Australia’s housing market is creaking under pressure — record-low affordability, rising lower-end prices, and policies that keep boosting demand instead of easing it. In this episode, Cotality’s Head of Research Eliza Owen helps us zoom out and make sense of the contradictions shaping today’s market.

We unpack why “years to save a 20% deposit” is the wrong metric, why income — not deposits — is the real barrier, and how the 5% deposit scheme pushes prices up by funnelling demand under strict caps. Eliza also breaks down the mismatch between the homes we build and how Australians actually live, alongside the collapse in turnover rates that concentrates buying power among wealthier households.

If you want a clear, data-led look at what’s really driving the crisis — and why prices keep rising even as affordability falls apart — this conversation cuts through the noise.

Episode Highlights

00:00 — Introduction and Overview of Australia's Housing Market

02:18 — Government Incentives and Their Impact

04:17 — Challenges in Housing Affordability

10:16 — Policy Measures and Their Effects

12:18 — Affordability and Market Trends

17:55 — Turnover Rates and Market Stability

22:20 — The Case for Replacing Stamp Duty with Land Tax

25:28 — Mismatch in Housing Supply and Demand

28:19 — Challenges in the Rental Market

31:38 — Eliza's Departure and Reflections

34:42 — Global Perspectives on Housing Markets

38:51 — Affordability Metrics and Policy

42:33 — Underquoting and Auction Dynamics

43:36 — Conclusion and Listener Engagement

About the Guest

Eliza Owen is the Head of Research at Cotality (formerly CoreLogic), where she leads national market intelligence and economic analysis across Australia’s property sector. Appointed in 2020, she brings more than a decade of expertise in affordability metrics, credit conditions, lending environments, and the economic pressures shaping housing performance.

Eliza has guided industry leaders through some of the most pivotal moments in recent history — from the volatility of COVID-era markets to the rapid rate-hike cycle and today’s affordability crisis. Her work helps governments, banks, and real estate professionals understand the shifting forces impacting buyers, sellers, and renters, using rigorous data to illuminate what’s really happening beneath the headlines.

A sought-after keynote speaker and trusted media commentator, she has presented to thousands across real estate, construction, banking, and finance, translating complex economics into clear, practical insights. Passionate about demystifying housing data, Eliza is recognised for storytelling that cuts through complexity and empowers Australians to make smarter, evidence-based decisions in an increasingly strained housing landscape.

Connect with Eliza

1. Eliza’s LinkedIn
2. Cotality Australia’s LinkedIn
3. Cotality Australia’s Website
4. Cotality Australia’s Facebook Page
5. Cotality Australia’s Instagram

Resources

1. Visit our website: https://www.theelephantintheroom.com.au
2. If you have any questions or would like to be featured on our show, contact us at:
3. The Elephant in the Room Property Podcast - questions@theelephantintheroom.com.au
4. Looking for a Sydney Buyers Agent? https://www.gooddeeds.com.au
5. Work with Veronica: https://www.veronicamorgan.com.au
6. Looking for a Mortgage Broker? alcove.com.au
7. Work with Chris: chrisbates@alcove.com.au

Enjoyed the podcast? Don't miss out on what's yet to come! Hit that subscription button, spread the word, and join us for more insightful discussions in real estate. Your journey starts now!

1. Subscribe on YouTube: https://www.youtube.com/@theelephantintheroom-podcast
2. Subscribe on Apple Podcasts: https://podcasts.apple.com/ph/podcast/the-elephant-in-the-room-property-podcast/id1384822719
3. Subscribe on Spotify: https://open.spotify.com/show/3r0nnJrLUu3t1GpO7X3j6E

If you enjoyed today’s podcast, don’t forget to subscribe, rate, and share the show! There’s more to come, so we hope to have you along with us on this journey!

See you on the inside,

Veronica & Chris

TEITR 415

===

Veronica: Points. We'll also tackle the uncomfortable truth about government first home buyer incentives. They sound helpful, but by funneling demand into narrow price brackets, they push prices up and leave many first timers, no better off or even worse off. Add to that, the blowout in servicing ratios, renters handing over a third of their income or more and cheaper homes rising faster than the broader market, and you've got a system that's creaking under its own contradictions.

Veronica: Well, what a conversation this is going to be.

​

Veronica: Eliza has analyzed everything from COVID volatility to the rate hike cycle, to the great mismatch between shrinking households and oversized dwellings. We keep building all the while tracking the long-term supply constraints now shaping the market. Welcome, Eliza. We always have a wonderful chat with you.

Veronica: It's really great to see you again.

CB: Eliza, we always enjoy chatting with you. You're one of our long-term friends of the show. You probably are most,~ uh,~ appearances as a guest. I reckon. I haven't done the tally, but you're up there. ~Uh, Um, uh,~ obviously you've got a bit of a change coming up in terms of a new start after fatality, which ~we'll, ~sort of, I get~ get ~in future episodes once you're on the other side.

CB: But, this 5% deposit scheme, and it's obviously come live on the 1st of October. ~Um, ~they increased the caps, they, you know, removed income thresholds and really any first home buyer pretty much should be able to make it happen with a 5% deposit. ~Um, ~the treasury said like a one or 2% increase in prices.

CB: Was that, you know, and we've seen that in a month. I mean, what's your thoughts on it? ~Um, ~it's been pretty powerful.

ELIZA: It's worth noting that. Obviously there's a filter that comes from within the banking sector. Just because you are eligible for the scheme doesn't mean you are eligible for a loan. And so from that perspective, it's been hard to quantify just what the impact to demand would be. ~Uh, ~Westpac for example, did some analysis on this earlier in the year and estimated that around 400,000 Australians would be eligible for the scheme.

ELIZA: but from the sounds of things, the. Uptick that has been seen by Housing Australia for applications is kind of in line with the more modest uplift in applications. I think it was getting to around 70,000 a year. and obviously from a demand perspective, you're increasing access to credit and whenever you do that, you basically increase housing values.

ELIZA: It looks great for the government of the day in terms of boosting first home buyer numbers, but long term it's not how we wanna be addressing housing affordability.~ ~

CB: ~Does it, ~does it frustrate you? what's the emotion it evokes in you?

ELIZA: It is frustrating. I don't know how many economists have to bang their heads against a wall. How loudly for how long before government stop. Inflating the demand side of the housing market. ~Um, ~we've seen great initiatives on the supply side. We've seen, a government that is committed to making the national construction code easier to navigate, making,~ um,~ planning and applications of property, easier from both the state and federal and, local governments.

Veronica: I also think too, there's something with the caps, like it's sort of spreading that demand underneath a pretty heavy lid, you know?~ That ~that means that properties really become overvalued, or overpriced, shall we say, up to that point. But it also means it's forcing people to go further afield or to find other places where they might be able to find properties under the cap.

Veronica: And then there's this big gap. So you've got this sort of lack of demand to that magnitude anyway, over the cap. I mean, you've done a lot of research on that over the past. In terms of what happens to that artificial manipulation, if you wanna call it. What do you see happening now?

ELIZA: Well, ~it's, ~it's a little bit hard to tell the impact right now because the lower end of the housing market has been outperforming for the better part of two years, probably because of affordability constraints, probably because we're at a point in the market now where middle and higher income buyers.

ELIZA: So at this stage it's a little bit hard to delineate whether there's been significant impact ~of, ~of the scheme on the demand side. And like I say, ~there are, ~there are filters from the actual banking side of things. Like there will be a lot of people who might be eligible for the scheme who just don't qualify for the loan.

Veronica: interesting to see the behavior of buyers though, because certainly before the scheme was. Increase on the 1st of October. As you say, we've seen increases in that lower price brackets, and there's anecdotally, a lot of people on the ground have been saying that they feel like a lot of those buyers who were in a position to buy without needing to rely on the 5% deposit guarantee rush to get in the market before that.

Veronica: Commencement date. And so that has actually resulted in an increase, you know, like preemptive increase in prices under the cap. James Wrigley, who's a financial planner. We've had him on the show and in fact, I interviewed him recently with Megan on your first Home Buyer guide podcast because ~he, ~he did some,~ some, ~videos on.

Veronica: You know, and in Sydney, his calculations on a single income. For example, if you are going to be buying to the cap, you've gotta be earning over $400,000 to be able to qualify. So what you're talking about there is the filter being the banks, and this is the thing that, you know, ~it's, ~it's good for the government to come out and go, look, we are helping first home buyers.

Veronica: You know, the biggest thing is the deposit hurdle, but that's not really the truth of it. Is it? The biggest thing there is income.

ELIZA: So the market becomes more concentrated with buyers either selling well. To repurchase in the market. ~Um, ~The median resale from,~ um,~ profit making homes across Australia is about $300,000. Right? ~Uh, ~it would be people with more than a 20% deposit. So not just resellers, but maybe people who are getting a big chunk of inheritance.

ELIZA: They're coming from a more wealthy background. They have a higher income, like you say. Or it's that people don't buy the median anymore and they do have to look further afield. They do have to look to,~ um,~ you know, maybe regional areas, but that's also not fixing the problem. It's just kind of a spillover of demand that goes all the way.

ELIZA: But it also comes from cooling demand. it was interesting as well, I don't know if you guys saw a PR this morning, announced that they're gonna be putting a 20% limit on high debt to income ratios and that at the margin have an impact on the demand side as well. People with really big property portfolios who,~ um,~ have high debt to income ratios, that's the kind of.

ELIZA: I guess,~ um,~ person with access to a lot of wealth ~that ~that might curb a little bit of demand at the edges, but ultimately they do that for financial stability, not housing affordability.

CB: I didn't, I kind of forgot about it. There was no media around it then. There was lots of media around it, like on the 1st of October and there was quite a bunch at the start of November. And so I think people were just. You know, it is like not everyone's property obsessed like us, right? So they're not really reading it, but it's gonna start.

CB: And then if you get this sort of, oh actually, like if I bought three months ago when I first used the scheme in October, we would've bought maybe 5% cheaper. I've gotta get in. There's always a natural January. I think James's numbers aren't right, to be honest. Veronica, I haven't watched his videos, so. ~Um, uh, ~sorry James, but I think it's a bit too,~ um,~ conservative that number.

CB: It's probably more around like, you know, a couple earning sort of 300 would probably get to the cap.

Veronica: No, he did say that couples have to earn less because they've got interest. they're, we got ~the, ~the tax free thresholds, whereas at an individual. Has to earn more because they only get one tax ~free, free, ~free threshold.

CB: Oh yeah, but it's still probably 400. I reckon it's probably close three 50, so, but that's

Veronica: Still a lot, right?

CB: So, you know, a 300,000 salary for a capital city is, you know, when you're in that part of your career is totally doable. ~Um,~

Veronica: But what

CB: I think what you're f.

Veronica: at the cap is not a lot, like if you're at that age, you're thinking about kids. You know what I mean? Like, if you're trying to buy for 1.5 in Sydney, you're not buying a family home, but anyway, we,

ELIZA: working as~ ~

Veronica: ~we,~

ELIZA: a teacher or a nurse or, you know, even if you've got a relatively good professional job. it's so hard to keep up with the market, and I don't know about you guys, but I'm feeling it, I'm seeing friends move away. I'm seeing colleagues struggle to find decent accommodation near work.

ELIZA: ~Um, ~it's affordability is deteriorated really badly in the past five years in particular. And I think, we are definitely feeling it even at a relatively. Comfortable, professional, white collar level, right? So you can imagine people that are lower down the income spectrum.

CB: And so ~the, ~the counteract to that is go hard on development Right. And go hard on releasing supply ~ and,~ and so I guess that's what New South Wales are doing. Right. So what's your thoughts on the way that Chris Mins and the government are doing it? and you know, there's a lot of people say, oh look, they're not gonna build stuff that's affordable and which is true, right.

CB: by creating supply at one end for Downsizers and you know, you are creating more dwellings, right? So how ~do you, ~do you think this is the right move and it's what we absolutely need to be doing, you know, not just in Sydney, but across the board.

ELIZA: So I think what they're doing is good. I like the vast,~ um,~ upzoning of, precincts around good. Existing transport infrastructure. Part of the challenge though, is that the government can only influence so much of what is ultimately the private sector's job. ~Uh, ~especially because over the decades, some of the development around new infrastructure for.

CB: So the change it's pretty pointless to be honest. you know, they made it this morning around DTI incomes over six, I mean, the percentage of lending going over DTI six at the moment's like under 10%.

ELIZA: It's

CB: gotta have, yeah.

ELIZA: in aggregate. Yep. But what they're saying is that for some lenders, it is higher towards the cap of 20%. I would imagine what's happening is that you have people turning away maybe from the majors and looking to smaller lenders for more flexibility. Could even. Push demand into non-bank lending, right?

ELIZA: Which is maybe a little bit of a risk for the policy, but what they're doing is they're trying to get ahead as potentially,~ uh,~ risky lending and a lot of those higher DTIs come from investors as well. So I get what you're saying. It won't have the same kind of impact as the interest only cap, but it's still a good preventative measure ~for, ~for the future,~ mm-hmm.~

CB: And they sort of, they looked, so, hang on a sec. We are really sort of allowing investors to sort of leverage up,~ um,~ just because we're not doing enough,~ um,~ checks around whether they can really afford these loans and we're exposing ourselves. And so I think that's. Played through plus APRA's doing this.

CB: But you know, there is still a lot of investors that are, you know, can't afford their home or first homes, they buying investment or they never bought an investment property and they aren't gonna upgrade their homes. So they're entering the market. I think it's hard though, when you start putting.

CB: Pressure on restricting lending for home buyers because it's already really tight. when I started backing broking, you were talking like seven and a half, eight times your income you could borrow. ~Um, ~then it went down to sort of six, six and a half. Now it's ~sort of like ~five, you know, and a lot of the banks are saying, you know, I wish we spoke about at the start, ~it's, ~it's, it's already really hard to even get the loan to buy the property you want.

ELIZA: That's a good point, and maybe we do need to think about hitting a. ~Uh, ~balance between limiting potentially risky lending and offering some flexibility for home buyers. It's interesting you mentioned the rise of the kind of rent investor as well. I was looking at the a BS lending indicators data. 'cause they have the, they report on the portion of first home buyer loans that are purchasing investment properties.

ELIZA: It's up to about 9% ~in, ~in New South Wales. but that's all symptomatic of a lack of affordability, like people feel they don't really have another option to get into the market. So it's an interesting consequence of affordability as well that it potentially creates a little more,~ uh,~ speculation, and investment approach to the market.

CB: Eliza, the CoreLogic, or the Ali, sorry,~ uh,~ came out last month, hit 12 trillion. Right. at the same time you're releasing an affordability report, so you're saying like, unaffordable, but then it keeps going up was 10 trillion, 11 trillion.

CB: That's 12 trillion. Like,

Veronica: Well, it's basically, it's been a billion a month for like the last two years, hasn't it? Yeah. Yes.~ ~

ELIZA: This is a great question, and the question is fundamentally, if housing is so unaffordable, who's buying it? Right, so that's,~ that's, ~what I was saying before, like this massive gap between what is affordable and where property prices actually are. The answer is that an increasingly concentrated wealthy pool of buyers, and you see it in turnover as well, even though property prices are rising, actual sales turnover.

ELIZA: Is sort of creeping a little bit lower. It's sort of about historic average of~ of ~5.1%, but in a city like Sydney for example, it's quite a bit lower. I think it's about 4.8% for the turnover rate, and I think we'll continue to see that concentration play out in the industry with fewer people just being able to participate in the market.

ELIZA: ~Um, ~DTI lending is often, you know, it is pretty rare overall. And what that means is that people are well placed to afford their mortgages when they do take them out. So if selling conditions start to deteriorate. People can stop selling, and we see that with a correlation between property values and listings, volumes and sales volumes over time.

Veronica: Such a good point because I never actually thought about it as a turnover rate. I mean, I just see ~the, ~the raw number, you know, it's usually about 500,000 properties sort of a year, or like 111 million properties. In total. So ~it's, ~I see that turnover ~it's, ~it's, it's a small percentage poten, you know, of the whole.

Veronica: Amount of properties, and if that were to go up, you know, markedly, then obviously there's gonna be some severe downward pressure on prices. But what would cause that to happen? And I certainly see, ~a, a, a, ~a high rise building that has a bunch of first home buyers in it that have a really high debt to equity ratio ~and, and, ~and then become under pressure, can't pay their mortgage.

Veronica: They're all gonna have to sell, they're all got similar products. Then there's gonna be huge downward pressure. You see that in some housing estates, for example. So that's why properties can really fall, or the property values can really fall markedly in those newer builds areas if there's hardship.

Veronica: You know, and there's ~this, ~this variation. And unless you're really under pressure, well, you might be the only one under pressure. Not everyone else in the street's gonna have that same pressure. So only one house comes on the market, so it's that diversity of ownership ~and, ~and, ~um. ~Tenure. That makes a big difference.

Veronica: So it's sort of interesting that Sydney's ~um, ~ratio, or the turnover rate is so much smaller than their national average. And I guess that does go to the cost as well. I mean, it's the most expensive city, so therefore the transaction costs are gonna be more expensive than anywhere else. imagine ~that ~that's something, ~I mean like ~there goes ~to your, ~to your stamp duty argument.

Veronica: If stamp duty was removed, if that's a bit of a hand break or you know, taken off, could that make our property? This is a question I haven't given you a notice, but could that make our property market more volatile?

ELIZA: I don't know if any of the questions have been.

ELIZA: Yeah. To be honest, the stamp duty, like in my view personally, I don't think removing stamp duty works for affordability without also. Replacing it with another tax because ~if you, ~if you take away stamp duty, that's just more purchasing power, right? And the way that our housing market is set up, it's to fuel additional income and wealth back into assets.

ELIZA: So what you really need to do, and what a lot of economists argue,~ um,~ is not just abolishing stamp duty, but replacing it with a broad based land tax. So you can still basically,~ um,~ have a. Progressive taxation on the property market ~that ~that kind of keeps a lid on growth.

CB: Yeah, I think what would happen ~if, ~if Sam Judy went right, you would create, unlock a lot of demand in upgraders and a lot of people that would want to upgrade, but just due to the sunk cost And so you will find, there'll be more properties on the market, but at the same time, there's.

CB: And then I think obviously when markets are booming, you get more supply, but prices are still going up,~ um,~ because the demands. Bigger than the supply increase, the turnover rates is Absolutely, that's exactly how I think about it too, Eliza, as soon as you think about well prices, well, no, it's actually the marginal buyer theory, right?

CB: and I think that's often forgotten about. it's just like, obviously people just think, oh, well, you know, there's not enough buyers if, because it's like a run on the bank. If there's a run on the back and, you know, a thousand properties came on the market, then yeah, absolutely prices would fall.

CB: But it's because there's just always constant restriction on people selling.

ELIZA: Yeah. And another way that we can think about it, which my colleague,~ um,~ in the US SNA hep,~ um,~ she looks at sales to population. So there's the turnover rate, but you also considered that Australia's population rate has. ~Um, ~come up so much over the past few years, but the turnover rate's just been sitting in average levels of stock.

ELIZA: So that's maybe another indicator that for all the people that are coming to Australia, for all the people that we have here, there's not as much,~ um,~ transaction activity happening. And you know, that's something that the industry should be concerned with as well. Like if they wanna keep up volume. maybe value is more important, I don't know.

ELIZA: But,~ um,~ if we wanna keep up volume, then affordability is important from that perspective as well.

Veronica: That sort of leads to your great mismatch research, doesn't it? Because you know, I think what you've come You know, we are structurally overbuilding large homes, despite most households being one to two people. Is that correct? But also with rental accommodation, like, renters typically have more people per household than owner occupiers.

ELIZA: Well, I think it comes to providing. The right supply and also having the right demand influences. So the swapping out of stamp duty for land tax, I think is a good example of how you could do that. ~Um, ~but also making sure that you're establishing just smaller accommodation for people that wanna age in place.

ELIZA: ~Um. that's all, ~that's all that research was kind of pointing to. I know it got blown up into a lot of other,~ um,~ headlines that weren't, you know, necessarily based on the original research, but that, the basic idea.

Veronica: So are you talking then about basically a compositional ~um, ~makeup of every suburb that needs more diversity in it? Because, you know, for example, if you age in place, you know, like if you have a house in the upper North Shore in Sydney. Well, until recent years, there's really been no apartments.

Veronica: Is that the sort of thing you're talking about?

ELIZA: Yeah, exactly that. Exactly that. And it just comes from having a diversity of stock and You know, anecdotally, when you talk to developers, some of the most profitable work that they are doing is in larger luxury apartments, right? Which speaks to that downsizing segment. so because I'm not a developer, I don't know exactly how you kind of move, forward with establishing that stock in more areas.

ELIZA: but. ~It's, ~it's gotta be an important part of getting people to right size,~ uh, even, ~even with the tax settings. You know, I was having a look at when the New South Wales government tried to. Do the swap for,~ um,~ stamp duty to land tax. And it just looked so complex and politically how difficult it was for the government to get that over the line.

ELIZA: and I think that, you know, just observing that kind of data should give us perspective and maybe add a bit to the conversation about how we look at our housing policy and development.~ ~

CB: ~um,~ you talked about this mismatch on the rental. Side as well. I mean, ~that, ~that to me is like the big mismatch we could see it sort of changing in terms of where investors were wanting to invest. We could also see a lot of investors bailing, you know, over the last three years.

CB: ~Um, ~Pippa's done lots of reports on this. So, coming out of this sort of period, you know, it's not looking great for renters, right? Like, particularly in capital cities, right? and we're seeing a reacceleration of rents, You know, because not only is it, unaffordable to buy, but when you can't start to even, rent and you just constantly get pushed to the bottom of the pile and never even get a look in, like, this is even a greater issue, I feel.

CB: How do you feel about that?

ELIZA: some economists arguing that it was just noise and that it was a kind of a cheap apartment for that area, and that's why it attracted such a long line. But when we actually looked at the data, we found that the fastest reacceleration in markets was at the higher end. Maybe more luxury rental markets, and that is a reflection of probably higher real income growth over the course of the year.

ELIZA: Probably the normalization, like the de-stigmatization of social housing as well. ~Um, and, ~and affordable housing, which ~I think ~I think we have with affordable housing to an extent. and also, you know, the boost to Commonwealth rental assistance and the. guess greater protection of tenants rights to protect more vulnerable households as well.

Veronica: have you done work on the volume of available property at that higher end? Because anecdotally, as prices rise. and also, you know, people that have owned,~ uh,~ a larger home that's been in the rental market for some time, often they're a lot older, you know, they're older landlords, you know, they might to getting close to retirement or they might be getting close to, try and do help their kids and their grandkids to get onto the property market.

Veronica: But, you know, lucky, you know, it's not unusual to see a house in Sydney that's worth 4 million being offered for rent, but would've been owned by the same family maybe for 20, 30 years. ~Um, ~and so ~there's, ~as properties get more experience, they're gonna be less and less of those larger properties available for rent, I would think have you done any work on that?

ELIZA: I haven't had a granular look at the supply levels. No, but that's a really good point. And it's obviously the other thing that could be pushing rent growth higher in those markets.

Veronica: And then also pushing people with higher incomes, looking at that sort of next tier because they don't have the option. There's nothing for them to look at. ~Um, ~we just see that on the ground anyway.

CB: Eliza, you are going to leave ality and we'll probably post this similar when your exit date is around Christmas. ~Um, ~ Obviously when you leave certain organizations you get access to, you know, obviously ip, but also data. What are the things you're gonna miss? What are the things where you're just gonna go, ah, like the access that you get to.

ELIZA: Yeah, that's so true. That's a really interesting point. Like it's always nice to think that you can go off and do independent work or whatever, but the compromise there is you don't get the same access to data. You don't get the same access to people. ~Um, ~we have an amazing analytics team here that are so brilliant, supportive, innovative, and ~uh, ~have really helped us to explore cool research.

ELIZA: You know, when the fixed rate cliff was coming up, we looked at three year resale periods. we looked at, as I said, the index above and below the price threshold of the first home buyer caps. We've done the price premium of being in good school zones, so I'm really gonna miss working on those kinds of projects.

ELIZA: ~It's, ~it's well worth it. So, ~um, ~The data, the people, the culture. ~Um, ~I'm gonna miss all of it.

ELIZA: I'm on a personal mission to help more people make better property decisions. You know, most people don't realize 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 offer masqueraders simple questions like, should I sell my investment property because the interest re payments are hurting, or should I buy before I sell?

ELIZA: Or the other way around. You could connect with me and access all of the tools that I've created to help you make better property decisions at Veronica Morgan dot com au. And there you'll find resources for first home buyers, details about my buyer's agent mentoring program. You could connect with my Sydney based property management and buyer's agency teams, Australia wide vendor advocacy.

ELIZA: If you're considering a property move, which is buying your first time, upgrading, renovating, or investing, the team here at Alcove would love to help you think through your decision and get the finance right.

ELIZA: Please go to cove.com au to reach out.

CB: Yeah, I mean the ability,~ um,~ just come up with a. An idea, how's the school zone gonna affect prices? And then, you know, be able to say to your analytics team, Hey, can you guys back this up? Or find if it's working or not. Like, ~that's pretty, ~that's pretty cool, you know, to be able to,~ um,~ have the team to do it.

CB: cause obviously you have to, in those situations you are trying to search that and find it and build the model and it's just impossible ~to, ~to sort of do. And, when you think about the global context of cata or even just. You mentioned before around the,~ um,~ the sales per, you know, a hundred or a thousand people or whatever it was.

CB: You know, like Iceland probably the only country that's gone backwards over the last five years, but, you know, Netherlands and, you know, new Zealand's having a bit of a correction now, but, so like there's always a global perspective that we forget about,~ um,~ that's not just an Australian problem. Like what were some of the learnings ~you, ~you find when you speak to them?~ ~

ELIZA: I think those are some of the interesting differences. I mean, globally COVID kind of put a lot of the major Western economies on a pretty synchronized rate cycle. So that's led to a lot of, synchronizing of, property market performance as a result. and generally speaking, there was a kind of.

ELIZA: lot of these property markets were benefiting from easing policy rates through the start of the year and end of last year. So I guess, yeah, a few similarities and differences. What's interesting for our partners in the US ~their, ~their challenge is because so many, uh.~ uh. ~Americans are on a long-term fixed rate, they can't get stock moving ' cause people don't wanna lose those rates.

ELIZA: we haven't had the same blowout in arrears and we haven't seen, great housing market downturn in, in terms of value. So, hopefully that continues.

Veronica: It's funny how we can have these conversations. We can talk about the challenges of affordability and also how good it is that we don't have great downturns in value, which means that we are preserving. ~The, ~the prices of property. ~Um, ~and we have to be very flexible in these conversations, don't we?

Veronica: But, you know, in the American market, for example, is there the same interest in investing in property from individuals and moms and dads as there is in this country?

ELIZA: Ah, so that's ~a, ~a big difference actually, is a lot of the investment overseas is institutional. And it's

Veronica: where

ELIZA: affordability pressures in a lot of countries can be.

ELIZA: unlimited in a way because you have these vast,~ um,~ pools of capital that can invest in property, and we're just not structured in the same way, particularly

ELIZA: in Australia.

ELIZA: So you get a lot more individual investment ownership here. ~Um, ~whether that's good or bad, I think kind of depends on

Veronica: your.

ELIZA: perspective. ~Um. I, ~I think there is the potential for Australia to open up more of that institutional investment. And you start and you see conversations happening from a government perspective around

Veronica: tax breaks

ELIZA: for institutions, the rise of build to rent.

ELIZA: but whatever we go forward with, you've gotta make sure that. Either is a good landlord to an increase in population of renters, especially if institutional investment crowds out ownership of individuals.

Veronica: And it's not gonna solve ~the, ~the affordability end of the market anyways, that they need a return on their investment. And the simple fact is our governments have been steeply declining their investment ~in, ~in housing for decades. which has been a big contributor to our current situation. Right.

Veronica: And, you know, I guess, ~which of ~which of the sort of major stress points is doing the most damage right now?

ELIZA: So I would actually defend the 20% deposit benchmark. The vast majority of, buyers do go in with at least a 20% deposit. if you look at the aprada on new loans secured on, loan valuation ratios, and that's in part because they're selling a home to buy a home,

Veronica: Oh, right, yeah, but not for first home buyers. so if you are upgrading and you're buying a home, then yeah, you are using equity in the home you just sold. ~Um, ~but first home buyers. ~Mm mm ~Because that's how we were really measuring it. Is it like, if you're already in the market, are we worried about affordability?

Veronica: We, or it was affordability? Something that we sort of refer to first time buyers.

ELIZA: The time to save actually is, and realistically what time to save ~a, ~a buyer wants. So another one that we get a bit of,~ um,~ criticism around is the portion of income required to serve as a mortgage, which is 45%. It's not realistic, and hopefully no one is actually taking out loans that require 45% of their income.

ELIZA: If you look at,~ uh,~ data, it suggests that home loan payments actually make up about 20% of, household income in aggregate. But what the measure is telling you is that the median income household cannot afford a mortgage on the median dwelling. So again, it's pointing out the distortion in the market and how the distribution of income compares.

ELIZA: To the distribution of property value. So when the numbers start to look crazy or unrealistic, ~ uh, we, we, ~we,~ um,~ need to keep that in mind I think for,~ um,~ where the market should be.

Veronica: sorry, Chris had a question there.

CB: No, I was just gonna go to, you know, and it's with a property, Dumbo. ~Um, ~and yeah. ~What, ~what's, have you got any new stories or tales that you can share with us? I know we've asked you these questions so many

ELIZA: gonna be the expansion of the 5% deposit scheme, but we've covered it off. I don't think it's a smart approach to policy,~ uh, for, ~for housing. ~Um, you know that, ~you know that story well.

Veronica: Yeah. Yeah. ~You, ~you are part of a cohort of, you know, young. Professionals buying their homes. Have you seen any of your friends do something and you think, oh, please, no.~ ~

ELIZA: ~Not, ~well, one thing I would say is like a very general observation is, and this is not really the fault of my friends who are like trying to get into the market, but it's like interpreting. ~Uh, ~listings or price guides on property. And I keep saying to my friends, like, whatever it is, whatever the listing guide is, add like 10%, add 20%.

Veronica: Wishful thinking kicks in because people think, oh God, if I could get it for that, you know, that'd be great. and you know, I know it myself, like I know these intimately, I understand price guides and it is dangerous to say just add 10 or 20%, by the way, because sometimes they get it. The age agents get it wrong too.

Veronica: So you do need to do your price research and really es establish what you believe it to be worth and then work out what your limit is. But yeah, assuming it's gonna sell for that is. sad, but it's a huge mistake I see a lot of people make. ~Um, ~interestingly enough, both the Victorian government and the New South Wales government have come out ~very, ~very recently with some moves on under quoting.

Veronica: I've been part of the round table of the Office of Fair Trading for some time now. ~Um, ~on under quoting. It's been a very interesting journey working with them on that. ~Um, uh, ~so New South Wales got new legislation coming in. ~Um, ~that may or may not work. We'll see. ~Uh, ~Victoria's,~ um,~ recent announcement, which is a classic to say that vendors have to provide the written reserve to buyers.

Veronica: Often they have very different figures, and the agent's job is to bring the two together and hopefully bring buyers along for the ride. So it's complicated. ~I, I'll be, ~I'll be, I've got some theories on what might play out there, but,~ um,~ we shall watch with interest. To see if they can crack the nut.

CB: Absolutely. Eliza, we'll chat to you again in the new year onto your new gig, whatever that might be. appreciate your, all your efforts over the years as well. ~Uh.~

ELIZA: Thank you so much guys. Thanks for the chat.

ELIZA: If you have a question that you'd like us to answer in an upcoming q and a episode, you can send us a voicemail or written question via the website. The elephant in the room.com au. Or you can email us directly at questions at the elephant in the room.com

ELIZA: au.