Latest / The Follio Property Podcast / Melbourne Property 2026: The Buying Opportunity Hiding Inside a National Crash

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Melbourne Property 2026: The Buying Opportunity Hiding Inside a National Crash · The Follio Property Podcast

0:00
Australia's mortgage crisis is becoming a powder keg.
0:02
Millions are now in financial stress.
0:04
Households with a mortgage was left in the red last month.
0:07
There are fresh signs Australians are under mortgage stress.
0:11
We've seen a trillion dollars wiped off of home values.
0:14
30% of people who are in mortgage stress.
0:15
Economy's in big trouble, Rhys.
0:17
Significant trouble.
0:19
from a national perspective for the month, 0.9% decline in house prices.
0:23
That was led by Sydney at negative 1.4.
0:26
Massive falls.
0:27
When a market shifts, so for Sydney to be three times is showing the impact of interest rates and sentiment driving that on a downwards trend.
0:35
So my fear is the decline in Sydney is only going to get worse potentially next month.
0:39
That trend tells me that Brisbane is in for a world of pain over the next two to three months.
0:44
The ripple effect filters throughout the entire market.
0:47
A lot of people are obviously feeling stressed.
0:49
Where are some of the green shoots at the moment across Australia from a property perspective?
0:53
I think...
0:58
You're listening to the Folio Property Podcast.
1:00
I'm Rhys Bettle and I'm here each week with my co-host, Lachlan Delahunty.
1:04
Lachlan, I've been listening to a few episodes recently and I keep saying big episode today, but this is a big episode today.
1:08
It's a monthly market wrap and we're doing a deep dive across a lot of capital cities we've been getting called out that we haven't been speaking about.
1:15
And we've even got some data here on some regionals as well.
1:18
A lot to unpack.
1:18
It was a big month.
1:20
A lot of negative data sets that were reviewed and again, it's an unbiased podcast.
1:27
Let's call it how it is.
1:27
It wasn't a great month.
1:29
Okay.
1:29
Let's just do a deep dive onto the headline figures and then we'll have a look at some other stuff like interest rates, lending, migration data, then do a bit of a deep dive in some of the capital cities.
1:40
Looking at from a national perspective for the month, 0.9% decline in house prices.
1:46
That was led by Sydney at negative 1.4, followed by Melbourne at 1.1, Brisbane 1%, negative 1%, Perth and Adelaide at 0.8%.
1:58
Negative 0.8%.
1:59
Negative 0.8%.
2:00
So they're the big capital cities we talk about.
2:03
every week on our weekly updates, but then also looking at Darwin was the only city that saw growth, 0.60% growth, and we also saw Hobart with a minimal decline of 0.2%.
2:16
So Sydney, negative 1.4% lead in the pack, followed closely by Melbourne and Canberra at negative 1.1%.
2:23
Massive falls.
2:24
When a market shifts...
2:26
really anything higher than 0.5% is significant, be that growth or decline.
2:33
So for Sydney to be three times is showing the impact of the budget hitting that market, the impact of interest rates, and sentiment driving that on a downwards trend.
2:45
And it seems to, when you look at the four-week weekly average of median house price decline, it's building momentum.
2:53
So my fear is,
2:55
the decline in Sydney is only going to get worse.
2:57
We could see that again produce negative 1.5% or more as we move into September.
3:04
It's interesting because if you look at the monthly data versus the quarterly drop, so Sydney's done just under nearly 5% negative decline for the quarter, 4.7% negative.
3:17
Melbourne, negative 3.9% decline.
3:20
Now, if you actually look at it from a rolling month average, it isn't as severe as what it has been the other month.
3:24
So it's interesting.
3:25
You've mentioned there the weekly data we also track.
3:27
You do think this is going to gain more momentum moving into next quarter as well, or potentially next month.
3:32
In those major areas of Sydney, but when you break down the...
3:37
segments and that's what I'll dive into now is let's unpack this from a house and unit point of view because that's more importantly because we talk about sub-markets, we talk about markets within markets and then I want to talk through the quartile data.
3:48
Yep.
3:49
Okay.
3:49
So, let's look at big ones there and I've kind of highlighted on my data points is something key I wanted to get your opinion on and it is those Sydney and Melbourne markets where you're looking at units.
3:58
So, for a house perspective, negative 1.8 for the month for Sydney.
4:03
negative 1.4% for Melbourne.
4:05
But if you look at the units, very minimal negative growth.
4:08
So 0.4% for Sydney, 0.5% for Melbourne.
4:12
So you can clearly see that unit market is obviously holding its value a lot better than what some of that housing market is doing at the minute.
4:18
Yeah, and if you go around the grounds, is there any unit markets that actually, you know, picked up some momentum?
4:25
In terms of- Positive growth.
4:27
Positive growth.
4:28
You did see areas we haven't spoken about, probably the only ones that we've seen some growth.
4:32
So that's Hobart and Darwin.
4:34
Hobart is 0.9%, so just under a percent growth.
4:37
Darwin, 0.5%.
4:39
What you've seen across the grounds this month, which is probably different from other months, is actually those markets we've been talking pretty positively about units, such as Brisbane and Perth.
4:48
They've actually had a bit of a decline this month with Brisbane going down a percent and also Perth going down a percent this month as well.
4:54
Yeah, so really the only markets in Australia that are sort of weathering the storm are the most affordable price points in the country, right?
5:02
So when you look at where the investors are going, clearly there's some groups buying heavily into Darwin and Hobart, which is supporting the lower price points.
5:12
And outside Darwin and Canberra, from a yield perspective, Melbourne now, Melbourne units, medium yield is at 5.1%, so that's really driving a lot of investor activity from a value perspective as well.
5:22
Yeah, when you think about where Melbourne was as early as five, six years ago, the second lowest yield market in the country now to be the highest, particularly for that unit market, there is no surprise that we're seeing more commentary around investors entering that lower price point of the Melbourne market.
5:38
What's interesting, Reece, if we dive into the percentage change in days on market, so why this is interesting is I'm trying to look for, obviously you've got short-term, medium-term, and long-term triggers on how markets move.
5:51
And one of the key short-term triggers is days on market because it starts to paint a picture.
5:55
It gives us a trend.
5:56
If you look at the percentage shift between the days on market from this time in 2025 to 2026, there's been significant changes to the days on markets in terms of percentage.
6:06
And if you look at Perth, obviously coming off a low base, we've seen the days on market increase by more than 200%, which is a concerning statistic, right?
6:14
But let's go through the summary there.
6:16
Where are the markets any improved?
6:18
Have they all gone backwards as expected?
6:20
Yeah, so Adelaide was probably the most neutral with only just a 6% differentiator there, but you're completely right.
6:26
Perth leading the way with the biggest change in terms of an increased days on market.
6:30
But it's come from a very low basis.
6:31
Correct.
6:32
Yeah, the lowest that there was out of any market here.
6:35
And what was it?
6:35
11 days.
6:36
11 days, now out to 30.
6:37
34.
6:38
34 days.
6:38
Okay, let's talk through the other markets.
6:40
So you're looking at Sydney as a 70% increase, so going from 30 days on market to 51.
6:45
See, that concerns me more than a market like Perth, and people would argue, well, one's only done 70%, the other's done 200%.
6:51
30 days is about an average campaign when you think about ...
6:57
Four-week campaign, an auction campaign, typically it's about four weeks.
6:59
That's pretty industry standard.
7:02
So that's a 30-day average or median days on market is par.
7:11
For that to then increase from 30 days to, what was it, 50?
7:14
51.
7:14
51.
7:17
is significant, and that 70% is more concerning now.
7:20
Things are sitting on there for almost double the time that they were in what was already considered a balanced market, certainly not a market that was at 10 or 15 days on market.
7:32
The interesting one though, and this kind of feeds some commentary we've said over the last couple of months, but Brisbane had a big shift as well.
7:38
Not as severe as Perth, however, was starting at a higher base than Perth from a days on market.
7:43
That's gone from 19 days on market to 46.
7:45
Yeah.
7:47
And for a market that's not auction based, and that's the difference.
7:49
So with Sydney, it's an auction based environment.
7:51
Auctions are short and sharp.
7:52
Four week campaigns, and that's why your sort of base level numbers are going to be at 30.
7:57
Brisbane is in an auction market, therefore the days on market is similar to Perth.
8:01
where things are launched and in a hot market, they say within two weeks, and leans into the fact that Brisbane's been one of the most hardest hit markets across the country.
8:10
And that trend tells me that Brisbane is in for a world of pain over the next two to three months.
8:16
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8:35
We get some heat, I guess, for not calling out Canberra, so I thought we'd just touch on a couple of the Canberra and Darwin data points there as well.
8:44
So while we're still on the topic of days on market, both those markets are pretty stable.
8:48
So starting from a very high point, so Canberra, 50 days on market this year, was 45 last year.
8:56
We're looking at Darwin, 39 days on market last year and 43 this year.
9:01
Canberra very much following a similar trend from a days on market as the big capital city, Sydney and Melbourne.
9:05
Yeah, and again, these are demand indicators.
9:07
This is showing us activity on the ground.
9:09
And we know when days on market increase, it means there's more available stock, therefore less scarcity, putting downward pressure on pricing.
9:16
So for even Darwin to go from 35 to 42 suggests next month we may see a neutral median house price or potentially may see Darwin go into the negatives.
9:25
What about Hobart?
9:27
Hobart there, we have...
9:30
Hobart's gone from 27 days to 32 days, so about an 18.5% jump up.
9:36
Not concerning yet, but again, we're seeing a softening from the demand side of the equation across the board, and it's not surprising where sentiment has shifted.
9:43
What I want to hear is, what I'm interested in is, we talk about the affordability index often, where the problem was with the Australian property market and why the government has probably targeted and are proud the fact that the price is reducing is because earlier this year, almost all markets across the country hit their peak.
10:00
Let's go through market by market of which markets are still at their peak and all those that have come off
10:05
Well, the only market at the moment that is at its peak is Darwin.
10:08
Interesting.
10:09
So that is probably, you know, for those that are investing heavily at a market that it's at its peak pricing is probably to be a little concerned.
10:18
But what other markets have come off significantly right?
10:20
This year has been where majority of the markets have come off.
10:23
So, if you're looking at Hobart was March 20- sorry, if you're looking at Perth, it was April 26, which has come off 3.2% since its peak, which may surprise some people because it's had some, I guess, a bit of a run of negative decline recently.
10:38
Adelaide and Brisbane, their peak was in May 26, so we're now 2.7% off its peak in Brisbane, 1.6% off its peak in Adelaide, and then Sydney, February this year was at its peak, and we're already down 7.1%.
10:51
That's a sharp fall.
10:53
The largest recording of negative growth in the last 40 years was 8.2%, and we're sitting at 7.2%.
11:03
7.1%, negative 7.1%.
11:04
7.1%, and the demand indicators that we spoke about before in terms of days on market, and when you look at auction clearance rates, still in the 40s, we could see this year play out and see Sydney drop another 4% to 6%, which would leave it in sort of 12%, 13% negative territory for a 12-month period, which will be the largest median house price fall on record for the Sydney market.
11:28
Yeah.
11:29
Canberra and Melbourne, similar trends in terms of their property cycles as well.
11:33
So Melbourne, its peak was March 22.
11:35
So 2022 is a four years ago.
11:38
Canberra was May 22.
11:40
Both down from that initial peak.
11:42
Melbourne down negative 6.8%.
11:45
Canberra down 0.5, 0.2%.
11:47
Are they following a similar property cycle?
11:50
No, they're all moving at different paces because what's interesting about Canberra and Melbourne is you've got to look at the time period.
11:57
And why that's important is because property is typically ahead against inflation.
12:01
So inflation over the last four years, we're in a high inflation environment, netted out at circa 4%.
12:07
4% over four years is 12% growth.
12:10
So if a market's gone backwards by 6%,
12:13
against inflation at 12, we're talking about a market that's essentially done about 18% negative house price growth because it compounds because that's what property is.
12:24
Effectively, it is a hedge against inflation.
12:27
And so for Melbourne to come off 6% over a four-year period in a highly inflationary environment,
12:34
It essentially means it's extremely underperformed in comparison to the short and sharp decline that we've seen in Sydney.
12:42
It's certainly better off to fall hard and fast and rebound than a Melbourne market that essentially has gone backwards now for seven, eight, almost nine years, right?
12:55
Albeit four of that's come in, a majority of that's come in the last four.
12:59
Well, there's a good segue into looking at the last five-year and 10-year trends across the markets, and it's painting a pretty two-speed economy that we've obviously been speaking about this year in terms of Brisbane, Adelaide, Perth running at one speed versus maybe Sydney and Melbourne.
13:14
I just want to talk through these figures over the last five years and get your commentary on it.
13:18
The Sydney market over the last five years up 5.6%.
13:21
So Sydney, very much a yo-yo market because there's been peaks where it's gone on a run and peaks where it's had the biggest declines.
13:27
Melbourne's still down 3.9% in the last five years.
13:30
Brisbane up 64%.
13:31
Adelaide up 64%.
13:32
Perth up...
13:35
let's call it 80%, 79.7%.
13:38
And then looking at some of the other ones that we were recently touching on, Hobart's at 11%, Canberra's at 6%, and Darwin's at 30%.
13:47
Anything there that kind of surprised you in terms of those figures that have last five years?
13:51
And can that paint a picture moving forward?
13:54
Yeah, the underperformance.
13:55
Let's look at the underperforming markets there.
13:56
Canberra's done what over the last five years?
13:58
6.3%.
13:58
Melbourne?
13:59
6.3%.
14:01
Negative 3.9%.
14:02
Hobart?
14:03
11.5%.
14:04
So, you know, that is interesting, right?
14:07
Things that when we look for markets and what we do as a business resource, obviously we track the long-term compounding growth rates.
14:14
All three of those markets, the long-term compounding growth rates since 1974, they're all above 6%, yet they've traded well below that over the last five and likely 10-year period.
14:26
So, you know, underperformance doesn't correlate...
14:30
to overperformance later on, but it is a really good indicator to see which markets are getting left behind.
14:36
What's also important to understand, those that, the fear mongering headlines that the markets are falling and there's blood in the water and a market like Perth that's come off 3% and people are saying it's doom and gloom off the back of 80% in the last five years.
14:55
If you're still 77% up, I'm sure you're very comfortable in your equity position and your quality of life as we speak.
15:01
So let's have a reality check, guys.
15:03
Those that are writing these articles that the despair that the government has caused on the back of falling house prices, those that have rode the markets for the last five years have done extremely well.
15:17
And if you are taking a 3%, 5%, 10% haircut on what is 60%, 70%, 80% growth, I'm sure your portfolio is still healthy.
15:24
The Sydney one's the most fascinating in terms of it definitely is yo-yo, right?
15:28
Like when I'm looking at some of the data here, I'm looking at monthly, quarterly, 12-monthly, from peak, five-year, 10-year.
15:34
It's very hard to- It's out of cycle.
15:36
Out of cycle.
15:36
It almost has its own cycle.
15:39
But if you correlate the Sydney market, if you want to draw any correlation, follow the cash rate and anything to do with monetary policy.
15:47
And it does start to lean towards a trend.
15:51
And there's no surprise in that in the highest interest rate environment that we've been in, we've seen a decline in Sydney house prices.
15:59
Also, every time it's exceeded its historical affordability ceiling, albeit everyone in Sydney says, we don't buy properties with debt, we buy it with cash.
16:10
They're lying.
16:11
They are the most impacted by the affordability index at any other market in the country and so volatile towards the cost of money and the accessibility of credit.
16:21
And we're seeing that play out right now.
16:23
Let's segue into interest rates there.
16:24
You've kind of beautifully said that Sydney is obviously the one that's so reliant on interest rates from a housing price perspective.
16:32
We're looking at trim mean CPI still stuck at 3.6% above target.
16:37
Household spending jumped 1.1% in July as well.
16:40
Markets are now pricing in a November hike from a cash rate perspective.
16:44
And as of present recording, pricing in about 92% is going to happen.
16:49
I couldn't disagree with that anymore.
16:52
And hopefully we can go back on this recording.
16:54
So the markets have priced in a 91% increase in interest rates.
16:59
Yeah.
16:59
I'll stand here.
17:00
I'll retire off this podcast if that happens.
17:03
Call it right here.
17:04
There's absolutely no way when you've got a falling headline inflation figure.
17:09
So the headline inflation figure has dropped from 3.8 to 3.6, yet headline media, you would have assumed that it increased.
17:17
The article was that they assumed that headline inflation was going to drop from 3.8 to 3.4, but it didn't.
17:23
It dropped to 3.6.
17:25
So reading through that, we have a falling inflation figure.
17:30
Headline media would have suggested it was rising, but the headline media was the fact that inflation is falling and unemployment is rising.
17:37
You've got the most catastrophic
17:40
tumultuous residential market in the country.
17:43
We've seen a trillion dollars wiped off of home values.
17:45
You'd be the bravest RVA to increase the rates a month before Christmas.
17:50
Just think about that.
17:53
I will be, like I said, I'll retire from this podcast if we see a rate rise in November.
17:58
Well, the interesting thing as well, I obviously read that article as well, and it's why we've brought it up, but they're talking about November.
18:05
So there's still a decision to be made in September.
18:07
So I'm assuming what they're thinking is because it didn't come down as much as they thought it would, they're thinking that's going to lag into November.
18:15
They're waiting for the quarterly inflation data, right, which is released in October.
18:21
So they're obviously assuming that the quarterly inflation data is going to be, you know,
18:29
out of sync with the monthly data.
18:32
But again, I just, with the information we've got at hand today...
18:36
It would be a very brave RBA to bring on such a beautiful Christmas present for the Australian people.
18:44
I just can't see it.
18:45
The quarterly data, when that comes out around inflation, is dramatically different to the monthly data figures.
18:52
Then I'll be, like I said, I'll be out of a job here, so I'll have a bit more time on my hands.
18:57
So I, by the sounds of it.
18:59
Yeah.
19:00
You'll be doing it with Jono and Ben.
19:03
Okay, let's talk through vacancy data, rental data as well.
19:08
So we've got access to some of it, not a full breakdown at this stage.
19:11
We generally get that data mid-month.
19:13
However, just from a national perspective, looking at rents now, we've got a podcast coming next week where we talk a little bit more on this as well in terms of- The outlook.
19:21
The outlook on that rental data.
19:23
Now, national rents are up 5.7% annually, which is about 38 bucks a week.
19:27
And I know we've set forecasts-
19:29
off the back of the budget where it was, I think, WA is up about $22 a week since the budget alone.
19:35
$22, yeah.
19:36
And we're looking at annually 5.7.
19:38
Perth leads it 56% over the last five years, and that's probably been a lot to do with the investment boom, I guess, in Perth or the property boom as well.
19:47
Vacancy rates are pretty tight across the board at 1.9%, which is well below the 3.3% we saw in COVID.
19:53
Yeah.
19:56
What's your thoughts on some of the rental data that we're seeing at the moment?
19:59
So our national average of vacancy rate of 1.9%.
20:01
Correct.
20:02
When a balanced market is between 2.5% to 3%.
20:06
So it's telling us that we have a significant shortage of properties.
20:11
Yeah.
20:11
And this was in the lead up to the budget.
20:13
Then obviously the budget's taken place, which is de-incentivized investment.
20:17
which will reduce more rental.
20:18
So we could see this rental figure.
20:20
And we know on the supply side of the equation, we're seeing one of the biggest builders in Sydney go bust.
20:24
So construction is getting harder.
20:28
Investment is becoming less common or certainly somewhat removed from the marketplace.
20:35
So we will see vacancy rates across the country continue to fall, which will put more pressure on rents.
20:42
And this is where the conversation, and with the current government where I'm concerned, the conversation is going to go around rent capping, which will again...
20:51
we have more unintended consequences, we'll push more investors out of the market, which will essentially mean that vacancy rate will get crunched again.
20:57
So positive for investors, you're gonna, anything that you've missed out on, negative gains, any sort of cash flow that you've lost from negative gearing over the next two to three years, you may make up on the rental side because we're gonna see national rents surge in those yields that we're talking about, are starting to close in on what the cash rate or what the cost of debt is.
21:18
Looking at the vacancy rates from a capital city perspective, comparing July 26 versus July 25, you can actually see Melbourne, Perth, Adelaide and Canberra have all seen a significant drop in their vacancy rates.
21:34
So 0.1% for Melbourne and Perth and Adelaide and Canberra down 0%.
21:39
0.2% as well.
21:41
So they're trending that way.
21:42
Most other markets are stable.
21:43
The only market that's seen an increase in vacancy rate, probably similar to do with this yo-yo effect we've been speaking about earlier, but is Sydney, but everywhere else is either stable.
21:52
So where's Melbourne in 2025?
21:53
Melbourne in 2025 was 1.8% and now it's 1.7%, so it's dropping.
21:58
Yep.
21:59
And that is consistent to what we're seeing and hearing on the ground, which correlates into rising rents.
22:04
Let's just touch it quickly on some lending data as well.
22:06
So we've been mentioning through the podcast recently about the decline in applications across the board with major banks, also looking at first home buyers being a significant drop off.
22:16
And we've seen data we've spoken about on the podcast previously regarding banks, lenders, mortgage aggregators while all saying there's a share down.
22:23
There's a recent article that I was reading this week by Roy Morgan and it was, they had done some analysis on mortgage stress and it's actually at an 18 year high.
22:32
at 32.5% of people are now starting to have some mortgage stress and how they determine at risk, that's now jumped to 22%.
22:40
So, I guess what I'm getting here is we are starting now seeing an increase on a credit perspective as well off the back of these rate rises we've seen over the last 12 months.
22:47
So talk to me, high level, what are the figures around mortgage stress?
22:51
Mortgage stress, 32.5% from July 26, about 1.79 million people have hit mortgage stress.
23:00
37% of people with mortgages are in mortgage stress.
23:03
32.5%, 1.79 million.
23:08
So to say, looking at those figures, there's probably more people that have mortgages.
23:10
I think this is probably the pull that they've done the survey on.
23:13
But still, that's a big group.
23:15
If 30% of people are in mortgage stress, our economy's in big trouble, Reece.
23:19
Like, significant trouble.
23:21
We wouldn't have seen that since COVID.
23:23
And then banks had to step in and provide interest-free support.
23:28
This is what the unintended consequences of the budget, it's the flow on effect.
23:36
You see when prices come off as aggressive as they are, you see builders go bust, you see big developers go under because they've bought things in an environment where feasibility is stacked up, now they don't, so they sit on this land, they have to force sell them, they go under.
23:50
The ripple effect.
23:52
filters throughout the entire market.
23:54
And yeah, a lot of people are obviously feeling the stress because it's not only is the loan and the market negative equity situation, but the cost of living is high race.
24:05
And that's in the data.
24:07
People are feeling the pinch and discretionary spend is coming off, albeit the data suggests it needs to come off more before the RBA are going to change their view on the cash rate.
24:17
Looking across the board with some of the major lenders here, Macquarie, CBA, Westpac, NAB, ANZ, they've just released some of their year-on-year growth across owner-occupied mortgages, so principal place of residence for those listening, versus investment, comparing June versus July's figure, so looking at the last month data.
24:36
No surprise from an investment standpoint, all major banks are seeing a decrease except for ANZ.
24:42
So ANZ might have some nice policies out that are attracting investors.
24:46
I just recently refinanced one of my investor lines, ANZ, so that's probably- You're not sponsored by ANZ.
24:51
That's the only one I've seen a slight increase.
24:54
But not crazy figures here, right?
24:55
And I think this is, you know, we've seen, we did a podcast recently.
24:59
We spoke about what the ABS data is showing from a quarterly perspective about invest in lending going, I think it was down about 8%.
25:06
But looking at some of these figures here, it's not super crazy at this stage.
25:09
And actually, rather than just being investors seeing a decline, it's seeing a decline across owner-occupied mortgages as well.
25:14
Bank's share is down.
25:15
That's essentially the end of it.
25:16
Which is...
25:17
it's going to be in a competitive environment.
25:19
So you're going to start to see banks being a little bit more creative with their policies and trying to throw incentives around.
25:25
So it may be a time to check in on that.
25:28
Okay, Lachlan, we've covered some headline figures, a lot of negativity in some instances, but there is obviously some positivity there.
25:36
You mentioned from your perspective you don't see another cash rate decrease from an interest rate perspective.
25:43
I have probably just said there as well from a lending perspective, it is down, but it's not...
25:46
It's not down by the crazy figures that people did anticipate pre-budget or just after budget.
25:51
Where are some of the green shoots at the moment across Australia from a property perspective?
25:56
Yeah, so if you look at...
25:58
The tailwinds, a falling vacancy rate is a really good lead indicator.
26:03
And we've seen that if you look to correlate any market that goes on a growth run, if you see a fall in vacancy rates and increase in rents, typically 12 to 18 months correlates to house prices.
26:12
So I think a big tick on vacancy rates, we want to see that continue to reduce for investors.
26:18
I'm speaking purely from an investment point of view.
26:20
That's a massive positive.
26:21
The unit data
26:22
So if we look at houses and units, units is a massive tick.
26:25
We're seeing sub-markets across Australia, particularly that lower to middle quartile.
26:31
We're seeing obviously markets within markets, some ticks in those sub-markets of units and particularly some of the more affordable price points in places like Melbourne.
26:42
I do think...
26:44
The worst is behind us when we look at the cash rate and the current lending environment.
26:48
I think the next thing we'll start to hear more about is some of this serviceability buffer stuff, Rhys.
26:53
It's sort of been swept away, but currently mortgages are getting assessed at a 9% interest rate because there's a 3% serviceability buffer.
26:59
So...
27:01
There is going to be some talk, and I think in any sort of downturn, you'll see a change.
27:08
There'll be a lever pulled to allow access to credit.
27:11
So that could be in the form of a reduction from 3% to 1.5% from the APRA serviceability buffer.
27:22
and or potentially some rate cutting into 2027.
27:26
So I think there's some green shoots around there and a swinging government.
27:30
I think there's no better place to, you know, arguably a fair portion of why we're in, why we're recording some of these figures on the back of some policy from a government so they wouldn't do it.
27:40
Going into a Victorian election, which typically
27:43
or has been for the last decade anyway, are very much a Labor state for that to, you know, if the coalition were to take that market, I would think that would ripple across the country and, again, provide some green shoots.
27:55
So I don't think it's all doom and gloom.
27:56
If I was going to look around the grounds to see the best opportunities, I think Melbourne units represent tremendous value.
28:02
Canberra's starting to come on from a data point of view, five years of very minimal growth, starting to represent some really good value there.
28:08
Concerns?
28:09
I'm still concerned for Sydney.
28:11
I think buying now, you're buying too prematurely.
28:13
I think you're going to see more pain and significant pain.
28:16
I think Adelaide and Brisbane are in for a pretty tough six to nine, maybe 12-month period, even beyond.
28:23
And looking at, you know, when we spoke about it earlier in the episode regarding the five-year trends, the 10-year trends there as well, and looking at how it's performed since its peak, each of these capital cities,
28:34
Would it be fair to say Sydney definitely, and followed closely by Melbourne, although it's been in pretty stagnation for five, six years now, are they running at a different speed to these other major capital cities?
28:48
And will they potentially come out of the other side before these other capital cities do?
28:52
I definitely think so.
28:53
If you look at how cycles work, Melbourne and Sydney led the race across the country out of the GFC.
28:59
And Melbourne and Sydney are going to lead us out of this rut.
29:02
So my bet, I think Melbourne, regardless of...
29:07
those headline figures represents tremendous value and there is some markets there currently and you may take an early call on it, but I certainly am positioning my portfolio in that direction and we'll keep a close eye on Sydney, but again, too prematurely, but they will lead the market out of this.
29:24
I think Brisbane and then later in from some hurt, particularly Adelaide, spoke about that.
29:28
And I think Perth, you know, just because of the sheer undersupply and the amount of infrastructure and the strength of the economy, and that's what people fail to realise,
29:38
They say we're a little bit biased towards Perth.
29:41
Elbow past the, they're not going to touch GST.
29:44
There's no state anywhere near the financial position of Western Australia.
29:49
So what does that mean?
29:50
That means they just keep pumping in infrastructure, which means higher wages.
29:54
Higher wages means more access to credit.
29:56
More credit means they're typically tipping that into the market.
29:59
So it is a bit more protected, far more sheltered than the rest of Australia because of that reason.
30:04
But still going through a...
30:06
you know, it's trying to work itself out.
30:08
Now, that's what a lot of these markets are doing, Rhys.
30:10
They're trying to work themselves out and certainly feel that there is, you know, more positive sentiment in the market than there was two to three months ago, but we're not out of the woods.
30:21
Lachlan, what I want to summarise and finish the podcast on today is get your actual investment rating for each of the capital cities, including some of the ones we miss out on.
30:32
There's a popular TikTok Instagram trend called the S tier rating system, but we both agree we don't understand what the S means.
30:38
So this is going to be A, B, C, D, S.
30:41
and that's what I want to get your rating on.
30:42
Now, because markets are moving at different cycles and different asset types are moving at different cycles, I do want to get your opinion on houses versus units.
30:49
So what's your investment grade rating for Sydney?
30:52
Sydney houses, D. Sydney units, B+.
30:58
What's your investment grading for Melbourne?
31:01
Melbourne houses, C. Melbourne units, A.
31:05
B.
31:06
What's your investment grade rating for Brisbane?
31:09
Brisbane Houses, D. Brisbane Units, C. What's your investment grade rating for Adelaide?
31:17
Adelaide Houses, D. Adelaide Units, D. What's your investment grade rating for Perth?
31:24
Perth Houses, C+.
31:27
Perth Units, B+.
31:30
What's your investment grade rating for Hobart?
31:33
Hobart Houses C, Hobart Units B+.
31:38
You've been listening to the August monthly update from the Folio Property Podcast.