What Is Really Shaping The Property Market In 2026?

In this episode, we take stock of where the property market really sits as we head into 2026, the forces already in motion, the pressures building beneath the surface and the shifts that are quietly altering the way buyers, sellers and investors need to think. Prices have been rising across the board.

The lower quartile is still running the fastest and rate cuts keep slipping further away. Add tight rental markets, weak construction pipelines and global instability and you've got a landscape that's anything but settled. 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.

This week, rather than making predictions, you know, we'd never do that, we're unpacking the factors that could shape markets in the year ahead. Policy settings, consumer sentiment, borrowing capacity, supply constraints, and where investors are already repositioning themselves.

And we'll break down what smart buyers and sellers should be considering now, the risks to avoid, the signals to watch, and the decisions that should not wait for perfect clarity. All right, Chris, let's kick this off bluntly.

Given everything we're seeing at the end of 2025, is there any credible argument that 2026 will be easier for buyers or are we heading into an even tighter, faster market?

So easier to buy? I don't think so. So, you know, it's going to be interesting to see what investors do, like old investors, not new investors entering the market. How do they sort of feel around this interest rate shift? I do want to preface this, right?

We're recording this at the 11th of December and I think that matters, right? Because things are moving quite fast in terms of people's expectations are always changing.

Like I think if the biggest lesson I've probably had over the last four or five years is, you know, jumping at shadows and because interest rate expectations have been wildly going up and down, you know, when there was zero, it was going to go to two, then it went to four, then it was going to get dropped and then went back up.

And, you know, we're just over the last couple of months with a couple of bad inflation numbers and then all of a sudden our rate expectations have shifted from, you know, a couple more cuts, maybe even two, three more over the 2026 to potentially one or two increases, right? And so,

That could even shift in another month when this publishes, right? And then secondly, it could shift by the time the market opens up in February.

But if you think about if this was happening in three or four months time and the expectations is that rates are gonna stay high all the way through 2026 and potentially go up, I think what you'll find is that I don't think first home buyers would really care too much.

I think they'll still answer. There will still be some people that are concerned about buying their first home, but unfortunately, most first home buyers, the ones in the market are the ones probably doing the best financially. They're ones who are confident around their income. And I think investors will still stay there.

It's just such a big, strong part in the market. Whether rates drop or not, it hasn't really been a reason why they're buying. And I just wonder whether current investors will type the bail. It just becomes too much to hold all these mortgages.

Plus, they're under a lot of debt stress on their home. We saw a lot of investors bail two, three years ago. maybe less in 2025.

But homeowners, like if you own a home, like rate uncertainty at higher rates means that you're less likely to upgrade or less likely to wanna take on more debt. And the jumps are quite big to make. So it's usually quite a lot more debt and you'll just sit on your hands.

And I think that's what we've seen over the last two, three years is very tight listings of good quality properties. And if you likely think rates are going to go up next year, then you'll just sit on your hands.

I think it's going to get harder to buy next year, particularly in the housing market in our capital cities.

So first, if you assume that what interest rates do, whether they stay the same, go up or go down, has a universal impact on the property market in Australia, then we're going to get into trouble.

Because if you look, you know, say 2023, for example, when rates were rising, prices were also rising in some of our capitals and they were falling in others or stagnant, you know. So the whole country doesn't uniformly react to rising or falling interest rates.

And I think that's important for us all to remember, that as an individual, the impact of changes to interest rates will impact individuals differently. And there's, you know, in different areas with more debt, for example, you're going to have much more sensitivity to rate rises.

So where you've got a lot of first home buyers or a lot of brand new properties, that sort of thing. But, you know, how do you explain the crazy prices that Brisbane has?

Perth and Adelaide, for example, had in the same environment that Melbourne had price falls and Hobart had price falls and Canberra had price falls. You know what I mean? So I just think we need to add a nuance here. That's all.

Because obviously the very fact that within weeks we had a change from expecting at some point in first half of 2026, a lot of people, a lot of banks talking about rate falls and it's swung to potentially rate rises at some point.

You know, that's a total about face in terms of the conversation.

But also, you know, we haven't done our full forecast report for some years now, sort of got sick of saying the same thing over and over again, you know, 95% or, you know, maybe at best 15% of anything worth paying attention to.

But we did one year, we actually did it on our interest rate forecasts and they were just as bad as price forecasts. So it's interesting to watch what's happening, what's changing and be aware of that.

But I guess I don't want any listeners pinning any decisions onto what we say about it is what I'm trying to say there.

Obviously, we're just talking about sort of, I think the questions are at, is it going to be easier to buy? I don't reckon it will be. I reckon it would be harder to buy particularly good houses. You really want to upgrade. What motivates? Yes, it's life.

Yeah, my kids are going to high school. But what really makes it is if I don't do it now, then I'm going to regret it. And because I'm going to have to pay what could run on me. I think a lot of upgraders are like, well, hang on a sec.

I've got a house. Rates are high. Why would I really want to go and take on more debt? The market's hardly running. Yes, it's getting more expensive, but I don't really want to take a big mortgage on. But if, for example, rate cuts were coming, right? And

all of a sudden there was this real expectation that it was going to run on them. I think you'd find a lot of people want more to transact.

They want to jump in early. You're saying they want to get ahead.

Yeah. If you look at Brisbane's listings in houses, it's just where prices are going up. Yeah, absolutely. But a lot of people can't afford to do that, so they get stuck in houses. And so houses are just ridiculously tied up there. And others like Perth and Adelaide, et cetera.

So, yeah, prices are going up. It doesn't mean people are selling. It's just listings are also – you know, a reason why prices are going up. And you look at like CoreLogic sort of, you know, five-year average listings and where they are today, they're like well down.

And, you know, this typical sort of autumn and spring period, like it's like, oh, it just disappoints every year, right? And if you compare that to say 10 years ago, it's like really dire.

And so I just reckon we're going to have rate uncertainty just gives people, particularly people wanting to upgrade, you know, less desire to.

Listings in Sydney have been pretty high, certainly in spring. And when I say pretty high, we're cracking 1,500 auction listings a week for a number of weeks. And that is hugely high. I'm trying to remember which year it was. I think it might have been 2023.

I don't think we cracked 1,200 one week ever.

in that year so I'm pulling this out of my memory bank so we've actually seen quite a lot of weeks and so I do track this on a weekly basis and we've seen a lot of weeks this year in big weeks prices have held up in the face of that

But as a buyer's agent who's been on the ground and the buyer's agency space coming up to 19 years now, it's always hard to find a good quality property. There's always more sort of junk on the market than there is good stuff.

So that's always a challenge, even when you've got lots of listings, even when you've got no listing. Listings are tight. The quality of property is always a challenge. That's something that I think a lot of buyers do when they enter the market.

If they've been sitting there spectating, just looking on the portals and just sort of casually looking at what's selling or what's around, they often have this sort of false sense of security that's going to be easy to find what they want.

And the minute people get ready to buy and actually start actively looking, the feedback we often get is, oh, these things have dried up. It's like, no, it's just now you're properly looking, you're picky. And, you know, you're discarding the vast majority of them.

And so I think that there is that sort of awareness that a lot of people don't have until they get active. So, yeah, it will be difficult if you want to buy a good quality property. I think it will continue to be difficult across the board.

One thing I'm going to ask you, and you may or may not have this on top of your head.

But I wonder, like, as we sort of come to the end of this year or end of 2025, if you look at quotalities charts for the November charts, every state and territory was in the black, you know, in terms of positive growth to varying degrees, of course.

And in every quartile, they do it in sort of bottom and top quartile in the middle and in all segments. All positive, right? That hasn't happened that the entire country has been in growth mode since 2021. I don't think, I don't recall it. And that was unusual back then.

So that was a really interesting thing to, as we come to the end of 2025, there's obviously a level of confidence there. and positive sentiment out there. People don't list their properties unless they have to or if they feel like they're going to get what they want.

And obviously there's buyers out there paying enough money for enough owners to feel like they're getting a good deal and they sell the properties and therefore prices start rising, right? So that's across the board a level of positivity. But I wonder... Do you know this off the top of your head?

Have you got across this? Of the, say, Brisbane, Perth and Adelaide, because those three cities are still in growth mode, I'm not even going to talk about Darwin really, but is owner-occupiers driving more of Brisbane price growth versus investors in the other cities? Do we know that?

We could find that out because you can easily, you can see that investor lendings as part of the CoreLogic report and you can see long-term averages of how much percentage of investor lending is there. And I think it's up across the board, to be honest. In every state, it's higher.

And that's just because investor lending has just been really popular over the last couple of years. Interest rates are higher. I've got equity. There's a whole episode we'll do on sort of risky lending. Yeah, we've got that coming out.

That we'll do and we'll talk about some of those things that are getting shut down. So I do think it's going to be interesting to see how much investors, but I think a lot of investors are trying to play where first home buyers are buying because that's a good bet right now.

Like, you know, often it's a similar price point. Investors don't want to spend millions. They just want to spend what they've got and they think if they spend too much, it's too risky. Yeah.

And I think it makes a lot of sense is, well, where are a lot of first-time buyers going to buy with this 5% deposit scheme? What's really attractive to them? If I'm an investor, can I sort of take advantage of that extra demand and also get a good asset?

And if it goes to a first-time buyer and they're dominating the markets, then it's an owner-occupier sort of market rather than an investor market. And it could be a good decision. So I wonder if We still see investors retreat from the regions. They're running out of regions to go to.

Do they start all going back to the capital cities? And I just think the first home buyer thing is if the market's even moving a little bit, it's an opportunity cost of not taking advantage of that scheme can be quite a lot.

And so I wonder just if that scheme sticks around all the way through 2026, more and more people find out about it, more and more people think, hang on a sec, I speak to a broker, you've got 20,000 brokers now, you know, 80% of the market share.

So, you know, a lot of people talking about and having conversations, reactivating sort of interest of old leads and, you know, old people who thought about buying their first home and, you know, friends doing it and taking advantage of the scheme and telling their other friends. So,

I wonder as that scheme continues on next year, if there's more and more interest in it and if the investor lending sort of continues. But when you look at sort of the, I mean, I do focus a lot on these things and you do need to break it up between houses and apartments.

And if you look at sort of Brisbane, way down on 2021, 2022, usually 30,000. Now it's 15,000.

And it's been like that for the last three, four years. Perth way down, Adelaide way down, Hobart and Canberra, a bit of an issue. And Melbourne's a pretty high. That's why the market doesn't kick is there's just a lot of choice.

When listings and choice is really tight, that puts a lot of steam in the market.

But you're talking total listings there, not new listings, right?

Yeah, total listings, yeah.

And that's because those other markets have been booming and so everything's been snapped up. And so a slower market is going to have total listings at a higher level and it's going to be longer days on market and, as you say, more choice.

And when things dry up, it's almost like every buyer sitting on the fence gets off at the same time. And so this will happen. Every market's in a cycle, right? Sydney's been in a very flat cycle for the last couple of years. At some point, it will kick off again.

Melbourne's been in the doldrums for, what, seven years, and at some point that's going to take off again. What are your thoughts on, okay, so you've got first home buyers and investors all competing in the same price brackets, and that's been happening for some time.

As you said, we've got an episode on risky lending and risking investment sort of practices, shall we say, coming up in a couple of weeks. What that does, though, is does pit more investors against first home buyers, and then you get the people that have sold to them.

Now, if their owner occupies upgrading, that's then going to sort of trickle into the next price bracket, right?

Yeah, I do think it's a bottom-up sort of boom, right? Like if someone's selling that property, I think that's often forgotten about. If it was an apartment that, yes, there's some first-hand buyers buying great assets, but some are just basically buying new investments that people didn't perform that well for them.

They're buying the high-density apartments. And the investors wanted to get out of that for years. They just haven't been able to. And then all of a sudden, you know, this happening definitely in Brisbane apartments, not so much in Melbourne, and it would definitely be happening in Sydney.

You know, you think about all the high density sort of postcodes, like, you know, a lot of them are older builds that aren't great as well, like newer, older builds that are built poorly. So 10, 15 years old. Yeah, exactly.

That's sort of old now, but not really old, like the Art Deco stuff. But I think that's an issue here. So those investors are bailing and whether they've got much equity or not depends on what they did years ago.

But they have built more equity and what are they going to do with that? Do they then take that, pay off their mortgage and then that gives them the borrowing capacity and the equity then go to upgrade their home? Probably.

I do think though that just reading social pages with investors that have bought dud assets that have sat on negative or no growth for sometimes a decade or more, when they start to see some growth, they're just so relieved to get the hell out of there.

I don't think they really are thinking about putting that money back into property. But I think if anybody is selling their home to a first home buyer and the value is inflated accordingly, all of a sudden they've got more to play with in the next price bracket.

I think you're right. So exactly. So if it's like a first time buyer that, you know, a couple, they bought a pretty good apartment, say in Sydney or a house in Brisbane, and they bought it for whatever price. And then that's gone up, say 500 grand, right? You know, or 300 grand.

Then they paid that property off because it was their home. And then their equity has gone from 400 to 700 because of the price growth. And then hang on a sec, their incomes have gone up since they purchased and their life's progressed and now they're having kids.

The 5% deposit scheme has pushed up and the up end hasn't moved as much because the growth is more subdued at the more higher level. And if they are doing well financially and they can borrow a decent amount with their incomes, then they can afford to make that jump.

So it's the 5% deposit actually is pushing prices up from the bottom. But there's a lag on that and not everyone can take advantage of that because even though they've got equity, it doesn't mean they've got enough borrowing capacity to them because house prices have gone up so much more than apartments.

But in some cities, that opportunity is going to be greater than others. Like in Melbourne, for example, that opportunity to upgrade if you're selling to a first home buyer is fantastic, even in Sydney. As I said, we've had two years of very steady growth modest, very modest growth, almost a flat market, right?

So low single digit growth per annum, you know, like that does provide opportunities, especially when the lowest quartile is the hottest market in the last, say, quarter of the year. So that, but that opportunity, that door will shut, that door will close.

And so I guess that's something that if you're in that category, that you should be certainly thinking about. What do you think about downsizes?

Yeah, it's an interesting one. That's a good point to the market. I think that leads into our building boom sort of other factors. I track this story like I'm a little bit obsessed with it, understanding the zoning, what's getting approved, what's getting marketed.

It sometimes gets marketed as not even approved or it might not get built, but they're trying to get it approved with council and you've got a whole register on major projects in New South Wales. There's a bunch of websites you can track this stuff on literally daily. There's a lot of people who...

obsessed over this for many years and I'm kind of entering this world, but there's so much happening. It's just crazy. And does that really change it for downsizers? You know, if your suburb's going to really shift, think about like the premium suburbs of the old NIMBYisms where you thought it would never change.

Do you go, right, I'm out of here. Like, like, which is fair enough. Like, I don't want this suburb to.

You're out of the, or finally they get an opportunity to actually downsize and stay where they've lived for maybe the last 20, 30 years. Yeah.

Well, yeah, but they, so they have to downsize though. Exactly. So they, that's the, it's a catch 22. They might say, yeah, I'm out of here. I'll buy one of those new apartments, but I'll sell my house. To a developer.

Yeah. And or to a developer, or do you just, if you're just on the skirts of, because there's always the.

the one that wins and then there's the one that loses that doesn't sell to a developer. And if you're closer with that or you just go, you know what, this is not what I thought signed up for. I wanted a little quiet village and I wanted to know everybody.

And all of a sudden it's all this high density. A lot of people, you know, potentially will bail and go to other areas. And I sort of want to track that story. I think it's a massive shift that can't be underestimated. And that's why it's happening in Sydney.

I think it's the canary in the coal mine for other cities, right? Brisbane's got planning changes going through. Melbourne has. Melbourne's got a lot.

The thing is though, and this is one of the issues there, that there are people that are in those development corridors, their lives then enter into limbo. Because if I'm about to outgrow it, I can't sell it. No buyer's going to buy it if it's now in a development zone.

My neighbors aren't ready to sell or they want too much for it. We can't actually agree on how we're going to go about this. And I'm stuck. What's the point of investing in my property? I'm not even going to maintain it.

Yeah, absolutely.

And so, actually, it's a bit of a cruel, it's quite cruel, I think, in many cases. I've spoken to a number of individual homeowners who are really personally stuck because of this. And, you know, it's all well and good to just see this blanket rezoning and say, we've got to get more housing.

There's people that don't have houses, but to... then commit individual families into this sort of limbo where they cannot move on with their lives at a time where they would otherwise move on with their lives, I think is really tough.

There's winners and losers, right? This is this NIMBY versus YIMBY sort of debate. I'm not in politics. I don't, you know, I'm not coming up with these. I'm sort of an observer of it and saying, this is a huge shift.

And if, you know, for example, if you had a property that was going to be affected, absolutely it'd be emotional because it's going to affect you individually.

But if you just look at a city level and think about it as, you know, five, six million people here and the state government's doing this and they're overriding councils and the developers are doing this and,

You know, there's going to be massive consequences with reshaping what's valuable underneath the new world versus the old world. And because there was a lot of intrinsic value built into these suburbs that was based on getting a park and having quite streets and feeling safe and low density.

And if those things are now no longer there as much. then people are like, well, why would I pay that for the property? And does that mean people bail? And I don't know. I think it's just going to play out, particularly when things start happening.

I mean, lodging a DA is one thing, but when six of your neighbours knock down and there's a sixth level building going up and you're just up the road, you go, hang on a sec, is this really what I want, you know?

I mean, that's a no brainer. But the problem is that, you know, if you're one of the six neighbors that banded together, all agreed and actually found, you know, it's a willing vendor or willing buyer, that's fantastic.

But if your little cohort, your little neighborhood isn't quite as is on the same page, you know, like that's shit. That's really shit. Absolutely.

Do they bail? That's what I mean.

But who are they going to bail to, right? They're going to bail to a speculator who's going to basically land bank it, hoping that those recalcitrant neighbors might actually at some point all need to sell, right? So, like, who are they going to bail to and at what cost? Hmm.

I think that's tough. Obviously, it only impacts a small percentage of all the downsizes out there, but it's an interesting thing to watch.

I think the other thing we've been talking about a lot over this year about the construction pipeline is that it appears that the most profitable type of development has been the higher end. and apartment development, which is typically the type of property or the type of stock that downsizes would attract downsizes too.

There's opportunities, I guess, coming to downsizes that isn't necessarily coming to the rest of the marketplace. And that's a change because across the board, we've had a real shortage of three-bedroom apartments for argument's sake, or those real house size apartments, we want to call it that.

That's sort of interesting too, because that definitely changes. It's all in good. There's development happening and there's new dwellings happening, but it's one segment of the market. It's at the higher end of the market. Let's face it. It's not necessarily helping the old people that can't get into the market.

Yeah, absolutely. It's going to be interesting to see what actually stacks up, right? What do they can actually make money on? What can they actually sell? It's all good and well getting these approvals, but can you actually then go find enough downsizers that want to live in them?

It might be okay for a four lot And I don't know how well they're selling, right? That's definitely data that I would love to find out. And there's some real estate agencies that's focused in this space, right?

And they've gone, you know, maybe 10 years ago, they were selling, you know, 600 apartments in this big high, you know, now they're just selling, you know, 600 apartments. They're selling it over like 60 different projects, you know? I think there's a huge amount coming.

So I think that's a story to track together with Sort of the return to work, working from home. Like, how does that keep playing out? Does, you know, obviously it was five days home for, you know, 21, 22.

Now it's only three, you know, one day in the office, two days in the office, three days, four days, five days. Does that go back to the old way? Because it's sort of, that's been the trend and.

You know, if we are back in the office, say, four or five days a week for a vast majority more, yeah, there's still people working from home. I think that sort of will affect the markets, you know, not just in Sydney, but, you know, around the country, I think.

Well, regional markets, that's going to impact, you know. Yeah, absolutely, yeah. So, and, you know, that's been a big success to our sort of post-COVID world, but how sustainable is that? And certainly not all regional, I mean, look at,

both sides of you know the both peninsulas on either side of melbourne maybe not geelong so much but certainly in the morning to peninsula's been suffering that's in the doldrums i guess the victorian story is a little bit different to the rest of the country but you know the word from home there's pressure on that and who wants a big commute anymore so those properties are going to uh you know watch out northern beaches i say chris

Yeah, but I also think that part of the beaches is one of the things. I mean, that's where I live, right? So, I track this stuff. Like, does high density in the east or low in offshore or up in offshore? Like, you've seen what's happening around Clara and Gordon, and that's crazy.

The whole thing about living up there is around being the schools and the village. Mm-hmm. And if that village thing's not going to be what you want, the kids are leaving school soon and you don't need to go, then where do they go? The beaches haven't got the train line, right?

And so it's really hard to increase density when they say they haven't got the infrastructure there for it, right? And so their argument is, well, we'll just do it in sort of around Warringah Mall and maybe do it down Manly Beach and a few here. And where's the east suburbs?

Go look around what's happening around Edgecliff Station in the eastern suburbs. It is absolutely crazy. And together in Bondi Junction, there was a just this week, some fights to increase heights in Bondi Junction again, let alone the Wallara train station. So that's a huge story.

Obviously, I'm talking Sydney-centric here, the work from home. Obviously, AI was a huge story this year and we're all going to lose our jobs. I think people have probably anxieties dropped a bit as they've used ChatGPT more. But I think that's a great story to sort of track.

How does it actually change our job landscape? Does it create more jobs than we lose? Yeah, what happens to our job markets is a big story, you know, this year.

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.

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Yeah, and regional markets are interesting to watch because a lot of the commentary I see on them is really just it's focusing on what's happened since COVID.

It's ignoring what happened before and whether or not we're actually in a state of permanent change or whether this is a new world or whether it actually will go back to what was previously the norm in terms of work from home and where the demographics of people living in these sort of coastal and sea change and tree change areas.

So that is something to watch. that confident that the regions will continue on the trajectory they're on. And again, we're going to talk about regions in more detail in a couple of episodes, because I think there's a lot of risky behavior in some regions.

So I guess be careful is where I'm saying there. We've talked about supply, listings and new construction. We've talked about demand coming from increased investor lending and also first home buyer incentives. We've talked about interest rates because we don't really know what's going to happen.

There is a level of positive sentiment around the market. As I mentioned about Cotality's data showing that all markets in the positive. What do you think has led to that and do you think it's sustainable?

It's interesting, right? So the Westpac, which I was just trying to bring out as you said that, the Westpac consumer sentiment sort of, forget the name of the report. It's like the property housing report. Anyway, there's a time to buy index on it. And it is like off the charts.

Like it's 16, 17 year high. No, not time to buy, the price expectations. And so- That has been recorded and it's like a very well-respected survey and it is off the charts. So people are just overconfident and expecting massive price. I don't think the time to buy is really that high.

Like a lot of people are like thinking it's not, even though they're expecting prices to go up, they don't think it's a good time to buy, which is a bit counterintuitive. I think they know the interest rates are high and do you really wanna take on this risk?

Is it a good time to do it? But yeah, there's just huge confidence. And I think this rental crisis, issue is really encouraging people to buy. I think that's what's really supported prices the most.

I think a lot of investors bailing over the last years, rents going up a lot, and it just really supported prices a lot under higher interest rates because people are like, well, I don't want to rent. Yeah, that looks better on paper.

Yeah, I would save money if I rented, but I don't want to get kicked out. And I really do want to own a home. If I remember back, say five, six years ago, When there was that share economy debate, like, no, own nothing.

You know, the next generation will own nothing and they'll never own property. And Gen Z don't want to own. They just want to share. Like, that was the argument.

But I think we'll find that the younger generations want to own just as much as every other generation, if not even more so because what they're going through in recent years.

And we talked about this before as well. The minute you have kids, your attitude towards property change when you had kids was interesting watching that, you know, and that is all of a sudden people want stability. They want a house. They don't want an apartment.

You know, there's, there's, I'm happy not to be walking distant to the nearest bar anymore. I need a backyard or. parks or whatever it is, you know, your priorities change. And I think, you know, millennials, well, definitely the younger millennials might not have kids yet, but, you know, millennials are certainly having kids.

Gen Z, well, my daughter's Gen Z, do not have a child yet, please just back right off. But, you know, soon they'll start, the older ones will start thinking about it. Gen Alpha are now in the workplace. People in the workplace whose birthdays start, you know, with 2000 or something.

2000s, yeah. I know there's freshmen, there's some footballers that are like born in 2010 and they're like lighting up the world stage. But I think the intergenerational wealth, I was blown away over the last two, three, four years how much that came down.

When you look at all-time highs on share markets, baby boomers don't crypto investors, but let's forget about crypto. Property prices, their investment properties have been going up. They're getting a great return on cash. Their super fund's doing really well. That money, if you look at household wealth,

is only much higher than it was two, three years ago. That money's still there. People are still dying. Grandparents are still dying and great-grandparents. And so that money is coming down and it is coming down. And I think we'll see that continue because that just makes sense. That wealth is just there.

Think about this person, these downsizers that are cashing in. They might put some for their own retirement, but a lot of that will go to the kids and then the grandkids and then they'll re-leverage it into property. So I think that's going to be a...

Obviously, this is a have-nots, but that is absolutely going to happen a lot over 2026 and beyond. We're kind of only at the start of the baby boomers dying off, if I can say it in a nice way, but that's kind of where we're getting to.

And look, we've had lots of episodes where we've discussed around the social contract around rising prices and problems with our cities that become unaffordable for people who are the backbone of our cities, the cleaners, the baristas, let's face it.

That's such a frigging privileged thing to say, really, but teachers and ambos and nurses, et cetera, et cetera. So there are real issues structurally, particularly when you look at a city like Sydney and the affordability here, but You know, be that as it may, we can't deny the facts.

You know, the facts are that there is that wealth in the system and that wealth is increasingly, you know, the bank of my mind, that is what the fifth largest lender, that wealth is increasingly being directed towards younger generations to help them continue to own property and get into the property market.

Yeah, I mean, one thing we haven't chatted about or just thought about is bank lending. Obviously, this is our space. Obviously, we get updates from all the banks. You know, credit growth's kind of the way that they measure it. Like, every bank wants to grow their loan book, right?

That's the name of the game. And they're all restricted in terms of how much they can lend because APRA's got this assessment buffer. It's 3% above what current rates are. And, you know, there's not as many transactions in the market as well.

They don't want to do these refinance wars because they've realized that they just cannibalize. They just eat each other's books. They don't really grow. They get 10 new customers and they lose 10 new customers.

So they all sort of had this sort of truce the last sort of two, three years where they all didn't undercut each other after they basically wiped out all their, you know, basically loyalty tax they were making. Yeah. Agreed.

So they're going to have to come up with innovation and they're going to have to move into new lending and try to open up new ways to grow credit growth. Obviously, they've all gone to business banking in 2025. But then that's hard because business is nowhere near.

You can't really do it in commercial lending. There's been the rise of private credit in the last few years.

And so while I think that'll still continue, I do think that the banks and not so much the non-banks, it's such a small part of the market, but the banks will have to start to come up with innovation and there completely will be risk on.

They'll just try to, I guess this 5% deposit scheme, but that's just a government thing. There'll be ways of trying to increase lending. Now we've started to see 40-year loans. I think we'll start seeing more interest rates. Only we'll see relaxing around self-employment and bonus income and lending on shares.

And I think that this will be the way that the banks try to increase their credit growth. And we can already see it. And I think that's going to be interesting. That means more lending, right?

Let alone when interest rates come down and they can lend more or APRA step in, reduce the buffer. people will start taking on bigger mortgages just because they take on a longer mortgage, right? Or just because they can borrow more because the bonus is counted 100%, not 80%.

Or they would look at the last year in business, not the last two years. And so I think that'll be something to watch in 2026 is just the appetite of banks because access to credit is a huge part of the market. Like if it's easy or hard, it really determines.

If you think about the Royal Commission in 2018, Really tight credit, really hard to borrow. Market crashed pretty quickly.

It did, particularly in Sydney and Melbourne at that time. We've both been booming. So, there's pent-up demand. At the end of the year, you see also buyer fatigue. Certainly, pretty much, you know, eye-tracking. auction clearance rates in Sydney. It's a really important metric.

And in Melbourne, it's an important metric as well, less so in the other cities. And you can really see buyer fatigue in auction data because you can see that the clearance rate really falls off a cliff. Generally, it starts in November, but it really bites in December.

And usually that coincides with a lot of spring listings and pent up, you know, the growing total listings, but also new listings.

But when you have really exuberant markets as well, like even when we did have that last boom in Sydney and Melbourne, which has sort of ended in the middle of 2017, it ended because it was a raw commission and APRA changed lending rules and there's a whole bunch of things happening at the time.

But other booms... What I see is buyers just get over it. You know, there gets to a point, like, so I wonder, and I look at sort of Brisbane, Perth and Adelaide in particular, which seems to have just had a resurgence.

A lot of people thought that they passed their peaks in terms of their growth phase, but all of them seem to have rallied, right? And I just wonder at what point buyers are just going to get fatigued. It gets to a point where they're enough, it doesn't...

feel like value anymore i'm not going to compete anymore so that will be interesting to watch because at some point that will hit these markets yeah i do think there's it's interesting to say biotech now just like you say does it how does it change over sort of january february yeah usually comes in hard they

Yeah, and does the market, does a lot of this stock that is on the market now, does it get snapped up over these next couple of weeks? Like, does it just really, is it really dry? Do listing numbers, you know, and is it really late in January?

Do they start, you know, is it just really dire? And do buyers come back with a new vigorance to sort of make it happen, right? Like... And I think at the moment I would say no because there's so much negative news around the economy and where inflation is going to be.

And I reckon a lot of people just aren't in that would feel like they just want to be patient.

But at the same time, we're talking about an overall confidence and... you know, price is still growing at the end of the year. Like even though we've seen clearance rates fall off, price growth across the board is still there.

Like I think that there's actually, there's a foundation to this market at the minute that sort of surprised me when I sort of dug into the numbers a bit. What normally happens after Christmas though, and so the auction markets behave very differently to private treaty markets.

Because with auction, you need three, you need four weeks, really. Effectively, a campaign is over three weeks.

So you're not going to list something, you know, first week back in January because you've got Australia Day on the way, you know, and you're not also going to list stuff in the last week of December because... You can't run an auction campaign over the Christmas holidays.

But if you're in a private treaty market, you can bring a new property onto the market on 24th of December if you want to. Yeah, sure, market's going to close for a couple of weeks.

But, you know, the first day back, that property is available to be purchased and some market agents stay working. Not a lot of solicitors do, so there's not much happening.

But with private treaty, that really is a two-week lag, where an auction market says that depending where the public holidays land, it can be a five- or six-week lag. And what you do see is buyers come back renewed and invigorated after Christmas holidays.

The ones that got over at the end of the year, they're back, plus you get new ones. And that's why in an auction area, you will see the clearance rates peak generally in February. So often it's the highest clearance rates of the year are in February.

So unless you're in an absolute year that's going to take off booming, but most, that's a typical pattern. So we can see that in auction markets. You can't see it as clearly in private treaty markets.

And in private treaty markets, it has less of that pent-up demand swirling because there's no auction campaign starting. So that's something to be aware of as well in the new year. And quite often when we sort of hit the market in February in Sydney and we're watching this, And we're seeing this exuberance.

We're always in the back of our mind. Is this going to take off and continue through the year or is this going to be the normal February hump, you know, and then the rest of the year goes back to normal? So that's the question you've got to be thinking about.

I mean, you said there are property markets. They naturally sort of, you know, slow down and, you know, people get over it. I think people do that as well with shares and other asset classes. they go, look, I'm just not going to keep on pumping up the share price past this point.

I just don't see value. And I wonder if we're, you know, stock markets, you know, if they go up the stairs and down the escalator, right? Like it's, they can crash really hard and really fast. And when they happen, that is bloodbath.

It's all over the news, you know, and some of them, they bounce back pretty quick, right? Of most, you know, volatilities, then they go and they go back to even higher highs. It's just the way it works. But Sometimes it isn't and, you know, it can be quite severe.

And so, you know, it does a little, you know, whether it's a bankruptcy or AI company gets found out or something that triggers a bit of a stock market crash and investors will bail or a crypto crash or gold crash.

And how does that impact things in, you know, does that really affect consumer confidence? So I think that's something just to be aware of. That could happen every year. But I do think that, you know, when markets are at all-time highs, the chance of a big stock market crash is higher.

Goes up, yeah. Yeah.

But look at what happened in April, April of 2025. You know, like it died. God, I wish I'd just actually, I mean.

Yeah, bought some of the NASDAQ back then, yeah.

Yeah, I didn't, you know, and it's stupid because I sort of invest regularly. I just didn't get myself... into gear. It's weirdly enough, what I have actually done is I made sure as a result, because I just didn't get myself organized in time to take advantage of it.

I have since then though, increased my cash holding so that next time it happens, I'm ready. So I didn't have to sort of reorganize myself. So I've looked at that. I went, yeah, that was a missed opportunity. I won't miss it next time. But that's the way I look at that.

I mean, some people rush to safety. They rush to property if we get that sort of volatility in other asset classes. But I think we always have to remember, we're at great pains to say that property, yes, it's an investment, but primarily it's a riff over people's head.

Security is a lot of, and it's not a tradable asset for most people because they're not going to, well, A, it's not that liquid, but B, they're living in it. It's not something they sell out of, get back into. You know, they don't play it like you can play the share market.

So we have to think differently about it, even though often we talk about it in the same terms.

Population thing, that's going to be a huge story, right? It's already, you know, we've got people sort of marching on the streets. It's massive in the news, you know, almost every week. You know, a lot of people are blaming that for all our problems. Convenient.

And, you know, how that happens, how that plays out. But you've got a very pro...

government both labor liberal for development right because they can see just dwellings commence is just way down but building prices have gone up not feasible for builders a lot of buildings are lost gone under you know built or have lost all their sort of liquidity or their buffers over the last few years that

less risk appetite than they were, say, five years ago. So, they're not going to take on any project that's not going to make financial sense. You know, they're just not going to play that game. You know, builders are undercutting each other and just basically buying work, you know, in COVID, right?

And so, I don't think building prices are going to go down, particularly, obviously, when you've got roads and Olympics and all sorts of trains and all sorts going on.

The rate of growth of building materials and imports has gone down, but it actually hasn't gone backwards. Yeah.

Yeah, that's right. Exactly. And there is still a lot of people that can't afford to upgrade. You've got stamp duty selling costs. And yeah, it costs to do a renovation is higher, but that doesn't mean you need to do the whole hold.

You can just do a more moderate renovation and people are still doing that. Obviously, it makes sense to do it potentially because house prices have gone up and they can afford to do it with the bank and

I think just overall, while we're talking about all this new development, it's not typical, the old developments, not high density apartments. It's not greenfield housing estates.

It's still, I mean, they're pretty flatline, but it's pretty dire, the building industry really, you know, and the amount of dwellings that we're sort of completing is way down. Like we were doing here a few, About $50,000 to $55,000 sort of a month, and we're doing sort of $40,000 to $45,000 now.

So we're like well down on sort of the previous boom in 2017.

It's interesting too because I see a lot of houses just wandering around. I spend a bit of time in Melbourne, wandering around the streets of Melbourne, wandering around the streets of Sydney. I see a lot of houses under renovation. So people are investing in their own homes.

But I tell you what, as buyers – The unrenovated properties, they are not that popular. Buying a property to renovate is much less attractive to buyers than deciding after you've been in your home for a few years that you are going to renovate it. There's a really different mindset.

And so I often find that mismatch quite interesting, that there's clearly an appetite for individuals to renovate their homes, but people don't necessarily want to be buying unrenovated.

I didn't have enough cash plus borrowing capacity to sort of do it, you know, because it's actually quite hard, much harder is to actually, you know, you put a little bit in for the deposit, you borrow a lot from the bank, which is easy when lending's quite easy and you can borrow a lot of time to your income.

And then you put the rest of the money in the offset account and then you do your reno, right? Or to then go and do a construction loan to then borrow and do a reno is actually quite hard because you've got to have even more equity.

and there's a process and time to do it, and there's risk involved, and there's risk involved, you want more buffer. And so, you know, it makes sense.

Like right now, if you're going to buy and you're leveraging up, like you don't really want to then go, A, leverage up, and then leverage up and take risk when we're doing builds. And when you've got no confidence around building costs and the time to do it.

And so, and a lot of people have left it too late as well. So not only are they upgrading a bit later than they wanted to, so they haven't really got those years up their sleeve. They kind of need the space now because they've got the kids that

You know, getting a bit on and they can't buy a two bed and turn it to a four bed because they've got two kids going to school and high school. And I feel like that's happening a bit as well. And investors aren't doing it as well.

I think investors aren't sort of doing the rentals. It's like, it's just, it's a lot of risk when potentially the reward's not there because the cost to build is just so high. Why would you renovate your investment properties? You just would just leave them, you know.

Well, it's easy to rent properties out. Exactly. That's right. As long as they're in good condition, you know, so it can be dated, daggy, but good condition. I've got, you know, one house that I've always intended to renovate, but what's my incentive to renovate it at the minute? I don't need to.

So, at some point in time, I may or may not ever renovate it now. I've always thought I would, but maybe I won't. Maybe I don't need to. But anyway, we... We'll often wax lyrical and bang on about all this sort of stuff and have these sort of wild ranging chats.

We hope that you've had some benefit out of the sorts of things that we're thinking about as we enter into 2026. The big message for me anyway, is that when you are buying something, You need to be strategic about it. You need to be thinking about what you're trying to achieve long term.

I think too many investors that I meet in sort of short term financial pain because cash flows are tight. And certainly if you are moving into an environment where interest rates are starting to go up again, it becomes tough. And a lot of investors feel that pressure. pinch of cashflow. It is tough.

And one of the things that I sort of say quite a lot is that the first 10 years of owning a quality investment property are painful because it often takes time for compounding to sort of see the benefit of capital growth, but you will be out of pocket.

You're going to have to keep investing cashflow into that. And when things like interest rates go up, insurance costs go up, there might be some maintenance that bites the You know, it feels like, oh, this is just not working. This is not for me.

And so I always think that you've got to remember property has to be a long-term view. You have to have a long-term vision. You have to have a plan behind it before you go in to do it. And that there's a lot of noise out there about where should I buy?

Where's the next location to go off? None of that matters in the long term if you buy a good asset in a good area with good foundations, and you can ride out those bumps of a market. But that only works if you're in it for at least 10 years, preferably 20 or more.

That's the one thing I probably would say, that we're talking about volatility, stuff that's happening right now. In reality, long-term thinking, really, none of it should matter.

I mean, you make a good point around investing and we've really avoided this regional investing phenomenon. We have got concerns around that and the whole multiple property strategy. We haven't been pushing that at all.

We could easily have been on that way forever and we've been anti-off the plan when everyone was saying, all the way back when we were doing this at the start, you know, we were anti all that. And we... We know that there's been a lot of momentum investing there.

And, you know, and I think what those buyers agents are also doing are basically investing their clients' money, right? And you're making a gamble. And often I don't feel like it's on long-term fundamentals. It's basically trying to basically capture speculation on markets.

And I do think you've got to be a bit careful with that. Like when I talk about investing is I'm saying, well, you know, what you're trying to do is get an asset. Because most people want to buy and hold.

If you go and ask those investors what their plan is, it's buy and hold.

Yeah.

Well, is that really the thing you want to buy and hold forever for the next 30, 40 years? And most investors are, you know, at least looking, you know, got 20, 30 years to retirement. Like they've got long timeframes and it doesn't mean you have to sell it at retirement.

You could hold it for another 10, 20 years into retirement. So if you think about it like that and you think about a 30, 40, 50 year timeframe, you're going to hold this property forever. Are these the properties you want to hold?

And yes, you can make money here and you pay capital gains tax and then you have to trade it and then you might get it right and you might then get into a capital city. But these markets don't stand still, right?

And yeah, maybe someone might be a bit frustrated if they bought a house in Melbourne over the last five years and go, but the person who bought a good house in Brisbane, you know, back in 2016, they've done all right, probably done all right in Sydney.

But they would have sat for a number of years thinking, when is this going to do something for me?

Absolutely. Yeah, exactly. It didn't tick in 2016, 2017. No. It was 2020 and they went through the roof, right? But yeah, they bought an older house on a good street, you know, with good aspects and a quiet, you know, et cetera, close to.

So they bought a good asset and they just waited and then time and maybe they're going to go through a plateau period. It doesn't mean they sell. They're going to hold it, right? They know that that's a good asset in 10 years after that. Yeah.

Yeah. It's like value investing. It's like, you know, if you have done the work to buy a good asset in the first place, you just then have to trust that you did the work and be patient.

Yeah, and it doesn't make sense to sell. You don't really want to sell it now. If you bought 700 now, it's worth 1.6. This is actual clients I can think of.

Like, you don't want to then go and pay, let's call it 800 grand of net gains, you know, like 200 grand of capital gains tax. No thanks. It's covering itself. I'll just leave it there. And so... Yeah, I think obviously we've had a good year. Obviously another 50 episodes done.

I think we're eight years in. We have, you know, no plans to stop this if you're worried. And we'll have 50 new guests next year. We'll learn a lot. Hopefully you will too.

And if anyone you think we've missed or conversations we haven't covered, please send them through because, yeah, we're always looking for new angles to discuss. Love it. Happy New Year. Happy New Year.

If you have a question that you'd like us to answer in an upcoming Q&A episode, you can send us a voicemail or written question via the website, theelephantintheroom.com.au or you can email us directly at questions at theelephantintheroom.com.au.

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