Louis Christopher on the 2026 Boom and Bust Scenarios

In this episode, we dig into one of the most anticipated and often confronting outlooks for the Australian housing market, Louis Christopher's boom and bust report, 2026.

We explore the scenarios he thinks are most plausible for 2026, what his modelling says about prices, rents and listings, and the signals he's watching most closely for a shift in direction. Importantly, we also dig into the uncomfortable bits.

the risks the market is currently discounting, the indicators buyers and investors consistently misread, and whether his outlook suggests opportunity, caution, or a mix of both.

Welcome to the elephant in the room. This is the podcast where we love to talk about the big things in property that never usually get talked about.

I'm Veronica Morgan, real estate agent, buyer's agent, and buyer's agent mentor, co-host of Foxtel's Location, Location, Location Australia, author of Auction Ready, and co-host of Your First Home Buyer Guide.

Hi, I'm Chris Bates, ex-financial planner and mortgage broker, currently ranked number three in the annual MPA Top 100 Mortgage Broker Awards. Before we get started, everything we talk about today is not personal advice, and we recommend you engage the services of a licensed and experienced professional.

Our guest today is Louis Christopher, founder of SQM Research. Louis has earned a reputation for calling markets early and calling them accurately at times too, drawing on decades of statistical work, index construction and independent forecasting.

His perspective is grounded in data rather than industry spin, which is exactly why we love to pressure test his latest predictions. And thank you so much for joining us again today, Louis. We are very honoured to be chatting with you so quickly after you releasing this new report.

Yes, we've come out with some new forecasts, of course, for the year ahead for 2026. Very excited to do this once again. We've been releasing our boom and bust reports since 2011. Yeah, thank you for pointing out that, look, yes, we've at times got it right.

And then, of course, there's been times when we've got it wrong. And there are risks to our forecast for the year ahead, no doubt. And some of those risks have been highlighted more recently with a bad number coming out of the CPI very recently.

And then, of course, APRA stepping into the market a little bit in terms of trying to put some curbs on lending. And we can have a chat about those and what that may well mean to our forecast.

Yeah, I mean, if no one's listened to our past episodes with you, I do highly recommend it. So we won't try to just rehash what we've said on past episodes. But I do think there's two things I love about you. One, these are obviously scenarios with forecasting.

It's not like this is what I reckon is going to happen and it's like definite, et cetera. And you role play out different scenarios and how it's all interlinked. And the second thing is you actually review. how you actually went each year.

And you've given yourself a score of seven out of 10 on 2025. Now, where did you get it right? Where did you get it wrong? And did it play out as you expected?

Yeah, look, seven out of 10. So we took marks. Why I took marks off? Well, the fact that, look, our base case scenario, and you may recall, we released four scenarios each year, and then we put our hat on what we think is the most likely scenario.

And that scenario for 2025 was that we wouldn't see interest rate cuts until mid-year 2025. As it turned out, we started getting interest rate cuts in the month of February 2025, and that fell under our scenario three. What that meant, of course, is that our base case was thrown out into the bin

early in the year, which is kind of good. That gave us a clean slate for the remainder of the year. And so with our scenario three, more often than not, we've got it right. So that scenario assumed rate cuts starting from the March quarter, which did happen. And we largely got that right.

We did undercook a couple of growth areas such as Darwin, and we overcooked a couple of areas such as Perth. and Brisbane as well, and Adelaide.

But I do happen to believe we're going to see our 25 forecasts for those three cities actually come in in the first quarter of 2026. So yeah, look, what we do here is it's about the fact that, look, hey, I'm a housing market expert in terms of the analysis.

I don't regard myself as an interest rate expert.

There are others out there who are better than me at that forecasting, but I like to point out to say, okay, if you tell me what interest rates are going to do, if you tell me what the economy is going to do, I'll tell you what I think that means for housing crisis.

One of the things I love about you, you came on a few episodes ago. We've been interviewing you for a few years now. I remember you explaining, Chris said, you know, go back and listen to those episodes if anybody's interested.

But you explained your methodology and the process you go through to come up with those four scenarios. I think I recall you said, you know, you start working with around 15 scenarios and then you sort of whittle it down to the four most likely scenarios. Last year's was scenario three out of four.

So you've got base case in two, three, and four. I am curious, are they ordered then in order of probability in your view? Like was scenario two more likely than scenario three?

Yes. Yeah, I do them in order of probability.

Yeah.

That's right.

Sorry, and I do love the fact that you score yourself and you keep us up to date in terms of how we're tracking according to those scenarios. Chris and I for many years wrote the Fuller Forecaster Report and we love your methodology because of that.

It recognises that there's risk and there's change and there's all these different elements. But one of the things I'm curious about, when you pulled the data together for this year's report, what was the one finding or was there anything that really genuinely surprised you?

Yeah, look, I think some of our findings surround our key assumptions that we've applied to all four scenarios. So one of the key predictions we're putting in there is that we believe that the population growth rate is going to moderate no matter which scenario we go with.

And so therefore, it's also one of the risks in our forecast for the year ahead. So we believe the population growth rate is going to moderate to about 1.4% or that the population is going to expand to about 390,000 people.

And that's way off the peg that we had back in 2022, 23, where we're expanding at nearly 700,000 people.

So if I'm right about that forecast that we're going to see a slower growth rate, that means that the demand supply imbalance that we've had in recent years is going to be more imbalanced.

because one of the other key assumptions that we've built into all scenarios is that we're going to complete roughly about 180,000 dwellings in 2026, which will be up on the present year 2025.

And so that will mean, if we're right about those two key numbers, that will mean that the market since 2025 will actually have a slight surplus of stock for that year ahead. It's only going to be slight, about 30,000 dwellings, but it should mean that that will be enough

to put a little bit of a dampener on rental growth at least.

And would it be rental growth that has the biggest impact on rather than price growth?

Yes, I believe it's more rental growth because when you think about the rental market, it's less impacted by interest rate movements, less impacted by the economy as well, though it's not to say it's not impacted at all, but definitely interest rate movements, there's minimal impact, immediate impact upon the rental market as opposed to what's actually getting built on the ground versus how fast we are expanding as a country in population growth.

Louis, you got, I mean, you definitely got 2025 pretty good, right, on the scenarios. And obviously there wasn't some major black swan event that sort of caught us all off guard. I mean, obviously some hot inflation numbers in recent months.

Were you doing a lot of your forecasts without that sort of jump in inflation?

Yeah. One of the things you'll note is, and you'll see here, and it's obviously another risk, is that an interest rate rise in 2026 didn't make our top four scenarios. It came in at like about number seven, number eight on our view.

And no doubt the latest scare with CPI does increase the probabilities of an interest rate hike sometime in 2026. And literally to the point where I'm happy to say to you now and with your audience that

that I think we might need to put an addendum in our report to add an additional scenario where we've got an interest rate rise that occurs sometime next year. So I'm working on that as we speak.

And we plan to add that into our report for all our existing subscribers to our 26 boom and bust report that will be coming out soon. That will model up what an interest rate rise looks like for housing prices next year.

Which is a very recent new discussion topic, isn't it? I mean we're talking the last few days that suddenly this is now something that we're considering could happen.

Yeah, that's right. My personal view, and I do think a lot about this, is look, what we're seeing with the CPI is a blip.

It's predominantly being driven by the drop of rebates on electricity prices, which has meant that in gross terms, nominal terms, electricity prices have jumped big time with the rebates dropping out. Now, that will eventually calm itself down.

And so it's still of the view that, look, while the probabilities have increased that we may see an interest rate rise next year, I don't think it's a fait accompli.

And I think the most likely scenario is still what we modeled out, which is no interest rate changes for the first six months of the year, but sometime in the second half of 2026, we'll still see an interest rate cut.

And the reason why I think that's still the main scenario is that I think that the economy is very sluggish right now. We're seeing rising unemployment. We're seeing very sluggish GDP per capita numbers.

And I personally believe we're seeing many small to medium-sized businesses struggle out there. And one of our base case assumptions as well is that unemployment is likely to rise from here and perhaps touch 5% sometime in 2026.

Now, if I'm right about that, I think the attention of the Reserve Bank will swing from price stability to employment stability. And that will focus their attention towards what can we do to support the economy. But there's every chance it could be wrong.

And you'll note that our second most likely scenario is sticky inflation, which is what appears that we have right now. So, Regardless, yeah, the risks have increased that, yeah, there'll be an interest rate rise in 2026.

And we're going to add an addendum to our report to model that up for all our subscribers.

Just reflecting on 2025, I mean, Gold Coast, yeah, shot the lights out. I mean, that's a conversation there. And then Darwin, I mean, what's your thoughts on those two? Why they just did so well and way beyond your numbers of expectations?

Yeah, look, great question. Let's think of the Gold Coast right now. So our view this time last year, and it's actually been the case now for the last two to three years, is that the Gold Coast is an overvalued market at this point in time.

And that means that the risks of underperformance or an outright downturn are heightened. Now, we don't know exactly when that downturn is going to hit, but there will be a time when we are going to see a downturn in the Gold Coast market. It didn't happen in 2025.

The market increased a lot more than what we anticipated. And that was predominantly driven, in our opinion, by still ongoing, very strong population growth in the Southeast Queensland. let's remember that the net interstate flows into Queensland are still very high. They're coming predominantly from New South Wales.

And so the population growth rate in southeast Queensland is beyond 2% per annum. And that the build rate on the Gold Coast was lower than our population growth rate. And that's meant that, of course, rental vacancy rates remain tight. And it's also meant that demand to purchase property has remained quite robust. Now,

In the year ahead, we've done some modeling in terms of supply versus demand. We still think it's going to be a year where supply is going to be underneath demand, hence the reason why we're still forecasting price increases for the Gold Coast.

But we're still somewhat cautious where we've basically forecast, if I remember the number, along the lines of what we got here, 7% to 11%. Now that is essentially below surrounding areas that we've got for Brisbane and we've got for the Sunshine Coast.

So there's still a degree of caution in our numbers because we are concerned about the valuations we're seeing on the Gold Coast. But is it going to crash next year? No, I don't think it will.

2027 is going to be most interesting for the Gold Coast because I can see supply is starting to ramp up. And I've been up there recently. The cranes are all over the place at the moment on the Gold Coast. So supply is coming. And I think it's going to come in 2027.

So is that the main reason you feel like it's overvalued at the moment because of that coming supply? Or do you think fundamentally there's something that buyers are missing at the minute?

Fundamentally, the prices just appear to be too high relative to incomes. We're talking about median housing prices now coming up to about $1.2 million in that area. We're talking about rents on the Gold Coast, which are actually higher than what we're recording in Sydney. That's going to ride itself in time.

And I just think the pricing and the rents are right now well and truly above what the demographic can afford on the Gold Coast. And therefore, we are going to see people looking at other regions, may it be Brisbane, may it be the Sunshine Coast, that they can actually afford to get into.

It's going to be the supply because it's different supply than what they've built from my understanding. I don't know if they're going to get this real high density, just the cost to build high density and high levels has been quite prohibitive on sort of the mass market investor products.

So they have to send, you know, basically sell, you know, full floor, really high end where you can charge a really high square metering rate. And I think Gold Coast building a lot for that sort of downsize, a really expensive market, right? Not a typical supply in past booms.

What's your thoughts on that?

Yeah, I agree. There potentially could be a bit of a mismatch in terms of what's been built versus what the demographic can afford. If you look at the recent builds that have been up there and been advertised on the off-the-plan high-density market, my goodness, some of these prices that they want are

for just say, you know, a two bedroom, three bedroom apartment, like, wow, they're right up there. And basically that only the top end of the demographic can absolutely afford. That's it.

Yeah. Yeah, exactly. And a bit of an oversupply of that could be very easily the case. Just there's always new choices, new developments coming, you know, I don't need to buy and potentially there's more margin in it for builders, et cetera. So, but I mean, Darwin's an interesting case, right? What's your thoughts?

Because it's been very much the talk of investor circles this year, not to say we've got any clients buying there, but, you know, a lot

Yeah, look, by way of background with Darwin, we've tended to be more conservative on our Darwin forecasting. So with regard to Darwin, historically, we've actually undercooked our forecasts. That is because we've been having concerns about the local economy.

Now, for the year ahead, looking at what the Northern Territory government has forecast for the budget, looking at the monies that is coming into the economy, and looking at our most recent leading indicators, we have become more bullish.

I know that the Darwin housing market is offering relatively good value despite the increases that we've recorded over the course of the last 12 months. The rental market's still very, very tight. And so our forecast for Darwin over the year ahead is for a rise of 12% to 16%.

With Perth and Darwin, they have similar economies. However, Perth is definitely more diversified than Darwin. Darwin, nevertheless, when going gets good, it gets going really, really good. And as we can see over the course of 2025, dwelling prices have been up by high double digits.

And we basically undercooked that forecast of 2025 because we didn't expect that type of growth.

But a couple of questions on that. I mean, for starters, it only just recovered where it was 14 years ago, right, Darwin? So it was a long time in the doldrums. But also it's a small city. It's like our 17th biggest.

It's a capital, but we talk about it as if it's the eighth biggest, but it's the 17th biggest. And it's got a tiny population, what, of 140,000 people or something, right?

What challenges does that bring to analyzing the data?

So, yeah, with Darwin, it does present challenges in terms of forecasting. Absolutely. It is a smaller township. It is a less diversified economy. But nevertheless, there is strong interest from investors historically in terms of opportunities in Darwin.

And when the going gets good, it gets going really, really well. It's obviously a township that has a lot of exposure to commodity prices and energy prices in particular. And there's been some pretty large projects which have now been banked and are now operating, which is going to help the local economy.

The other thing, too, of the Northern Territory, like Western Australia, is that they did a great deal just a few years back on national GST receipts. And that has helped the state coffers in a big way.

And that's allowed the Northern Territory government to go out there and spend a bit more to get that economy going.

So looking at the leading indicators too, one of the reasons why we're more bullish this year is that listings, when we look at listings, which is a good indicator of supply and demand, they're at basically an all-time lows at this point in time since we've been recording listings in Darwin from 2009.

And that's generally translated when you see such a downturn. In listings, it's translated to a lack of supply versus demand, and prices generally will move upwards and move upwards pretty quickly when we see listings at these levels.

Louis, I mean, I love your SQM research for listings. I probably go on there almost daily, to be honest. It's one of those things that I can't get enough of. But if you think about it, you've been doing this boom and bust report for, you say 2011? 2011, that's right.

Yeah, so say 15 years of it.

What's some of the big change structurally you've seen? Because you mentioned there around listings.

When you look at 15 years ago, listing numbers versus where they are today and where vacancy rates are now versus where they've been long-term and how hard these things are to reverse back to what was norm, say, five, 10 years ago. It's just fundamentally shifted, hasn't it?

And what are some of the big surprises you see when you look at the makeup of our residential housing market versus, say, 10, 15 years ago?

Yes, there's been a significant structural change in terms of listings, total listings in the marketplace. So for a number of cities, we're recording more listings back in 2009, 2010 compared to where we were

compared to where we are in 2026. Structurally, listings have fallen and it doesn't make a lot of sense because we've grown as a population. Dwelling completions have grown. We've got more properties than what we had 10 to 15 years ago, and yet we're recording less listings.

I don't have a few things that I think about that. I love your listings charts. They're broken up into days on market effectively, right?

What's really interesting in those hotter markets, the ones that were dead for many, many years, say Perth and Darwin, versus when they become hot, or even Brisbane, really, it's really noticeable that 180 day or more on market, that number just drastically shrinks.

So I guess the days on market in a hotter market is always going to be shorter. And then when buyers are desperate, they'll start looking at stale stock, which they'd never touch in a slow market. So that's how I interpret it. Is that how you look at it?

And that's the right way to interpret it, Veronica. Absolutely. So when I see more and more stock hitting the 180-day mark, that is a big sign to me the market's slowing down. So if you start seeing those red bars trending up, watch out.

That means more stock is not selling and vice versa. If you see it trending down, it's usually meaning that, okay, all these crazy vendors who had a crazy asking price on their property are suddenly getting taken out. that's an indicator demand's increasing.

And then I guess further that, you know, when you go houses versus units, I think that's a huge difference because you can see the trend as a city level or region level can be expected, you know, showing one thing and then you break it down and go, actually, the housing market's still really tight.

And I think that often surprises people. But I think the It's such a big shift though. You know, you're saying it's less listings now than it was like 15 years ago, but that is like a structural sort of downward trend. And do you see that just continuing?

Do you see it getting even tighter? Like in 15 years time, are we going to have even less listings than we have today? Do you think this is just the new world we've moved to?

I hope not. I don't think it's sustainable. We need to ask ourselves, why is this occurring? And in my view, it's because the transaction costs have become way too high. And that creates affordability issues because you see less liquidity in the marketplace. And what is it about transaction costs?

in particular that have gone too high? Well, I argue it's stamp duty in particular. Overall across the country, we've effectively all suffered from bracket creep in stamp duty. So proportionately, the rates have gone high and have gone high in absolute dollars. When you think about it, let's take, for example, Sydney.

If you were to transact, as I say, a would-be downsizer where you're selling your freestanding home, you want to move to, say, a three-bedroom unit. If you do the numbers, the total transaction costs on that are going to hit about $200,000. And the majority of that's going to be stamp duty.

And so you've got to ask yourself, does that really encourage downsizers to downsize when they're going to lose $200,000 out of the move?

It doesn't, obviously. $200,000 is a significant amount of money.

So that's one thing that would slow down new listings. So there's two different listings here. We're talking about total listings and new listings. So that definitely slows down that new listings into the market. But the total listings makes up all the dead stock as well, the old stock.

So I guess looking through those charts, I think, was it Hobart? You could see that the listings are starting to rise, if I got that right, because Hobart prices have slowed down.

But also when you've got a price slowdown, you get less new stock coming in the market also because people tend to hold on. but the days on market swells up. So that sort of means it takes longer to sell every new listing.

And so your total listings can grow even though your new listings coming to the market could be shrinking. Two things look like they should correlate, but they don't.

That's a valid point. Yes, that's right. In down markets, you seem to see less new listings, but there is one exception to that. And that is if you start to see some panic in the market, new listings will go up.

In some markets, so right? So how do you, if you're looking at a whole capital city, how do you sort of pull that apart?

Well, I think ultimately you need to consider each individual city because not all cities, when you see certain indicators happen, mean the same thing for each individual city. But I have seen certain scenarios, certain events in the past with new listings where

Yeah, if there's panic in the market, you'll see a whole bunch of vendors trying to list very quickly to get out. So we saw a bit of that, for example, in the GFC of 2008 for a number of capital cities.

But I agree with you over and above that when you see just a normal downturn, total listings can go up because a whole bunch of listings are not selling, but new listings fall. And so the buyers that are in the marketplace, they're looking at a lot of stale stock.

It's funny though, the GFC, in my experience, having been on the ground in that market, even versus COVID, was that panic selling that happened in the immediate months afterwards, certainly in Sydney anyway, there was owner occupiers selling out.

Whereas, say, in the downturn in Sydney anyway, 2017, 2018, people were getting out there and it was investors getting out rather than owner-occupiers. So, yeah, I mean, do you see that, that there's, you know, certain markets that are really investor-heavy where that is happening more than in other areas? Yeah.

Very hard to see that in our listings data. I would love to have an index which shows a real-time understanding of between investors and owner occupiers.

The best we can do is the ABS data, which gives us a bit of an insight through the housing finance approval numbers, but that's also a bit of a lagging series as well.

But yeah, if you look at that series of the long-term, you definitely can see times when investors are more active in the market versus first-time buyers, times when first-time buyers and investors are in the market at the same time, which can really juice up prices.

And then there's times when they're more or less both very quiet in the marketplace. And yes, 2017, 2018...

that was a time when investors were out of the market, predominantly because we had a rise in interest rates and we had basically the regulators a little bit more active in the market in terms of putting lending limits up.

Obviously, vacancy rates boomed post the construction boom in the 2015s, right? There was just a lot of stock and That's good, right? Because that doesn't push a pressure on rents going up.

But when you see vacancy rates just being ridiculously tight and come down and staying tight, if not getting tighter and rents going up dramatically over recent years and continuing to go up over the last 12 months, like how do you see that interlinks with price growth? Okay.

Yeah. So when you see that environment, what that generally means is rental yields start rising. And we've been seeing that, for example, in the city of Melbourne, where over the last couple of years, rental yields are actually quite high relative to history.

Now, that higher rental yield should entice investors to come into the marketplace because they're getting a better rental return for their money than what they otherwise would. But interestingly for Melbourne... We're not seeing investors coming into the market in droves at all at this point in time.

And as you will see in our forecast, yes, we are forecasting price rises for Melbourne, but it's a city we think will underperform compared to other capital cities in 2026.

So it's likely for next year, we'll see still relatively good rental yields on offer for investors, but investors still not really committing heavily to the Melbourne market. And I think that is in part because the Victorian economy is not in the greatest of shape right now.

I'm sure you would agree with that. And then over and above that, the biggest thing that really does deter investors is property taxes. And quite frankly, property taxes on Victorian real estate are quite high relative to other states at this time.

And then over and above that, I think investors have a feeling in Victoria that they've got less control over their property than what they would otherwise. in other states. So tenancy rights have increased in Victoria.

And I think for investors, that's probably a bit scary for investors that, look, if they've got a really bad tenant in place, it's going to be even harder to get rid of that bad tenant than perhaps what you would have in Queensland or over in Western Australia.

But there'll come a time when Melbourne does pick up and outperform. I don't think it's next year. I think investors will come back. But I think some structural things need to change. And that is that Victoria needs to do better on property taxes.

And we need to see the pendulum just move a little bit to the left between tenants and landlords.

It's interesting that the data you're looking at is saying that investors aren't returning to Victoria and let's say Melbourne. Anecdotally, a lot of buyers agents we speak to are saying that there's a lot of interstate interest, particularly from Sydney, but particularly from Brisbane and Perth.

However, the locals, and I'm currently in Melbourne recording this, but locals here are not at all interested in investing in Melbourne. For all the reasons that you've just said, but it's like the outsiders really don't believe it as bad as the locals are experiencing it.

So there's this sort of idea that, well, Melbourne's got to be next. So there's this sort of exuberance in some markets or some segments of the market. But I'm guessing that isn't showing up yet in the data you're looking at.

Yeah, that's right. So no, it's not showing up. And yeah, I agree. And I've heard those anecdotals. And indeed, I've spoken with people, especially real estate agents here in Sydney who want to take a bit of a punt on Melbourne.

Because they're looking and saying, oh, wow, it's looking affordable and you should get in.

And yeah, but the problem, I think, for interstate investors they need to consider is that they might be going into a value trap where, yeah, look, it's looking relatively good, but they need to ask themselves, what are the triggers or what is the catalyst for a strong uplift in prices for outperformance?

It certainly didn't really come in 2025, and yet the numbers would suggest that Melbourne was offering value, but yet we didn't see any major pickup. So why would we see the pickup in 2026?

It will be interesting to watch. I think one thing, you know, I've been down here quite a bit lately, and previously I made the mistake of really thinking the Melbourne market was very similar in a way it operated to Sydney, but it isn't. It's actually significantly different, and it's one of those –

you know, I'm always banging on that you need to be a local specialist. If you're going to hire a buyer's agent, get a local specialist. I'm a very experienced real estate agent and buyer's agent.

However, if I came down here and started buying without spending, and I'm not going to, by the way, it's not why I'm here, but if I was going to come down here and start buying with that arrogance of believing that because I understood Sydney, I understood Melbourne, I could make some really big mistakes.

So it's something, but your report predicts that Perth, Brisbane and Adelaide will continue to top the leaderboard. I'm really curious what needs to happen for any one of those to lose steam.

So we need to ask ourselves why, and this will be, if we're right about our forecast, this will be essentially the fourth year running for these cities, particularly for Brisbane, Adelaide and Perth.

Number one, each of these areas is recording strong interstate migration floats out of Victoria and out of New South Wales. So they're experiencing higher than average population growth rates. Adelaide as well?

Adelaide is actually starting to exceed, and not as much as Western Australia, not as much as Western Australia, but it is recording population, pretty good population growth rates. Adelaide, of course, has been offering relatively good affordability.

It has also been recording strong rental growth over a longer period of time.

And so despite the price rises, rental yields in Adelaide are still quite strong, enticing investors in a market which I think arguably is perceived to be a little bit more friendlier to investors than what we're seeing, for example, in Victoria right now.

Over and above that, Adelaide and South Australia are surprised on the upside on the economy. You may recall back in, I think it was 2018, 2017, there was a lot of concern about the fact that the auto industry was being phased out.

and what that would mean for jobs and the wider economy for South Australia. And I was concerned as an analyst as well at the time. Well, it turned out that the actual impact upon the economy was actually fairly minimal.

And the economy had boosts from elsewhere, such as, for example, commodities, such as, for example, the defence industry and efforts by the state government to diversify the economy. Those efforts worked. And so while we're not saying Adelaide is like a tiger economy right now, it's not. It still has some of its challenges.

It has been doing relatively well against a backdrop of really relative affordable housing prices. The reality is now Adelaide is the second most affordable capital city across Australia. despite the price rises which have occurred.

And then when I look at the leading indicators, I'm not seeing any notion there of a material slowdown in the Adelaide housing market as 2025 draws to an end.

And hence the reason why, based on what's going on in the economy, what's going on with population flows, what's going on with our leading indicators, we've come out with a forecast of 26 of 10 to 14% growth.

On the, you know, I guess the Adelaide, Brisbane, Perth story, I mean, on your report, you can show the 2018 price versus the 2025 price and what it was. You know, this is suburb level. You know, you've got, what, 60, 70, 80 pages of suburb by suburb.

And that's why it's a very interesting reading. And a lot of these places have more than doubled, particularly at the low end part of the market, right?

Well, how do you think that the cost of building, because it's gone up so much since COVID, and then it means that this supply response and really containing prices, right?

Because if prices ran that much and build prices were still like they were in 2018 and the cost to release land was still there, then you would say, why would I buy old when I could buy new?

And particularly in places that have got fringe suburbs that Brisbane's got a lot of land, Perth's got a lot of land, Adelaide's got a lot of land. So, Do you think that that's really, you know, really made price growth a lot stronger just because building prices have ballooned so much?

I'm on a personal mission to help more people make better property decisions. You know, most people don't realise that they can cost themselves hundreds of thousands of dollars over the medium to long term when they make property decisions without all of the information that they need.

And what I do is help people with tricky real estate problems, which often masquerade as simple questions like, should I sell my investment property because the interest repayments are hurting? Or should I buy before I sell? Or the other way around.

You can connect with me and access all of the tools that I've created to help you make better property decisions at veronicamorgan.com.au. And there you will find resources for first home buyers, details about my buyer's agent mentoring program.

You can connect with my Sydney-based property management and buyer's agency teams, Australia-wide vendor advocacy, or ask me for introduction to the small group of buyer's agents that I would personally recommend across the country. That's veronicamorgan.com.au.

If you're considering a property move such as buying your first home, upgrading, renovating or investing, the team here at Alcove would love to help you think through your decision and get the finance right. Please go to alcove.com.au to reach out. How much do you reckon that supported price growth?

Because if building prices stayed the same and just maybe went up marginally, obviously, the supply response would have been there. A lot of people would have bought new. But Just because that's gone up, it's really made this establish a better deal for lots of places.

So with regard to the relationship between construction costs and housing prices, it's definitely a supply side constraint. And so it can and has driven prices up in the past. Over and above that, it's not just construction costs.

Remember the taxes which are added to the construction costs. So this all represents a supply constraint.

And if you were going to constrain supply relative to demand, and you still are going to see, and you still have strong money supply, so inflation is still creeping along, housing prices in nominal terms will go up. There's no question about it.

And so yes, supply costs are definitely a factor in housing prices.

So, Louis, obviously, 2026 is coming around fast. Obviously, you've got this addendum coming for your boom and bust report. But what would be some of your biggest takeaways if someone was going to think about next year? What are their leading indicators they're going to really want to watch?

I mean, obviously, unemployment, that number, if it gets close to 5%, that's going to be a real mental point where people are going to get very nervous. It's going to make a lot of headlines. What are some of the other ones that...

you feel that people really need to track if they're wanting to look at price growth next year?

So for those who are interested in Melbourne and Sydney, following the weekly auction clearance rates is still valuable. I don't necessarily mean the preliminary clearance rates. I mean the final clearance rates.

I think that is still a valuable exercise and gives you a good understanding of what the housing market is doing in real time.

For those who are not exposed to the auction market, such as the markets of Perth, really Adelaide, Darwin, and so forth, following the weekly asking prices and stock market that we provide, I think they're great leading indicators. Now, above and beyond that,

following the housing finance approval series from the ABS is a really good leading indicator of demand. And the ABS does split that by state.

So if we were to see an interest rate rise, say in the first quarter of next year, the housing finance approval numbers will show up pretty quickly, like a month after whether the market's really reacted to that.

Option clearance rates in Sydney and Melbourne will show up within a week or two, whether the market's reacting to that or not. Those would be the indicators that I would follow.

Even above that, this is a lagging indicator, but if we were to see unemployment start to skyrocket beyond 5%, watch out, that would definitely be very negative for the housing market.

It just reminds me of how quickly, for example, economies can turn. If we wind ourselves all the way back to the 1990 recession, unemployment shot up from about 5% up to about 10% in a matter of about six to seven months. So it can happen pretty quickly if you're not careful.

Well, they're sobering thoughts, that one. Louis, have you got a property dumbo for us to see out the episode? You know, we love to hear a story about something that we can learn from, a mistake that may have been made. You got one for us?

I think I've shared all my mistakes with you in the past, guys. Can I give you an anecdotal of one of my recent property purchases, which has actually worked out?

This is a reverse Dumbo. Sure. Go for it.

It's a reverse Dumbo. All right. Okay. And it shows how the data can work. So my last property purchase was a property I bought on Airlie Beach in 2021. Three-bedroom apartment overlooking the Whitsundays. Pet house. Managed to pick it up for under a million dollars.

That market had not been moving for a long time, was impacted by Cyclone Debbie from 2017. But what made me move on that in 21 was looking at the leading indicators that we had. So I started noticing in that area, stock on market started to fall away. Vacancy rates started to fall away.

Reds started to increase. And it had all the hallmarks and our leading indicators that this was a market that was finally about to come out of its doldrums. And that's why I bought. And that has paid off considerably. So it's been a very good buy.

It's a buy where it is a holiday unit. And I don't mind that because guess what? I've got more control over that property, believe it or not.

Yeah. Do you use it yourself? No.

Yes, I do. My wife and I get up there and the kids about twice a year.

So you've got sort of as a lifestyle asset in that regard as well.

It's a lifestyle asset. I bought it on a rental yield of gross about 7%, which translated to about a 4.5% net yield. And now it's yielding on the original acquisition price north of 10%.

obviously on the short-term market. Did you buy that with a view to keeping as a lifestyle asset and you wanted that sort of initial upside?

Or did you buy that with a view to, I'm going to ride this wave and I'm going to bail at the point that I start seeing the red flags?

When I buy property, I buy it with a view that I'm going to hold it for a minimum 10 years. I don't buy it with a view that I'm going to flip it in five years. I don't buy it where I'm going to think I'm going to sell in five years. No way.

So when we bought this property, I bought it with two things in mind. Number one, I thought the area was undervalued. Number two, I thought that we would get an increase in rental returns over time. And yes, number three, I've always liked the area in terms of lifestyle.

And I believe if I've liked the area in terms of lifestyle, others will as well. And yeah, so no, we have no intention of selling that until I maybe go six feet under. Who knows?

Well, I'm glad you're enjoying it and I'm glad that you've enjoyed some outside there too. So congratulations.

Thank you so much for coming on and definitely get the boom and bust report. Links are in the show notes. And thanks again, Louis.

Thank you, Veronica. Thank you, Chris.

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