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Australian Units Are Going On A Run While Houses Crash | Property Experts · The Follio Property Podcast

• 0:00
  House prices are continuing to slide, with 93% of capital city suburbs recording falls through the winter.
• 0:07
  Well, there's one that has dropped 36% from sale to sale in the last three years.
• 0:11
  Values are falling quite dramatically.
• 0:12
  Or is there markets that are predicting to fall in?
• 0:14
  We're talking double digits in terms of the different speeds and velocity of falls.
• 0:18
  Sydney, upper cordial is down nearly 11%.
• 0:20
  So on the ground, examples of things that have fallen 20, 25%.
• 0:24
  Melbourne as well, nearly two and a half times, come off more on the top end.
• 0:29
  Now that interest rates have risen, for you to stroke interest rates up to 7%, you're getting stress tests at about 10, 10.5%.
• 0:35
  The bank won't let me until affordability comes back into the market.
• 0:38
  So where do we go from here?
• 0:39
  The markets with the most runway will likely have a higher probability of responding and rebounding because...
• 0:48
  You're listening to the Folio Property Podcast, the number one property podcast.
• 0:52
  I'm Rhys Beddle and I'm here each week with my co-host Lachlan Delahunty.
• 0:56
  Lachlan, you've been a busy man across socials and YouTube over the last week.
• 1:00
  You've just launched a new channel.
• 1:01
  I had to break away, Rhys, because I'll be out of a job here at the Folio Podcast very soon leading up to the RBA's meeting in November.
• 1:08
  So branching away, mate, doing my own thing.
• 1:11
  Break up.
• 1:12
  This is it.
• 1:13
  This could be it, Rhys.
• 1:13
  It is a deep data dive.
• 1:14
  So the whole reason you've launched the new channel is to highlight some of the data through PropStack and those that are probably looking at some higher level data insights is probably the channel for you.
• 1:24
  Yeah, jump on.
• 1:24
  What is it?
• 1:24
  It's Lock and Dell Honey, isn't it?
• 1:26
  Lock and Dell Honey.
• 1:26
  Jump on.
• 1:27
  It's probably not for everyone.
• 1:28
  It's those that are probably more into their data and fascinated, like data nerds like myself that want to go into markets and understand the mechanics and it is, you know, it's a
• 1:38
  Heavy data sets, but if you enjoy that, jump on, have a listen, hopefully grab some value out of it.
• 1:42
  Perfect, and speaking of data, today's episode, what I really wanna talk about is look across the market in Australia in terms of the lower quartile, medium quartile, upper quartile, so different price points.
• 1:55
  Different asset class, so really looking at houses and units across the board as well.
• 2:00
  Having a look at some of the data that we've got through PropStack to identify, is that market undervalued?
• 2:06
  Is there opportunity there?
• 2:07
  Or is there markets that are predicting to fall in, I guess, 2027 now?
• 2:11
  Yeah, a lot of the comments and people reaching out is trying to unpack these markets within markets.
• 2:16
  A lot of uncertainty and for the most part, values are falling quite dramatically.
• 2:21
  But what's interesting when you look at the data, there's such a disparity between the falling house prices between different assets, but also different sub-markets.
• 2:30
  So when you look at the quartile data, which we're about to go through now, the PropStack quartile data,
• 2:34
  And feel free to jump on PropStack and go through all this information yourself to try to work out which markets are falling harder than others or where there is some potential opportunity.
• 2:43
  But it's really clear when we go into this data race that, wow, I thought there might have been six to seven markets throughout the country now.
• 2:50
  Like when you open it up, we're talking double digits in terms of the different speeds and velocity of falls.
• 2:57
  Absolutely.
• 2:57
  For those that are listening, I'll explain as best I can, but this is a very visual podcast today with some of the data that we're going to be rolling out.
• 3:04
  Now, across the board, so this is looking at since its peak.
• 3:07
  So since its latest peak, Sydney upper cordial is down nearly 11%.
• 3:11
  This is the data.
• 3:12
  So on the ground,
• 3:13
  It's significantly worse than that because we know data lags.
• 3:16
  So 11% in reality on the ground is closer to sort of 17%, 18%.
• 3:21
  Examples of things that have fallen 20%, 25%.
• 3:24
  Yeah, especially in those eastern suburb region in Sydney as well.
• 3:28
  For like properties, we've seen an example.
• 3:30
  There's one that's dropped 36% from sale to sale in the last three years.
• 3:34
  Yep.
• 3:34
  Yep.
• 3:35
  Melbourne as well, 10.5%, so very similar to Sydney.
• 3:38
  They're the two, look, let's just stick with Sydney and Melbourne for now and talk about the upper, medium, and lowest.
• 3:42
  For houses, nearly 11% for both.
• 3:45
  Medium, Sydney's come off more, 7.5% since peak.
• 3:49
  Melbourne's about 6.5%.
• 3:51
  Lower quartile for houses, Sydney's still a 5.4% decline, whereas Melbourne is at 3.9% decline from a house perspective.
• 4:00
  So you can clearly see there when you're looking at the upper quartile versus the lower, somewhere like Melbourne is nearly two and a half times come off more on the top end than what it has on the bottom end for houses.
• 4:11
  And Sydney's double from what the bottom end's looking like as well.
• 4:15
  So when you're looking at this for listeners to understand, for Sydney, the lower quartile's 1.15 mil, so anything under that, and for Melbourne, it's 750.
• 4:23
  So those price points, people are saying, well, why aren't they falling like the rest of the country?
• 4:29
  Well, there's a few things.
• 4:29
  plane.
• 4:30
  You've got obviously this 5% deposit scheme.
• 4:33
  Both those markets really active, although we know that first-time buyers have pretty much come out of the market.
• 4:37
  Those that are still getting access to it are competitive, but we know that investor groups and investors in general typically, now that interest rates have risen, are getting pushed into that lower quartile as well.
• 4:49
  So, you've just got more buyer activity,
• 4:51
  And, you know, it's still difficult to bring on new stock.
• 4:55
  So we're looking in the construction data and commencements and approvals is down nationally.
• 5:00
  Developers now are getting nervous and therefore not bringing on as much supply.
• 5:04
  So the supply equation hasn't changed.
• 5:06
  If anything, it's come off.
• 5:08
  But demand, albeit well and truly reduced significantly since pre-budget across the board,
• 5:15
  The demand that is left in the market is typically in that early quartile in pretty much all markets across the country, especially in South Australia and Adelaide.
• 5:23
  If you look at that initial quartile, it's one of the strongest markets, albeit negative house price movement.
• 5:30
  It's one of the hotter markets in the country.
• 5:32
  The other markets that we touch on here and looking at the two-speed economy that we've been speaking about throughout the podcast over the last 12 months, their peaks were only a couple of months ago, right?
• 5:41
  These markets have only just started coming off, so nowhere near as significant as what Sydney and Melbourne has.
• 5:46
  We spoke at Brisbane, Perth, and Adelaide.
• 5:48
  Not much movement between – all of them not really much movement between the lower and upper, whereas Perth and Brisbane are running at a very similar trajectory to what Adelaide is.
• 5:56
  Adelaide is only between negative 1.4 to negative 1.8.
• 6:00
  Obviously, Sydney and Melbourne led this downturn post-budget.
• 6:03
  We've seen significant falls, particularly in the first three months post-budget.
• 6:06
  Adelaide, Brisbane and Perth are now catching up.
• 6:08
  My forecast is they'll fall harder in the back end of 2026, because we've already seen a significant portion of that in our two majors.
• 6:16
  Going through the unit data, I won't read through every individual decline because it is decline across the board.
• 6:22
  But I just want to highlight some figures here.
• 6:24
  So the lower quartile for units across the board is obviously the best performing asset with every capital city.
• 6:31
  One to note, a market like Melbourne who is following Sydney from a house perspective in quite aggressive negative growth, negative decline.
• 6:39
  That is the second best performing market behind Adelaide.
• 6:43
  And the other one I want to call out, Lachlan, as well, is the Perth market, actually.
• 6:46
  So, Perth units across the board, particularly the upper and medium, are coming off the hardest comparing to houses.
• 6:53
  And that is a very different trend when you're looking at units versus houses in other capital cities.
• 6:58
  What's your opinion on that?
• 7:00
  If you look at the most exhalerated growth in the country in the lead up to the budget, Perth units in the 12 months prior was the strongest market by a long way.
• 7:08
  So when you see that, if you look at the FOMO phase prices that you're seeing getting paid for units in Perth when there was a significant shortage of property, that market got down to listings close to 3,000 listings.
• 7:23
  are significant, that is, crisis levels under supply increased by almost 200% in that market.
• 7:30
  Therefore, it isn't a surprise to see such a correction.
• 7:34
  It's to say that the market was definitely overheated when it concluded its run in March.
• 7:39
  Yeah, interesting insights there from a Perth perspective and why we're starting to see some negative decline in the unit market as well.
• 7:46
  So looking at this, Lachlan, so for those that can't see, we've got the visuals here from a house price and a unit price movement across the board from a upper, lower and medium quartile.
• 7:56
  Where do you see these markets moving 2026 and into 2027?
• 8:00
  The markets that have been hit hardest?
• 8:02
  are likely to bounce back the quickest.
• 8:04
  And in referring to, he's a real estate agent, so he sells high-end properties.
• 8:09
  So he was referring to high-end properties in Sydney will bounce back the quickest.
• 8:14
  the quickest because they're falling the hardest, the most aggressive, and they're the first to fall out of this cycle post-budget.
• 8:19
  I completely disagree with that philosophy.
• 8:21
  And obviously, if you read behind the lines, he's an agent in the eastern suburbs, therefore has an agenda to want to try to push activity in that market.
• 8:28
  If you look at Melbourne and Sydney, by far the hardest hit market is that top end.
• 8:33
  The data shows that.
• 8:34
  The only way I can draw any conclusions of what could happen next, and it's just typically it's an opinion.
• 8:39
  An agent had an opinion.
• 8:40
  He believed the high-end market in Sydney will bounce back.
• 8:43
  I couldn't disagree more because when I look at the data and that's where I form my opinion, it paints a very different story.
• 8:50
  I think the best way to try to answer that question is looking at the affordability index in these markets.
• 8:56
  We did an episode on this two weeks or three weeks ago.
• 8:59
  Reece got a lot of questions, a lot of interest.
• 9:01
  So if you want to check this out yourself, jump into PropStack, go into the data index
• 9:06
  click on the affordability index, which Rhys is showing on the screen now, and you can look at the runway data.
• 9:11
  So we went through this particularly for houses to show how hard markets can continue to fall based on their affordability ceiling.
• 9:18
  What we didn't touch on in that episode, Rhys, was really the more affordable price point.
• 9:23
  So the question was, which markets?
• 9:26
  What's going to happen from here in terms of that low, middle, and high quartile?
• 9:29
  Well, let's look at the disparity between the affordability index in terms of that runway data between houses and units, because it paints a pretty interesting story and probably answers that question better than any opinion that I've come across in recent times.
• 9:42
  And just for those that haven't heard us talk about this through the last 18 months, the affordability index is the medium household income consumed by the medium household mortgage repayment.
• 9:51
  So when rates go up, the affordability index goes up.
• 9:55
  When prices go up, the affordability index goes up as well.
• 9:57
  So just have that in the back of your head.
• 9:59
  But yeah, you can see right now for those that are watching us on YouTube, watching us on Spotify, I've got the affordability index.
• 10:05
  But what we wanna talk about today is actually that forecast and looking at the runway.
• 10:10
  particularly across, you mentioned there Lachlan, affordable markets.
• 10:14
  Now this is on a medium interest rate for investment at the moment of 6.6%.
• 10:19
  Lachlan can't say this by the way, so I'm just gonna explain it as best as I can.
• 10:24
  Lachlan I'm sure he sent his data numerous times this morning before we've even done the podcast, but looking at houses you can see there
• 10:32
  Sydney still going to be negative decline from its historical ceiling.
• 10:36
  Brisbane now as well.
• 10:37
  Adelaide, it looks like it's going to come off quite significantly.
• 10:41
  All the other markets as well besides Darwin are below sort of 5% to 10% potential.
• 10:47
  But unit forecast, that's where there's still, even at a 6.6% interest rate, there still is a bit of runway in the market.
• 10:53
  So I'm just going to read out.
• 10:55
  Some of the key ones here, Darwin with the biggest at 63.15% to go from a runway perspective.
• 11:01
  Melbourne at 43.7%, so the next best performing.
• 11:04
  Although we've just mentioned earlier Perth coming off from the historical affordability index, the market's still got potentially 39% to go.
• 11:13
  Canberra 39% and Sydney 23%.
• 11:15
  So significant growth compared to what it looks like from a house perspective as well.
• 11:20
  Rhys, that's not to say, to caveat this, it's not to say that we believe that runway, that growth's going to occur in that particular market, but it's just showing what the market would have to do based on today's interest rate to get to that historical ceiling.
• 11:33
  Now, understand when markets hit their affordability ceiling, it's typically in a time where there's high sentiment.
• 11:38
  So when you've got confidence in a market and a lot of tailwinds,
• 11:44
  that's when you see what we saw in February, markets exceeding their affordability ceiling.
• 11:50
  So that unit market, albeit for the most part of the country, there's between 35% and 55% runway in terms of growth that could occur.
• 11:58
  For that to happen, we would need some positive sentiment.
• 12:02
  But what it shows is in terms of...
• 12:04
  which markets, and to answer that question, ask me first, what's going to bounce back?
• 12:08
  The markets with the most runway, from an affordability point of view, will likely have a higher probability of responding and rebounding quicker than those with less affordability.
• 12:19
  Sounds simple.
• 12:20
  Because the reality is where we stand today, Rhys, and if you were to forecast out and maybe you adjusted the settings there to a 7% interest rate, which is a scary thought and scenario...
• 12:30
  But it shows that top quartile in markets like Sydney that's already come off close to 10%, has the ability to fall another 8% in that top quartile or in that housing market.
• 12:42
  But when you look at the unit market, it's still showing that there's some value there.
• 12:46
  Because when you look at the problem in this particular market is sentiment's extremely low.
• 12:52
  But it really comes down to your serviceability and why affordability is so important.
• 12:56
  That's 7% hypothetical interest rate.
• 12:59
  If that's there, then you're getting stress tests on rates at about 10%, 10.5% because of the 3% buffer.
• 13:06
  So it's even if-
• 13:07
  Sentiment is to change.
• 13:10
  War's finished overseas.
• 13:13
  Victorian was to see a coalition government.
• 13:16
  And the commentary around interest rates was 2027 is they're going to be falling, not rising.
• 13:22
  So overnight, there's a change in sentiment.
• 13:24
  People want to get in and buy.
• 13:26
  Well, their affordability in terms of their buying capacity hasn't changed.
• 13:31
  It will take months for cuts to occur and then months for those cuts to come into the real dollars where the bank assess you not on 10%, but hopefully on seven or eight to give you the ability to afford.
• 13:42
  So that's why that affordability is so important to track.
• 13:45
  So even in the top quartile, if I want to go and buy a home for $3 million, the bank won't let me.
• 13:52
  Until affordability comes back into the market.
• 13:54
  The only way that can happen is rates drop dramatically or wages increase significantly.
• 14:00
  And looking at the employment data, that's a whole other episode.
• 14:03
  That looks unlikely.
• 14:05
  As you said there, if you look at a rate of 7.1, that's two more potential cash rate increases.
• 14:12
  There still is, as you mentioned there, there still is room for growth across the unit market, but it is probably going to come down to sentiment really to see if it can achieve those heights that it historically has.
• 14:21
  Yeah, I wouldn't say that there's room for growth.
• 14:24
  There's runway for growth.
• 14:26
  And that's just saying that those particular markets haven't hit their ceiling.
• 14:30
  They're going to fall less dramatically than the top quartile, and we're seeing that in the data.
• 14:35
  And I think if and when sentiment is to change, they're likely to rebound quicker than that top quartile.
• 14:42
  So they won't be as hit as hard as we're seeing in the data.
• 14:45
  The bottom quartile, the entry quartile, sub 1.1 in Sydney and sub 750 in Melbourne, but
• 14:50
  a holding value is better than the top quartile, and I think they will respond quicker, which is contradictory to that eastern suburbs agent that think the top end will bounce back.
• 15:00
  I just can't see that because even if you want it to and you really want to believe it and you think it's a good opportunity to buy, and I do think for some people who are looking to upgrade, it's probably not a bad time.
• 15:11
  Even if all those things come into play, you still need to get the money.
• 15:14
  And if the bank's not going to give it to you because they're assessing your loan at 10%, then how does that market respond?
• 15:22
  Unless you've got cash and everyone says that's what the Sydney market was built on.
• 15:26
  Well, clearly it's not.
• 15:27
  Otherwise, it wouldn't be coming off quicker than every other market in the country.
• 15:29
  The last five years, I'm just going to read out some high-level data points here as well.
• 15:34
  And for those that can see, we'll have some graphs up here through PropStack, but just seeing the performance across East Capital City.
• 15:41
  The only major capital city, but there's some close units actually outperformed houses in the last five years.
• 15:46
  So units that are 91% growth houses done 85%.
• 15:50
  Adelaide 77% for units houses 80%.
• 15:53
  So very similar.
• 15:54
  Perth 71%.
• 15:56
  Houses 89%.
• 15:57
  And I think that's probably just because it's come off like we're mentioning earlier in the last last few months has probably impacted that.
• 16:02
  Melbourne
• 16:04
  negative 2% decline for units in the last five years, houses flatline, so no growth at all there.
• 16:11
  Melbourne, 5% for units and 15% for houses.
• 16:15
  Sydney, 5% for units and 15% for houses, so nearly triple the houses versus units.
• 16:22
  Darwin done 20% on units versus houses 31, and Canberra done 6% units for houses 8%.
• 16:28
  Lock on, so looking at those markets I mentioned there, Brisbane, Adelaide, and Perth,
• 16:32
  you know, Brisbane actually units have outperformed, but the others are very close.
• 16:35
  And a lot of that run has come at the back end of its property cycle.
• 16:38
  Do you foresee that happening with other markets where houses go on the run first in units or are we starting to buck the trend?
• 16:44
  If you look at that incline from post-COVID to 2024, it was predominantly driven by houses.
• 16:51
  And then you've seen in a later...
• 16:54
  part of the cycle in the last two years, units catch up and it comes down to affordability.
• 16:58
  House is going to run because typically the preference if people can afford them, but then serviceability gets capped out, but you want to live in that same desirable location and you want access to amenity, whether that's city or lifestyle through ocean proximity, but then you get priced out.
• 17:15
  So the next best thing is getting in the unit market, and that's why we've seen that go on a bit of a surge.
• 17:20
  So it really comes down to affordability.
• 17:23
  But
• 17:24
  The missing piece here is the replacement cost.
• 17:26
  And that's why I think units have gone on such a run because the cost to build has increased well over 100% since COVID.
• 17:35
  So forecasting out, and that's why I think this lower core toll, which is typically dominated in that unit space, when we say units, we're not referring to apartments, potentially has more upside down.
• 17:51
  than the housing space because affordability is the only market in the country with a pulse at the moment and you cannot build that particular stock for less than what you can buy it for.
• 18:06
  There's a large disparity between the replacement cost of units in markets like Sydney and Melbourne seems to be the biggest difference in replacement cost of what established property is selling
• 18:20
  But the same is true in those other markets like Adelaide, Brisbane and Perth.
• 18:24
  So that replacement cost is really what creates a flaw in the market in terms of how far things can fall.
• 18:31
  Affordability is one of them, but the replacement cost is really the underlying flaw.
• 18:35
  What does it cost me to buy a piece of dirt and build on that property?
• 18:39
  It typically won't drop significantly below replacement cost.
• 18:43
  Because it can't, because we are still nationally under supply.
• 18:46
  We have a need for housing.
• 18:48
  So that's where I think that unit and entry-level price points have more resilience, but then when sentiment does change, probably has more upside because, A, you're competing in a market with gross affordability.
• 19:06
  And the replacement cost in some examples is 50, 60, 70% more than what you're paying for established property.
• 19:12
  Lachlan, you made some good commentary there regarding replacement costs and potentially opportunity when you are looking at established property.
• 19:17
  What I'm gonna get up for those that are listening now is our new dwelling price index that we've got through PropStack.
• 19:23
  Now what that actually looks at is the percentage change in residential building inputs, such as labor, bricks and steel, things that we use to construct a house.
• 19:31
  And as you can see here with the data I've got on my screen right now,
• 19:34
  Brisbane, Adelaide and Perth are now the most expensive to construct at the moment.
• 19:39
  It's interesting.
• 19:40
  I guess Brisbane is competing now with, you know, the public spending that's happening up there.
• 19:47
  And that's what happens.
• 19:48
  So when you look at Perth is a really good example and Brisbane, when you've got so much public spending through projects, so what we're seeing in Brisbane is obviously lead up to the Olympics.
• 19:58
  You've got local builders competing for labour from public and private, right?
• 20:02
  So it drives up
• 20:03
  labor costs.
• 20:04
  But you've also got construction.
• 20:05
  You look in Western Australia, they've run out of bricks, Rhys.
• 20:08
  They've run out of bricks.
• 20:09
  So what happens for any bricks that are remaining where they can find them when you've got public spending as high as it is with private spending, they're competing for the same material.
• 20:17
  So naturally, you've run out of bricks.
• 20:19
  Anything that's available, cost of bricks has gone up dramatically.
• 20:22
  But then there's going to be more reliance on things like timber and steel.
• 20:27
  So those prices go up.
• 20:29
  So,
• 20:31
  That aids these particular markets.
• 20:33
  So what you just said then about the most affordable markets to build a house is Sydney and Melbourne.
• 20:41
  Placement cost acts as the flaw.
• 20:43
  So it concerns me with Sydney as it's the most unaffordable and it's the cheapest place to build a house, therefore arguably the lowest replacement cost in comparison to its median house price, creates this narrative of significantly larger falls in that market.
• 21:00
  And potentially, when you look at Melbourne, at that higher end, the replacement cost to build a house is cheaper than that in these other markets.
• 21:07
  So that's where the floor sits a little bit higher in markets that it does cost more to build.
• 21:13
  Because, like I said, the natural floor is typically that replacement cost.
• 21:16
  And do you think the market's like, so for those that are listening, I'm just hovering over back in September 2022 where there was a severe building shortage across some of the, especially Perth.
• 21:28
  Perth was leading the charge, but Brisbane and Adelaide as well.
• 21:30
  Now, the prices have come down from those points, but they were significantly higher than Sydney and Melbourne.
• 21:36
  Do you think there's still a bit of a lag coming from 2022?
• 21:38
  Yeah.
• 21:39
  Yeah, that uptick in 2022 was obviously post-COVID and was driven a lot by state government and Fed government incentives, right?
• 21:44
  That's when you got the $50,000 incentive to build a new home.
• 21:47
  So where do I see construction?
• 21:50
  Obviously, that was a significant peak.
• 21:53
  Construction approvals and commencements have dropped since then.
• 21:57
  It's all about supply and demand and whether the builder and the developer can make a dollar through the process.
• 22:02
  What this market will do is likely to reduce supply and probably significantly because the outputs in terms of your end values that developers and builders need to make a project work on today's building costs have come back.
• 22:16
  If you're looking for 15% to 25% return on a project race and in March, you're looking
• 22:24
  A lot of sentiment, if you look at the Gold Coast as an extreme example, why that market will come off greater than any other market in the country, because there's a lot of speculation.
• 22:32
  And when there's a lot of speculation, developers start to get easy access to credit, because three to five years ago, you typically needed 80 to 90% pre-sales to get a project to commencement.
• 22:45
  Let's continue to back this momentum in the market.
• 22:48
  But now revenue, so your end values, have come off in some cases.
• 22:52
  Gold Coast units, 20%, 25%.
• 22:55
  Well, those feasibilities don't stack up anymore.
• 22:58
  So a lot of these projects that the developers are hitting the green light, hit the go button, hit the go button, hit the go button, have now come to a stall.
• 23:06
  So we may see a lag of potentially 12, 24 months of very low building approvals or commencements.
• 23:13
  There might be a lot of building approvals that have taken place over the last 12 months that won't.
• 23:17
  go to construction because these feasibilities were done in February, March figures when revenues were much higher.
• 23:23
  Now those projects don't stack.
• 23:25
  So what happens?
• 23:27
  Supply will start to reduce dramatically in that new construction space, which makes a case for that replacement costs and things that are already established.
• 23:34
  My biggest concern is all this private debt that's been lingering around in the market supporting this
• 23:40
  development, particularly in markets like Brisbane and the Gold Coast, is there's a lot of debt that's been given out to projects that maybe just starting or within construction haven't had the presale.
• 23:55
  And now the end values that that debt's been lent on is probably going to be somewhere between 15% to 30% lower.
• 24:04
  That's when people go bust.
• 24:05
  And that is the Bathurst Group example.
• 24:08
  Billions of dollars of debt and obviously went into bankruptcy.
• 24:13
  That is the first of potentially many and that becomes terrible for the economy.
• 24:23
  But it does support the established unit market or things that are already built because you do see a reduction in supply.
• 24:29
  Yeah.
• 24:30
  Lachlan, we've been talking a lot on construction costs, new dwelling index, you know, people might be overloaded.
• 24:35
  What the hell, why are they even mentioning these points?
• 24:38
  Now, the opportunity there is it is significantly more expensive to build these units than what it is to buy in these markets right now.
• 24:45
  Exactly.
• 24:45
  So that's why I think the cushion in terms of why we're not seeing those markets fall as hard.
• 24:50
  And what I believe the market to respond when sentiment returns will be those with affordability and those where the greatest difference between what it costs to build versus established, which supports that lower quartile and the more affordable price points.
• 25:05
  Lachlan, so to summarise, we've gone from a lot of data sets across the board.
• 25:08
  We're looking at upper, medium and lower quartile replacement costs as well and the affordability or the runway on these particular markets.
• 25:17
  Does say in this particular market from a unit perspective, although sentiment is low, that has the best opportunity for some growth.
• 25:24
  I would say has the most probability for the least amount of negative runway rates.
• 25:31
  I think that's clear.
• 25:32
  I don't think we're going to see growth in the markets across the board for the rest of 2026.
• 25:37
  So let's be clear about that.
• 25:40
  But I do believe they'll fall less than the top quartile, and I believe they'll respond the quickest when cinema returns.
• 25:48
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