Webinar Recording: Property Market Update with Opteon

Senior valuers from Opteon joined us on 22 September 2026 to unpack what's happening across Australia's residential, prestige and commercial markets, and what it means for your clients. Short on time? Here's what the panel covered.

• The market is splitting. Sydney, Melbourne and Canberra are slowest. Perth and Darwin have held up best, though Perth is starting to slow.
• Rates and the May budget have hit confidence. Clearance rates have fallen from the mid-70s to around 47% in Sydney and 50% in Melbourne, so recent sales evidence matters most.
• Prestige is a two-tier market. Best-in-class homes still sell well, but properties with compromises have fallen from their peaks.
• We're not at the bottom yet. The panel sees an early to mid-stage correction, with tight rentals and population growth supporting the long term.
• For your clients. Many prestige homeowners are asset rich and cash poor. A Household Loan could let clients aged 60+ access some of the wealth in their home without selling.

• Ross Turner, General Manager, Australian Valuations, Opteon
• Gabriel Carreno, Director, Residential Prestige (NSW), Opteon
• George Garagounis, State Director (NSW, VIC and ACT), Opteon
• Henry Pinto, Head of Client Relations, Opteon (moderator)
• Shelley Wettenhall, Head of Broker Distribution, Household Capital (host)

This transcript has been lightly edited for readability. Times match the video.

Shelley Wettenhall (0:05)

Good morning, everyone, and welcome to our Property Market Update with our valuers, Opteon, who are joining us today. So today we're going to give you a broad overview of the property market, so to help you understand what is happening in this very volatile time that we're seeing, and we're hoping that this will give you some confidence to talk to your clients about all of the changes that are going on in the Aussie market at the moment. To make this hugely relevant for you is towards the end of the presentation, there will be some live questions and answers.

So you'll see a chat there where you'll be able to enter your questions. We've actually already got a few of those that have been submitted, so the valuers will be answering those for you. So, we're really happy today to have three of the senior members of the team from Opteon joining us online. We've got Ross Turner, who is the General Manager of Australian valuations, so he's been with Opteon for 20 years, and he has a national role. We have Henry Pinto, who is the Head of Client Relations. Now, we are actually in the presence of reality television royalty here.

I'm not sure how many of you know, but Henry may look a little bit familiar, and that would be because he is the double LEGO Masters Champion. So, welcome, Henry.

Henry Pinto (1:32)

Oh, thanks for mentioning that, Shelley. You've allowed me to invoice Opteon and Household Capital for my appearance today because of that.

Shelley Wettenhall (1:38)

My pleasure. And we also have Gabriel Carreno joining us. Now, he is looking after the prestige market in New South Wales. That's quite timely, because we seem to be getting a lot of inquiry now, with regards to a lot of prestige and luxury properties, particularly coming out of Sydney, so it'd be great to also get an update there and some insights into the prestige market. So I'm going to hand over to Henry to intro. Thank you for all joining us.

Henry Pinto (2:08)

Thanks so much, Shelley. We'll start off with our acknowledgements. So, we acknowledge the traditional owners of country throughout Australia, and recognise their continuing connection to the land, waters, and culture. We pay our respects to their elders past, present, and emerging. Thank you. Thanks, Shelley. We touched on our speakers. We've got Ross, our General Manager. Ross will be providing a residential update, and he will also touch on commercial, so Ross has a lot of experience. Ross has been our commercial director in previous roles at Opteon, and he is very well versed, so if you've got any commercial questions, by all means, please don't hesitate to reach out as well.

We have our Director of Residential Prestige, Gabriel, he plays in the fun part of town, and he does all the properties that you see on TV. Obviously, myself, I'll be moderating, and so, as always with these presentations, I take the most amount of credit for the least amount of talking amongst my peers. And George, who also will be one of our panelists, who is a State Director across New South Wales, VIC and ACT. Thank you. Just a little bit about Opteon before we get started. We have 98% geographic coverage across all areas. We have 50 office locations, we have 600 valuers.

And we complete over 10,000 valuations every week. Obviously, that's not just amongst the four of us, that's across our 600 valuers. Technology's great, but we're not there yet. And this is our agenda today, and please don't be shy in the chat. I'll be moderating the Q&A as well, so as Ross and Gabs complete their presentations, I'll keep an eye on the questions, and I'll make sure that we answer everything right at the end. So, thank you. So, over to you, Ross.

Ross Turner (4:11)

Thanks, Henry, appreciate it, and thank you, Shelley, and good morning, everyone. I appreciate you joining this discussion with us today, and whilst we're presenting what our thoughts are today on the residential and prestige markets, I'll touch on commercial as well. We do love the questions. We want to make this as interactive for you as possible, and we love answering any question you're curious about in the property market, so please put them in the chat as we go along. The main message, I suppose, I want to share with everyone today is that conditions across Australia are becoming increasingly fragmented by city, region, price point, and property type.

And Sydney and Melbourne have really led the change in the market dynamics this cycle, but other cities and regions are starting to show their changing colours. So that's what this presentation's going to talk about. The main point is that the downturn across the residential market has broadened. So, for more than three quarters now, we've seen declines of residential property across Australia, with the national index falling about 0.7 of a percent in July. And Sydney and Melbourne have led this change. But the loss of momentum is no longer confined to those two areas. So early in the cycle, we can see where the declines have really started and sit.

So, where does the market sit today? Sydney, Melbourne, and Canberra are in that slow point of the market. Adelaide and Brisbane are moving toward more balanced conditions, although I would say that demand in those two areas is really starting to soften. With Perth and Darwin remaining the exceptions amongst the capitals. Even though there is still a bit of a balance between changes in listings and affordability at the moment. So the main important valuation point when looking at the different stages of the capital cities in the residential markets across Australia is that the regions of Brisbane and Adelaide were kind of covering some of the losses in Sydney and Melbourne.

That's no longer a common fact now, and the whole market is starting to slow. So for lenders, brokers, and owners, market selection and local evidence is becoming increasingly important as the slowdown changes at different speeds across the country. So what's driving the change? The first factor I'd say is financing, and this group is highly experienced in that field. So, the cash rate's at 4.35%. If you're a betting person, you would say that there's going to be an interest rate rise again today or very shortly. And with that, borrowing costs remain elevated, and lending serviceability requirements continue to constrain capacity for people to borrow at higher levels.

So because of this, the second factor driving the market is confidence. So, buyers are becoming more and more conscious of this repayment risk. Interest rate changes is one of those factors. And potential consequences of policy change as well, if you're an investor, from the budget conditions that happened from the 15th of May. We'll touch on that in a future slide. And when looking at interest rate changes and also the budget changes, that also influences transaction behaviour. So, when buyers become cautious, sellers face a choice. Should they accept a lower offer? Are they under more pressure?

Do they retain the property on the market for longer, or withdraw the property? So we're now seeing more evidence of those decisions: properties being on the market for longer, prices declining, and also market withdrawals playing out. Clearance rates have softened, and days on market are extending beyond Sydney and Melbourne, so to speak. So vendors are becoming more and more realistic, which is a reflection of these market conditions, where a sale is required. What this does, though, with a decline in the market, is create a situation where, if you're buying a property, freshly settled sales evidence matters more than historic momentum.

And to show this momentum: this is the clearance rate decline. We call it the budget effect, but I don't want to place all the emphasis on that. It's a useful chart when we look at the change in auction conditions, moving from that 70% or mid-70% auction clearance rate in Sydney and Melbourne in June last year to now, which was around 47% in Sydney and Melbourne at 50.2%. That period overlaps, as you see in the graph, the May budget, and the resulting discussion around tax settings and investor behaviour. So, it's really declined since that date. We need to be careful not to attribute the entire movement to one announcement.

We already could see before the budget that interest rates, affordability, credit conditions and broader confidence were already affecting the market. However, the timing is notable when you see this chart. It shows how quickly buyer and investor confidence weakened throughout that May to June period this year. So how's that affected markets more specifically? Here's a Sydney metro snapshot. That's the recent clearance rate, but what we're seeing is, because of that downturn in values, not every contract sale is supported like it used to be. That's because the market keeps dropping, and purchasers may buy higher than what the market's suggesting that property is worth.

And as valuers, it means we need to distinguish carefully between an isolated buyer decision and a price level that's supported across the broader market. In a rising market, older evidence can actually understate the current value. When the market's dropping, older evidence can overstate it. And I've got an example for you of those market movements: a fairly good quality, I'd say, investment unit in Lane Cove, which shows the kind of market movements from COVID to the budget to now. So, this was a property that sold for $1.06 million in November 2020. And then for $1.4 million in December 2025, and it subsequently resold after the federal budget, in late May 2026, for $1.255 million.

So, 1.06, 1.4, 1.255. Over the whole period, from post-COVID to now, it shows about an 18% growth rate, so about CPI if you look over the 6 years. But it also showed a 32% gain to December last year, and then a 10% decline from December last year to post-budget. So it just shows the market fluctuations that are happening, and the short-term impact that the interest rate rises and budget conditions have had on a good quality, two-bedroom, two-bathroom, one-car investment unit in a fairly blue-chip location. We've got another one here. So it's not limited to units, is probably the theme there. This one shows a decline in a really good northwest location of Glenhaven.

It declined 8.5% since its 2022 peak. It's a great quality home, and it's reflecting the market conditions that have extended to housing as well as units, which has not always been the theme in the market over the last few years. So let's go on to construction and supply. So the good thing is, in, say, somewhere like Sydney, the longer-term picture for supply is changing. And one of those things the state government's really assisting with is transport-oriented development. That planning is intended to add a substantial number of units or housing capacity near established railway stations. So, for the market in places like Sydney, and this is happening in other markets across Australia as well, there's an important distinction between rezoning capacity, planning applications, approvals, and completed dwellings.

And each stage carries a different time horizon. The scale of this, though, is quite significant. The level of new unit supply, so opening up zoning to be able to create new stock, is actually really good. The challenge, though, is that the values of development sites are arguably maybe too high, construction costs are burdened by inflation, and that impacts the feasibility of being able to create new units. You can't stack a project up, because the price that you need to sell a unit at, when putting in the inputs of the land and the construction, and the developer's profit and risk, doesn't really work at the moment.

And the flow-on effects for that are builders potentially having to take lower margins, and that destabilises the construction environment. And we're seeing some builders face the consequences of this, and one of those, amongst other challenges it had, is the Bathla Group. So, Henry, you've had quite a bit of exposure with the Bathla Group. How's that impacting the broader market?

Henry Pinto (15:27)

Thanks, Ross. I think the initial reaction is that there's definitely a level of hesitation now, because of the risks of buying investment-grade stock from the wider market, right? It's really sent some chills through the market in terms of hesitation. The Bathla collapse, although it's based generally in Western Sydney, probably represents 5% of all construction being completed in New South Wales, so it's very much impacted Western Sydney and to some extent North West Sydney. But I think what it also illustrates is how razor-thin, to your point, the margins are for the builders, right?

Obviously, it's not the CGT discussion alone that's triggered this, but it definitely would have had an impact, because we can see the market, even from your previous slides, decline overnight. So, I think in the long term, it will create opportunity with available trades, and that's always been a shortage and a pressure point for builders, but I think the initial reaction is that there'll be some confidence that needs to be gained back by the market before we press forward. Thanks, Ross.

Ross Turner (16:49)

It's a great point, Henry, and not to be Sydney-centric, that demand for skilled labour is a problem that we're seeing across the country. In Perth, for example, trades are being lured by the mining industry, the FIFO industries, and the strength of the mining industry in WA. In Brisbane, construction margins are being challenged through the demand for non-residential construction associated with the Olympics. So the scale of trades and the inflationary pressure associated with construction is a problem. So in the Sydney example, we've got great supply planning coming online, brilliant. What does it cost?

And with the demand dropping for secondary stock, due to the negative gearing provisions not applying to existing stock, we're seeing this really interesting period of time that's not supporting new construction prices. Just touching briefly on Victoria: it's got a bit of a different story to New South Wales. The auction clearance rate is slightly higher than in Sydney. But the data is showing a different problem, and it really relates to investors, and investors have been hit quite a lot in Victoria. Our research is saying 16.7% of Victorian investors sold at least one property over the last 12 months.

Which is higher than in 2024, when only 14% sold. Okay? So we're seeing an exodus, and the reasons for that are the same reasons as New South Wales. But on top of that, Victorian investors are reassessing the cost of ownership because of higher land tax provisions, the highest in any part of the country, with that threshold dropping from $300,000 down to $50,000 since January 2024. So, the rate of return has impacted the market, and in Victoria and Melbourne, prices have remained some of the most affordable in the country, with other capitals surpassing it. So, what are the capitals bucking this trend?

One of the call-outs are really Darwin and Perth. And they demonstrate the importance of employment. Employment is always a driver of property values, but so are local supply and population conditions. Darwin has remained one of the stronger capital city markets, whilst Perth has continued to hold up a bit better than Sydney and Melbourne, but that softening has really started to show in terms of volumes that we're receiving from our WA valuers. These markets aren't immune to high interest rates, but their starting affordability, rental conditions, and housing supply differ a bit more than the east coast capitals. And as I said earlier, the lesson is that no one city performs like the others.

There are national threats: interest rates, conditions from the budget. But there's also local nuances with employment, local market confidence, and land tax in Victoria, that can influence local market conditions. I just want to talk about regional markets. So, regional markets have been a bit of a darling in the last 12 months. And we're seeing in the slide here some of the top performing markets, with the greatest areas of resilience, and regional has actually helped improve the national average in terms of market growth. So, look at those selected regions: Busselton's 22% annual growth, Toowoomba up 20.7%, Launceston up 14.2%.

The underlying stories are great, but what I would say is that whilst regional markets have been resilient, not every regional market's performing equally. And the demand in regional markets is much more shallow than in capital city markets, and can be influenced much more by employment, migration, and lifestyle demands. So, employment: if there is a major employer that's in trouble in a region, that can really hurt underlying values. We saw that recently in Mount Isa, with Mount Isa Mines closing, a major employer in the region, and the values really dropped quite significantly.

Also, places where there's a large proportion of holiday homes, with the tax office cracking down on provisions for holiday home lending. I'd be mindful of probably an increased supply of holiday homes hitting the market and placing more pressure on downward movement. So when looking at a region, employment, lifestyle demand, and also migration are a huge thing to look at. I've been very negative, but there are some elements that we need to look at from a positive perspective. Firstly is building and apartment approvals. They've continued to recover, and that's a positive sign for the future pipeline. We will have to be mindful of construction costs, labour affordability, and finance and project feasibility.

That still determines whether we can get those approvals into the construction phase and sold, but the approval stage is a really positive sign. Another positive sign for the property market is that rental vacancy still remains really tight. Rents remain elevated, and rentals are growing. And population growth continues to support this underlying demand. People need to live somewhere. They're either going to rent or they're going to buy. So this is why our view on the housing market isn't simply negative. Higher rates and weaker confidence are weighing on transaction activity, but a structural shortage of housing in the long term has not disappeared.

So where are we sitting? The more likely outcome is continued divergence. Markets with greater supply, weaker affordability, or more investor selling may remain softer, whilst markets with restricted stock and enduring demand will remain comparatively resilient. I'll just touch very quickly on commercial property, and if I were to summarise commercial investment in one slide, it's this one here. Opteon have researched and mapped our commercial market yields, so the rate of return from commercial property, against the 10-year bond rate since 2013. And the interesting take-out is that there used to be a much higher margin between the bond rate, which we call the risk-free rate, and the amount of return from commercial property.

So in 2013, average commercial yields were around 8.8%, regional and metro, compared to a 10-year bond rate of around 3.9%. That gave investors a margin of safety, or a margin to take on commercial investment risk, of about 4.9%. So now, with the 10-year bond around 5%, and commercial properties yielding around 6% across our markets nationally, there's only a 1% buffer for investors to take on that risk. So, we're seeing a lot of interest, especially sub-$3 million or sub-$5 million, across the country from property investors pivoting to commercial property because of its deductible nature of expenses and its higher returns.

The risk buffer is quite compressed, and so we would advise due diligence before you jump into that investment, even if you haven't been a long-term investor before. The one thing I'd also say about the commercial market is that it's different to the residential market, where historically investors really helped drive the price of values. In commercial, especially in that sub-$10 million area, it's owner-occupiers: businesses that occupy their premises, and might own them through their SMSF or just through their company. They don't necessarily care about yield returns, they care about offsetting the costs of rent.

So, when you're investing in commercial, industrial or office property, you'll be competing with the largest sector of investors in the sub-$10 million commercial market, which is business operators. So that's something to be mindful of when you're purchasing an investment property. If I was to pick an asset class, I'd pick a generic industrial asset where there's a multiple of trades that could assist in being able to pay that rent long-term. But I'd be mindful of underlying contamination and environmental issues that could cause long-term challenges to your investment. So, just finishing up now, the take on the national outlook.

What does that leave for us? Looking ahead, market conditions are likely to remain uneven, influenced by the spring selling season, which we're seeing coming into play now, the RBA interest rate decision, which is coming out very shortly, and potential changes to ownership and trust structures. We're also watching investor activity closely ahead of the 1 July 2027 CGT baseline changes. And going to commercial, whilst commercial property continues to offer opportunities, it's important to understand that it operates in a very different way to residential property investment. The most important take-out, I suppose, is to avoid relying on older evidence.

Current, comparable, and genuine local evidence will be critical as the market continues to reset. So, one thing I didn't talk about was our house view on the national prestige market. So, Gabriel, I'll now hand it over to you for a closer look.

Gabriel Carreno (28:18)

Thanks, Ross, for your comprehensive update there. Really interesting to see how the regional market has performed in the last 12 months, relative to the prestige regional market, which in part tells a completely different story. And I'll touch on some examples in some slides that I've got for you today. G'day everyone. Look, thanks for taking the time to join us. My name is Gabriel. I'm the Director for Residential Prestige in New South Wales. And today, I'll be providing a prestige market overview, including key market trends, notable transactions, and an outlook of the prestige market for the next 12 months.

Before I begin, I'd like to briefly touch on Opteon's prestige capability, where we combine our national reach with local experts to deliver consistent specialist valuation advice across Australia's leading prestige markets. Demonstrating our experience in the prestige sector, we've completed over 160 valuations with market values exceeding $10 million in 2026 alone, representing a combined asset value of more than $2.2 billion. Just recently, and as we spoke about with Shelley in our introduction, Opteon have completed a number of high-end valuations on behalf of Household Capital, including a harbourfront property in Watsons Bay assessed at $40 million, and another waterfront property in Northbridge valued at $110.5 million.

What we've also seen just recently with Household Capital in particular is an influx of instructions at a prestige level coming our way. And what we're seeing is a situation where borrowers tend to be asset rich but cash poor in a lot of circumstances, and this is where Household Capital and Opteon partner to be the conduit for that borrower, to free up a bit of capital to improve their lifestyle requirements. And we're partnering quite well, and we're seeing some good inroads. So, what's happening in the prestige market right now is probably a question that everybody's asking.

And look, much like the broader market, the prestige market, especially in New South Wales and Victoria, is in a current state of decline, with softer conditions being attributed to a multitude of different factors, including a softer economy, higher inflation, a continuation of geopolitical uncertainty overseas, and to a slightly lesser degree, higher interest rates and the policy settings set out in the federal budget. Collectively, these factors are impacting the performance of the stock market, consumer sentiment, and business confidence, each being key drivers of demand within the prestige sector. In the current market, buyers are becoming highly selective, with demand and pricing concentrated on best-in-class assets, while secondary properties are facing softer demand, longer selling periods, and greater price sensitivity.

By way of example, this property in Mosman, on Sydney's Lower North Shore, sold for $15.25 million back in November 2023, and the property has just been relisted on the market with an asking price of $12 million. This reflects a market adjustment of about 21%, which is quite significant. Now, despite its high-quality renovation, the absence of a significant view detracts from the overall appeal of this particular property, with buyers placing greater scrutiny on properties that aren't ticking all those boxes. This non-waterfront home in Balmain East, in the inner west, set a suburb record, selling for $19.76 million back in 2022.

Just recently, this particular property has resold, albeit as a mortgagee in possession sale, for $12.8 million, representing a 35% decline from its prior peak. Now, much like the Mosman example, this property offers a high standard of accommodation. However, its non-waterfront position represents a compromise in the context of the prestige market, which has resulted in softer buyer demand. This Upper North Shore property in Roseville, with scope for renovation, sold back in June 2026 for $5.65 million, 12% below its June 2021 sale price of $6.4 million. This sale highlights weaker demand for properties in need of renovation, and the key distinction here is that best-in-class assets continue to attract strong interest where pricing is realistic, relative to compromised properties that are facing that softer demand.

Now, in regional areas, as I mentioned earlier, elevated levels of volatility with significant pricing adjustments are becoming even more pronounced, which is completely opposite to what's happening in the broader market. To give you an example, this waterfront property in Wagstaffe on the New South Wales Central Coast sold for $16.2 million in 2022, and has recently resold for $10.8 million, reflecting a decline of about 33% over that period, which, as you can see, is a significant loss for that initial buyer. Also on the New South Wales Central Coast, a Killcare Heights property that sold for $15.85 million in 2023 resold for $8.35 million in April.

This represents a decline of about $7.5 million from its initial sale price. Now, I have to admit, this sale might be considered somewhat of an anomaly. However, it does illustrate the increased volatility within the prestige regional market, especially during periods of market adjustment. Now, notwithstanding this recent volatility, it's not all bad news. On the demand side, the prestige sector is benefiting from a continued lack of supply, lifestyle-driven demand, offshore interest, and the wealth preservation objective of high net worth individuals, which together have been providing some support, especially for best-in-class properties. For instance, this prime harbourfront property in Vaucluse, selling for $57 million, marks the highest sale price for a house anywhere in Australia so far this year.

This sale illustrates that prime assets are continuing to outperform, despite declining values in the broader market. At the same time, and I'm showing off a little bit here, this property in Rose Bay is currently being marketed with price expectations exceeding $100 million, building on the precedent established by a nearby property which sold for $83.5 million in December 2025. I'll be keeping a close eye on that particular transaction, because it will be interesting to see what it eventually sells for, as it will be a good indicator of what's actually happening in the prestige market right now.

Now, it's important to clarify that not all prestige markets are behaving the same, with performance in some sectors of the market being driven by localised factors, including supply constraints, purchaser demographics, and lifestyle preferences, which is resulting in varying levels of demand, transaction activity and value growth across the country. Bucking the trend relative to other states, this particular property on the Sunshine Coast in Noosa sold for $17.6 million in June 2025, and it's just resold in April of this year for $19.2 million. This reflects an uplift of about 8% over that period, despite values moderating in places like New South Wales and Victoria, where prices have actually gone the other way.

In WA, an architect-designed residence in Cottesloe has just sold for about $25 million, setting a new suburb record and making it Perth's highest sale of the year. This transaction highlights the continued strength of demand for trophy assets in blue-chip locations, with premium properties continuing to outperform broader market trends. So, where are we after all of this? Where are we headed? Well, look, no one can really predict the future with any level of certainty. However, the prestige market is expected to remain relatively subdued for the remainder of 2026, and more likely well into 2027. That said, limited supply, the scarcity of best-in-class assets, and the continued focus on wealth preservation amongst high net worth individuals should continue to underpin values within some sectors of the market.

And despite economic and geopolitical headwinds, the underlying fundamentals supporting the prestige market remain firmly in place. Thanks, everyone. I'll pass back to Henry.

Henry Pinto (38:51)

Thanks, Gabs, and thanks, Ross. There are some questions in the Q&A, and I might start attacking those. There are some questions about WA. Going back to Ross's slide for a moment: while it's probably bucking the trend, it's probably at a point now where it's starting to feel like the rest of us. There's a listing statistic I was talking to one of my colleagues about, where 12 months ago there were 2,000 homes on the market in metro Perth, and now it's at 7,500.

That alone is going to put a dent in prices. Where there's more choice, buyers are organically going to have the leverage in the selling scenario. So I think in the next 12 months, you'll probably see a greater alignment of WA with the rest of the metro markets. They're probably just lagging behind a little bit in terms of what we've already experienced, and what they're going to experience. So, that's probably a prediction for WA. There was a question around the Gold Coast. The Gold Coast is probably a two-speed market. The Gold Coast is always subject to an interstate market coming in and buying investment-grade stock.

So, at that price point of around $800,000 to a million, there's probably already been a 5% to 10% decline in the market, similar to what we've seen everywhere else. But if you're talking about the beachfront locations, like Burleigh Heads and things like that, in that $3 to $4 million mark, you're probably seeing a little bit of growth. Not much, but let's call it sustained selling prices and a little bit of growth to come in the next 12 months. But again, that's a very unique market, right? If you're moving there, you want to move there, you know about that area, it's always got a lot of demand, so that's probably a high-level overview of the Gold Coast.

I might throw to the panel for the first question in the Q&A, and I'll read it out for those who haven't seen it. Are we nearing the bottom of the cycle, or is further repricing ahead? And are affordability pressures now driving buyers from houses towards units and apartments? George, I might throw to you for a Sydney point of view, and then, obviously, Ross, Gabs, please chime in with your opinions as well.

George Garagounis (41:53)

Yeah, thanks, Henry. Look, I think most of the data we're seeing says that we're not at the bottom yet. We're probably in the early to mid stages, I would say, of the correction. If we're thinking of interest rates and where they're looking to move, if in the middle of next year they're looking to potentially reduce, then realistically that's where the opportunity lies, from now to then, if you're looking to buy. But yeah, we are definitely seeing a slowdown, and I think, as mentioned earlier, what's very relevant is those sub-markets. They're definitely starting to fragment, and we're seeing that.

But yeah, it's a two-speed market. Sydney and Melbourne are definitely leading the falls at the moment. And in terms of Sydney, we're starting to see the listings come forward now. We're starting to see a few more listings come on the market. Spring is a very testing time. So it'll be interesting to see how that plays out, and if it'll continue to decline. The clearance rate has slightly improved in Sydney, week on week. However, we do think that's based on, obviously, spring and the weather warming up and a few more interested buyers. Yeah, thank you, Henry.

Gabriel Carreno (43:20)

At a prestige level, to the question about buyers moving from houses towards apartments: we're dealing with an ageing population, and that will become more pronounced in the coming years. We are seeing a cohort of high net worth individuals looking at moving into lifestyle-orientated developments with wellness facilities and a lower degree of upkeep. And we're starting to see some major boutique developments coming into the pipeline in areas like Mosman on the Lower North Shore in Sydney, and areas like Double Bay in the eastern suburbs. And that transport-orientated development initiative is certainly allowing some developers to selectively purchase A-grade sites so they can construct that high-grade asset, which, to be honest, is actually in hot demand.

And I think what we're going to start seeing, particularly in the next 12 to 24 months, is more of those affluent buyers looking to free up a bit of capital in a larger asset, moving into something that's a bit smaller and more manageable to suit their lifestyle requirements as they get older. So, yeah, we are certainly seeing, at a prestige level, more buyers selling up larger houses to move into those boutique developments.

Henry Pinto (44:56)

Thanks, Gabs. There's a question from David. Can you cover regional areas that are growing? I might throw to the panel. George, you cover a lot of regional New South Wales and VIC in your travels. Did you want to start off with David's question?

George Garagounis (45:16)

Yeah, so in terms of covering regional areas that are growing, in terms of valuation coverage, we've got a very large team. We service 98 to 99% of postcodes around Australia. And we focus on servicing those regional areas. It's a very big part of our business. In terms of areas that are growing, our valuers are on the ground every day, they see everything, and speak to a lot of agents. They've got a lot of personal, on-the-ground feedback, which is very relevant, up to date and very useful for a valuer, which keeps them on the trend of market values. So yes, we can definitely cover regional areas that are growing.

Ross Turner (46:12)

To add to that, thanks, George, and just to loop into the earlier question about when we're hitting the bottom of the market. When the market was growing, it was Sydney and Melbourne growing first, and then the other smaller capitals, and then the regions. So what we're seeing now in the downturn is Sydney and Melbourne leading the downturn, then the smaller capitals, like Brisbane, Adelaide, and now Perth, slowing down. And regional would probably be one of the last markets to slow down, if it's not closely linked to holiday rentals and supply like that.

So that's the nature of how the market goes. In terms of the markets that have still been growing, there is a slide earlier in the pack about Busselton having some significant growth, Toowoomba, Launceston and some parts of regional Victoria. They're still impacted by interest rates rising, and also the changes to negative gearing and capital gains tax. But what it's identifying is that the affordability point is actually quite interesting for investors now. There's an article in the AFR today saying that 6.5% is the rate of return needed to make an investment sustainable, because they can't negatively gear existing stock.

So the high returns are in regional areas, where there's greater affordability, lower borrowing costs, and the rents are still fairly strong. So, that's probably my answer on the growth in regional markets. An example of that is Greater Geelong, to answer that question from Theo. Greater Geelong, in parts, has been performing better than metro Melbourne because of that affordability, rental yield and population growth. However, I wouldn't rule Melbourne out. It's probably been one of the slowest performers in terms of price growth because of the land tax equation over the last few years.

And when you zoom out and look at the affordability in Melbourne, I just wouldn't rule it out. But Greater Geelong is performing very well.

Henry Pinto (48:33)

Thanks, Ross. There's a question from Francis: what have you been noticing with house and land valuations compared to established? Are construction valuations coming in low due to established prices moving downwards? Francis, I'm interpreting that, and correct me if I'm wrong, as construction valuations, what you'd refer to as a TBE (to be erected) valuation. Typically, with a general lens, they're probably not coming in low compared to established stock. In most metro markets, and even in regional markets, there's always a premium for new. And typically, most newer constructions are somewhat untested, so they get the luxury of setting a premium, so to speak.

So, we really haven't seen that dynamic yet. When you have constructions that are staged, like most newer developments, with a Stage 1 release, Stage 2 release, Stage 3 release, and a market that's softening like we're in now, you may see some discrepancies between the prices established in the earlier stages and now, and the developer's always going to push for a higher value because it's the most recent stage. But in broad strokes, we're still seeing construction achieving a premium beyond established. I hope that answers your question.

Gabriel Carreno (50:19)

Henry, to Francis' question as well, and to concur with what you've just said, certainly at a prestige level, what we've seen in the last couple of years for high-end construction houses is that buyers are a little bit reluctant to go through that process of constructing themselves: getting all the trades, finding the right builder, hoping that builder doesn't go broke in the process. So when these properties actually come on the market for sale, buyers are paying a premium over and above construction costs, because they don't have to go through that 18-month construction process in the first place.

So, we are seeing a premium added to these new homes once they're built. And that just goes to show the demand for high-end turnkey products in the market, even in a market that's in decline.

Henry Pinto (51:07)

I think you've hit the nail on the head there, Gabs. It's very different buying off the plan versus completed construction, right? The risks that Ross addressed previously, with the Bathla collapse and things like that, are negated once the property's complete. So strong premiums are not unheard of, even in a softening market.

Gabriel Carreno (51:35)

Yeah.

Henry Pinto (51:39)

I think that's all the questions in the chat answered so far. There was something about the Sunshine Coast from Elliot. The Sunshine Coast is very similar to the Gold Coast market. It's a very similar buyer demographic, and what you would consider prestige on the Sunshine Coast is still performing really well. Gabs, if you've got any anecdotal evidence around the Sunshine Coast, I know you deal with that market as well.

Gabriel Carreno (52:08)

I think SEQ in general is benefiting from the significant infrastructure projects associated with the upcoming Olympics, right? Historically, when we see an Olympics in any given city, we see a lead-up in property prices. Look at what happened in Sydney in 2000, right? We saw a significant uplift in values leading into the Olympics and after. And that's because we get that international coverage, we get a lot of buyer interest coming in from overseas, and all the infrastructure projects, especially what's happening on the Gold Coast with the metro now going right down to Burleigh, are really coming into play. It's allowing those cities to become a lot more liveable, right?

And they're getting a lot more attention. So, I think in the last 3 or 4 years, the Gold Coast and the Sunshine Coast have been piggybacking off the lead-up to the Olympics, and I think that's got a little bit to go, especially as we get closer to 2032. But it'll be interesting to see if this is sustainable. Because Brisbane, I think it's fair to say, has undergone exceptional capital growth over the last few years. It's obviously hit its peak, and the rate of increase has slowed, but prices are actually still increasing, regardless of what's happening in areas like Sydney and Melbourne. So it's interesting how we're in a bit of a two-tier market at the moment on a national level.

George Garagounis (53:48)

I might just add in there as well, in terms of SEQ, the key drivers are equity-rich buyers relocating from Sydney and Melbourne. So they're wealth-backed, they're not looking for credit. So, I think it'll be interesting to see, as things shift in Sydney and in Victoria, what that's going to do for lifestyle choices in areas like Queensland, whether that will see a bit more of a shift. But yeah, generally, I know that for the last couple of years, that has been a key driver.

Gabriel Carreno (54:25)

And it's proven in that Noosa example, Henry, that I spoke about in one of my slides. It's really gone the other way in the last 12 months compared to what's been happening in Sydney and Melbourne.

Henry Pinto (54:37)

Thanks, Gabs. There's one more question in the chat that we received earlier. I'm not sure if we can answer it, as it's at a policy level for the government, but I'll read the question out and invite the panel to answer it as they see fit. At what level would immigration need to drop before the supply and demand imbalance begins to tighten? I'll give my take first. I think that's only one part of the equation, right? The media outlets like to report that there's policy being made around immigration from the major parties.

But fundamentally, our supply and demand issues have been a problem well before anything like that was set at a policy level, right? In COVID, prices skyrocketed and we had zero immigration. So, I think it's genuinely about supplying more homes, addressing construction costs, and perhaps introducing some policies around stamp duty and first home buyers. I know the government's looking at introducing policies there. So in terms of the imbalance, from my end, more construction is needed, and more favourable metrics for development approvals, things like that. If we can get more skilled trades in, and I'm talking both domestically and internationally, that's going to be the key driver for fixing that imbalance.

George Garagounis (56:37)

Yeah, look, I agree. I think it's probably a bit more of a hangover from 2021 and that COVID period, when migration surged ahead of construction. So there was that gap that we're still seeing today. And it's probably more about lifting building rates rather than reducing migration. So getting more approvals across the line, and, like Ross mentioned, the transport-orientated development will assist with that in the future.

Henry Pinto (57:18)

Thanks, George. And I think that's all the questions in the chat answered now, Shelley. And I think we're right on time.

Shelley Wettenhall (57:29)

Brilliant! Excellent.

Henry Pinto (57:31)

Unless anyone has any further questions. Shelley, our details will be circulated as well, so if anyone needs to reach out after this seminar, we're happy to help. And thank you so much for having us.

Shelley Wettenhall (57:47)

Great. Thanks so much, Henry, Ross, George, and Gabe. Really informative session. My one take-out was that I'm going to be poor for the next 6 months because I do not own a waterfront property in Noosa, which is very unfortunate. I was very happy to hear your comments around Geelong, though, being a Geelong resident myself. That does give me some heartfelt confidence that we've made some good decisions. So, our partners in valuations, Opteon: you can see that they have a very big breadth and wealth of knowledge, which we benefit from. So, very happy to partner with them, and thank you all for sharing your knowledge with us today.

I think one of the really interesting things that we're seeing happen at Household Capital, particularly over the last three months, is the amount of inquiry that we're getting at the prestige end of the market. What that illustrates to me is that brokers are now also realising that our product is not only for the mums and dads in the mid-market, but it is also a product that translates across to high net worth clients. And it would seem that the property market isn't really going to turn around in the short term. I mean, we're talking about perhaps the bottom coming around in the next 6 months.

So, for people to have that time and that confidence that they can stay in their homes for as long as they wish with our sort of product, it's a really great time to perhaps start considering this as an option for them. I think this is really timely to also illustrate that particular strategy that brokers can perhaps consider for their clients as well. So, thank you very much, everyone, for your time today. We appreciate brokers taking time out of their businesses to join us. So, I hope everyone has a great day, and thank you all for tuning in!

Henry Pinto (59:54)

Thanks, everyone.

Shelley Wettenhall (59:55)

Bye!

Gabriel Carreno (59:56)

Thank you.