"Depressed" agents panic as homebuyers demand collapses

“Australasia’s #1 real estate coach and coach”Tom Panos, is “stressed” after “almost no buyers” at the Sydney auction on Saturday.

I am STRESSED We have almost NO buyers.
However I still think vendors should sell now, here’s why…

Plus, John McGrath told me that 25 economists across Australia agree on this – the #real estate market will get worse before it gets better. https://t.co/fv4Hvrt1K5

— TOM PANOS (@tompanos) 9 July 2022

According to Panos:

“I have six auctions today. Of the six I sold one out of six … And the only one that sold was the last. So I’m zero out of five until the auction I did this afternoon at 15.30… The first five auctions were pretty pathetic. Almost the only people there were agents and vendors… I barely had anyone signed up all day”…

“People have turned around and thought to themselves, this [interest rate rises] to be really scary out there as a buyer, of which I think there must be some of them”…

“This is the deal. If the Reserve Bank wants proof… take it from someone on the front line… that [interest rate hikes] already having an impact… There’s been a 20% drop in three months in certain areas. For example, the middle beach is one of them”.

“So again, what I have to say to you is: Reserve Bank, please pay attention to real estate. This has an impact. No question about it. It’s about buyers, we have vendors who significantly reduce what they expect. And besides, there are some buyers who bought… at the end of 2021, who now have assets that are worth much less than they paid for”…

“Right now, if you’re a vendor… you have to be a very brave person to refrain from wearing them now… I don’t want to see you wearing them in September, October, November… We know we have a normal seasonal property rush hitting the market spring. So when you combine that with the odds of at least one more, maybe two, maybe three, maybe four rate hikes, it tells me you want to be a buyer this spring. How did you become a shopper this spring? By becoming a seller this winter. Sell ​​now… Call your agent Monday morning”…

“25 economists across Australia agree on one point – the real estate market will get worse before it gets better”…

The data don’t lie. CoreLogic’s daily occupancy index for Sydney has been in free fall since the Reserve Bank began its tightening cycle in May:

Over the last quarter, Sydney occupancy values ​​have fallen 3.3%, which is sure to continue as the Reserve Bank’s latest rate hike, let alone any future hikes, is transmitted into prices.

The Reserve Bank claims that they do not look at house prices when setting monetary policy. Of concern is how rising mortgage payments and falling house prices will impact consumer spending, which is the economy’s biggest driver.

Therefore, the Reserve Bank may not stop raising interest rates until there is clear evidence of a reduction in consumption spending, which could take several months before it starts to materialize. At that time, it would likely climb too far.

In my opinion, I still expect the Reserve Bank to start cutting interest rates mid-next year as the economy teeters on the brink of recession.

Leith van Onselen is Chief Economist at MB Fund and MB Super. He is also Chief Economist and co-founder of MacroBusiness.
Leith previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

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