned, it’s been offset, partially because of price rises. Look, the job of a real estate agent, as I’ve always seen it, is to try and get buyers and sellers to agree with each other, which is a really hard thing to do, indeed, especially when buyers and sellers have a different view on what the price is. Fortunately, in the Sydney housing market there’s a lot of depth to the market, so when downturns do hit, you generally still find that there are buyers there. Given where a population of 5 million people are growing, it’s certainly different to say in regional townships where, when there are downturns comes along, there’s generally just no buyers at all. That makes the job even tougher for agents. So there is a market then and of course the agent’s job is to meet the market, to try and get buyers and sellers to come together and do it in the most ethical way possible, of course.

Tom Panos: 

Yeah, and of course we understand that the relationship in the stakeholders is an agency agreement is a contractual arrangement between a vendor and an agent, and that’s who engages an agent. And whilst the buyer doesn’t have an agreement with an agent, the bottom line is you, as an agent, somehow have to get, as Louis says, the vendor, who’s here and the buyer, who’s here, grind them together. And I’ve got to tell you, in this market there are some that are able to do it a lot better than others And the ones that aren’t doing it. Louis, i saw a fascinating report. There is a bit of an exodus in the real estate industry. I think there have been a lot of agents who have left the industry. I was reading a report on the ABC talking about the thousands of agents that have left real estate in Queensland. They were people that actually joined the industry as the market was going up and they’re normally the first to leave when the market goes down.

Louis Christopher: 

You can get a clean-out like that in every industry which is volume-based. So no great surprise to know that, given especially the fall in overall listings. But yeah look, i think it’s a very tough job to be an agent to basically try and get buys and sellers to come together, And especially in these markets it’s extraordinarily tough. But that said, the best shine through time. They get through the tough times And generally there’s a correlation between getting through the tough times and working very hard.

Tom Panos: 

Louis, i want to ask you SQM your top three reports that you think anyone that’s interested in real estate would look at, because if they go to the website and they get bombarded with various things there, what are the? I mean? I like the distress-selling report.

Louis Christopher: 

That’s within our top three most popular reports. Then we’ve got our Property Explorer login, which is a little bit similar to say what you get out of CoreLogic and HomeFlySky, where you get access to all the data, all the sales, the history. You get valuations on those properties as well. So that’s quite popular as well. And then, over and above that, the postcode snapshots. They just find out what’s going on in your local area in terms of sales, getting all the street prices that have occurred. That generally does well. And then whenever I release our annual forecast, which I normally put out at the end of November or first week of December, that generally is popular at the time.

Tom Panos: 

So that report, louis. So there’s the distress-selling, there’s the one that gives you all the streets, all sales, which is a comprehensive report. You pretty much have most houses in Australia, in Australia, yeah, that’s exactly right, what was that third report that you said?

Louis Christopher: 

So we’ve got a postcode snapshot report.

Tom Panos: 

Do you buy that by postcode?

Louis Christopher: 

Yeah, so you can buy for an individual postcode or, if you want, you can take advantage of a discounting and buy three or four postcodes So there is an ability to actually get access to all the postcodes, if you want to, via the report too. So we’re trying cater for all budgets. I’ve always had a view long term that we want to try and provide information as cost-effective as possible for mums and dads in particular. And, as you know, on our website we have a lot of free property data So we’re a well-aware to people can’t afford to even buy a single report, so we try and make as free as possible our data. But for special reports we put more effort into, we put more qualitative research into. Naturally we’ve got to cover our costs and and make an income, so we have to put a price on those reports.

Tom Panos: 

Okay, well, i’m going to finish it off there. To the other two questions can we get those reports in New Zealand? I think the answer is no, louis.

Louis Christopher: 

I’ve got news So we’re starting to monitor New Zealand. We’re not ready to publish reports yet, We need a bit of back series but we’ve just started monitoring New Zealand independently from the REI and Z And so I’m hoping this time next year we’ll actually fit the bill there for any people interested in the New Zealand housing market.

Tom Panos: 

Okay, And the last one. it’s an unfair question and it’s come from an anonymous attendee. When does Louis think rates will eventually start dropping?

Louis Christopher: 

Well, i’m still not going to rule out the end of this year. So the RBA is being reactive. Of course they’re going to focus on inflation, but there is an outside chance that inflation starts to fall quicker than expected because we’re going into a downturn, notwithstanding what we know has been going on in the rental market, and they’ll still feed through into the inflation numbers. But overall, the probabilities remain high that we won’t see a rate cut until either the very end of this year or into 2024. And then you would have to be very careful about responding to that rate cut, because the rate cut might be in the midst of a recession. And I think in all this we just need to remind ourselves those who have been around, what the 1990 recession was all about. That was a dark and nasty time, a time when, even with the RBA cutting interest rates, confidence did not return to the economy for some years. And this is the thing too, tom Once confidence has truly gone in the economy, it takes ages for it to return, and this is why the RBA does need to be careful if they wish to avoid a hard landing.

Tom Panos: 

Well, we’ll finish off on this, louis. As distressing and turbulent it is for various groups of households across the country. Breakfast this morning with someone who is debt-free, has paid their house off, has got $2-3 million or $2.5 million sitting in the bank, he actually said to me Tom, i’ll be honest with you, it’s happy days for me at the moment. And I said why is that? And he said well, i’m not impacted by mortgage interest rates and I am impacted by the cash rate. I’m getting a great return. I’m getting enough money for me to be able to go overseas and live off this money for the next 6 months. I’m getting 5% interest rate. So there is a group of people, louis the ones that don’t have mortgages and the ones that have got cash in the bank that are probably benefiting out of this market.

Louis Christopher: 

Well, ultimately, savers should be rewarded for taking on additional risk. And, yes, when you get to your more senior years and your retirement age, they take all of us to the point where we’ve got surplus funds, where we can live off, say, a higher interest rate, as our parents did and our grandparents did. But the reality is, of course, that this country has been observing and recording high and higher levels of debt to income. So I get concerned about that over the long term for our generation and our children’s generation.

Tom Panos: 

I’m reading Greg, this is a pretty political comment you’ve made. There. Labor Party will get in bed with the RBA to appear as knights in shining armour leading up to the next federal election. Mark that in stone, Maybe. I mean, let’s face it, if there was going into an election, having rates paused or dropping is better than going into an election putting rates up right.

Louis Christopher: 

Yes, but I’m going to officially stay out of politics. Sometimes I get a bit political on Twitter, Tom, as you know, but overall I try to remain a political when it certainly when it comes to the housing market. Look, that could happen. I think the probabilities are increasing. We will get a rate cut next year, but it still depends on what happens with inflation And, yes, inflation has lowered. We’re not on top of it yet, though.

Tom Panos: 

So, louis, one final question Twitter. I want to ask you, since Elon Musk has taken over, because Twitter is one of your preferred social media communication, it is. Have you noticed a difference since he’s taken over? Is it better, is it worse?

Louis Christopher: 

Is it the same? I think it’s more free flowing. I’ve appreciated the increase in free speech. I think there has been more misinformation running through Twitter as well. I think you need to be more and more careful, but I probably, net on balance, would prefer that over, opposed to just too much surveillance, too much control over what’s been stated. I get concerned about those people who they come up with their own definitions of misinformation to try and control those that are in power, but I’ve always been a little bit critical and bit concerned about concentrations of power And I really believe that we’re all adults and we should, to an extent, as best we can, run our own lives.

Tom Panos: 

Well said, lou, christopher from SQM. In the chat box there’s the link for you to get on at the website and do a deep dive, on a more local level, of what influences you. I want to thank you so much, lou. You’re always very kind with your time, your knowledge, and I would envisage that today would have been a day that a lot of people would love to hear what you’ve got to say, being an RBA announcement day. So thank you so much.

Louis Christopher: 

No, no, nice to be with you and your audience, Tom.

Tom Panos: 

Thank you so much, everyone signing off. Not a bad half hour, not about to jump off the ceiling.