MB Fund Podcast: Australian Housing Market: Bear vs Bull debate with Cameron Murray (updated with podcast audio)

With the COVID-19 lockdown in full swing and unemployment rising, many commentators including Nucleus Wealth are tipping that Australian house prices will fall over the coming year.

Today we were joined by Dr Cameron Murray, who takes the opposing view and believes that Australian housing values will actually rise.

Join MB Fund’s Head of Investments Damien Klassen, Chief Economist Leith van Onselen, Head of Operations Tim Fuller and Dr Cameron Murray as they take part in a Bear vs Bull debate on the Australian Housing Market.

Let us know who you sided with by the end of the discussion!

View the webinar slides here

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Tim Fuller is Head of Operations at the Macrobusiness Fund, which is powered by Nucleus Wealth.


The information on this blog contains general information and does not take into account your personal objectives, financial situation or needs. Past performance is not an indication of future performance. Tim Fuller is an authorised representative of Nucleus Wealth Management, a Corporate Authorised Representative of Nucleus Advice Pty Ltd – AFSL 515796.

Tim Fuller


  1. Is it true that Chris Joye was unavailable giving the excuse that he looking for his missing hedonic index?

  2. When it comes to a housing bull, who would have better credentials that an expert on corruption and Games of mates.

  3. I haven’t had a chance to listen yet, but ahead of the event I’m in the “Cameron is wrong” camp.

    • the comments are absolutely hilarious

      here we are 7 years later, and nobody has learned a single thing

      • Having been shocked by the politico housing complex so many times over the past 8 years, Cameron could very well be proven right. I’ve pretty much stopped caring anymore.

        I see the major differences this time around as 1) there won’t be the tailwind from falling mortgage rates (which are basically as low as they can get), 2) mortgage credit is tightening, and 3) the jobs/immigration shock.

        We’ll see how it plays out. It could go either way. A lot depends on whether the government launches a big bail-out sooner rather than later.

        • mikef179MEMBER

          “Having been shocked by the politico housing complex so many times over the past 8 years”

          No kidding! Every time I thought the whole thing couldn’t get any more stupid I was proved wrong. It gets tiring after awhile. I’m similar to you in that I almost don’t care any more.

          • My comment was there agreeing with Cameron. What wonderful foresight I had. Actually, no I just checked to see if my comment is there disagreeing with him. Thankfully it wasn’t but I just had to check if my poor judgement was one of those unwise people he is pointing to. On this occasion, no. On other occasions at that time……………

          • DominicMEMBER

            Don’t be dragged in by the BS, mike. Every time the pollies ‘stimulate’ they unleash more damage on the currency. You cannot do this ‘cost free’ but there are plenty of 1diots who think you can. It’s just another nail in the coffin.

          • mikef179MEMBER

            I cheered when Cam said he would love to see a crash and burn. I think even the best of us have been a bit shell-shocked for a long time over what has happened and I think that is kind of where Cam is coming from. He is saying, I think, that they can keep it going as long as they want to until inevitable demographics eventually get them. I don’t think many investors will wait for demographics to get the market, especially knowing they are relying on more and more craziness from the government which has less and less bullets to keep the profits coming. I also think the process of people slowly awakening to the fact it is a ponzi is accelerating. I mean, how many mainstream economic commentators have used that word recently? I’m certain that hasn’t been a thing in the past.

          • What I’m yet to see addressed is the inevitable loss of available cash for investment into self-funded retirement of an entire generation. The rentier class, as I understand, is growing on account of monopoly board game that benefited those who were already playing.

            A big wave of govt funded pensioners coming to a future near you.

    • Hi Cameron Murray:

      Thank you for your wonderful views and widely vision. What do you think the Fed may have negative interest rates in 2021?

    • working class hamMEMBER

      Nice to see both sides.
      Have noticed NE Brissy prices soften over the last month, nothing drastic, 5% locally.

      • I reckon you’ll see the negative impacts most in Melbourne, followed by Sydney. They are the markets where prices have boomed over the past cycle. They are also where the overwhelming majority of migrants come to.

        The other markets have been relatively flat (in real terms) for a decade, so are already reasonably valued.

        This might also help to explain our differences in view. I live in the ponzi epicentre of Melbourne, whereas Cam lives in the serenity of Brissie. I’d join him there if given the chance (I love SEQ).

        • working class hamMEMBER

          Lived on the Mornington Peninsula from 13 to 19, saw the Ponzi in full swing. And the downturn.
          Still think Brissy is overvalued for wages locally, not quite Melb crazy though.

        • Brisbane has gone downhill rapidly. Full of awful highrise buildings all over the place, corrupt brisbane city council and a state government struggling with population growth. Roads are wide, scything through suburbs, shopping malls and Bunnings litter intersections. You are probably better off in Melbourne (just).

    • DominicMEMBER

      Cameron, it is actually quite easy for policymakers to prevent house price or rental falls — they just need to create enough money out of thin air and the problem will be solved.

      Case study: Zimbabwe. A loaf of bread would have cost a few trillion dollars in its hyper-inflation hey-day.

      We can go there if necessary, so yes, the bull case (in nominal terms) is water-tight.

    • Thanks Cam. I found your arguments quite convincing. In terms of the 18 year cycle, which in your previous article you suggest began in 2016, how did the 2018-19 downturn fit in? Isn’t that much too early for the mid term 7 year minor slump?

    • Cam
      You may have been right 7 years ago
      But not this time
      1 out of 2 is better than 0 out of 2

  4. “”Whether or not they’re acting on Beijing’s orders, Chinese property buyers are suddenly a lot less interested in Sydney and Melbourne.””……..Robert Gottliebsen. Well sounds a more effective retaliation than targeting a few barley farmers and abattoirs.

  5. Cameron is exactly right about the marginal buyers influence on the whole market. Credit growth, unemployment, etc are not that important and economists just don’t get this. Those marginal buyers were significantly weighted to the foreign bid. Particularly from China.

    The planes have stopped. If those foreign buyers diminish enough then the price falls will start and compound. Added to the fact there will be a decent amount of investors with forced sales (there will be a lag of months but we’re already a few months in) – I think Cameron discounts the withdrawal of the foreign bid. Property investors in Australia aren’t generally multi-millionaires (some are) but most, in my opinion, are the epitome of unsophisticated investors; strugglers who are barely floating above water, the Mum and Dad investors, single mums, tradies, new migrants… just take a look at any FB group or property forum. The level of financial literacy or even general literacy and numeracy is shocking. These people make up the general “strayan property investor”. They are in very precarious positions and it’s just a matter of time before a huge amount will be liquidating their non-performing, stressful, un-serviceable IP.

    • DominicMEMBER

      The marginal buyer argument applies anywhere – fruit, vegetables, whatever. It’s not like it’s some revelation.

      The bottom line is that China has gone through a massive boom period and ‘currency’ has been created in vast quantities (and subsequently used to buy property in Vancouver, Sydney, whatever). China is cactus right now – at least, it will not provide the financial impetus that it has done in the past for any international property markets).

      If house prices remain propped up in Straya (they’ll remain so in the rest of the world) and they’ll do so because of massive Dollar creation – every currency is just a component of a Dollar-based system after all. The challenge for US policymakers is deciding how many Dollars they can produce without blowback i.e. almost impossible to know. In other words, they’ll know the answer when there’s blowback.

      • With fruit and vegetables the market is groups of buyers and sellers. Buyers paying cash. Aggregate demand and supply determines the marginal price.

        Real estate is different.

        With the real estate market, Most of the buyers (and sellers) are owner occupiers and are in effect, trading one product (their house) for another – the prevailing price is not so important, it could be any number.. 1m / 20m.. it’s not important because they just sold the product for whatever the prevailing price was and now they will buy another different one at the prevailing price level. Prices aren’t being determined by their demand.. the product is being traded for another product, not the product being traded for cash.

        When the product is being traded for cash (meaning not from the proceeds of a sold house), that’s where the prices for the market are determined and set. FHBs, foreign buyers, a property investor adding a new property to their portfolio.. these buyers are who determines the price.. not so much participants who are “already owners” (who can pay whatever the prevailing price has risen to). That is why the property council is focused on them.

        • DominicMEMBER

          It’s irrelevant whether it’s a cash transaction or leveraged, Les – the fact is the cash is being fronted by someone.

          The relevance of leverage relates to the potential upside / downside in a given market i.e the more leveraged it is the greater the risk either way.

        • working class hamMEMBER

          How can comparative prices not affect market value? I get that new capital, (cash, bank, foreign etc.) drive the margin, new skin in the game. With IR, LVR, FHBG etc. driving their borrowing capacity.
          I just don’t see why anyone pays over market value in a falling market?

    • Market, inc. Mel/Syd, has been tepid in real terms for some time and will take till end of the year for the impact of mortgage deferrals and/or unemployment to rattle through, and temporary resident numbers to recover significantly (will far fewer than now).

      The impact of marginal buyers from China has been overstated, but Chinese etc. temporary residents have been influential indirectly as renters of investment properties, but will not be returning in same numbers; wait till the new year for apt. and unit discounts to bottom nominally but continue to decline in real terms.?

      For houses, impact in new suburban developments with many Australian mortgagees under stress, then more established houses potentially hitting market with (now hesitant) baby boomers and/or retirees having/wanting to bail out for down sizing etc.; latter high end will be belted……

  6. 2 art deco apartments in the neighbouring buildings went for sale. One just before lockdown and one just after.
    Same size, same floor, similar condition.
    Before, $1.2m.
    After, $ 860k
    Shocked everyone in the street.
    There are now 5 apartments for sale in the last week alone in a 50m stretch of my street.
    There are lots of people who want out. However there seems to be a fair bit of interest who want in

      • Sydney. Eastern suburbs so its prime realestate. Its 2 bed, 1 bath, 1 sunroom/study with no parking units. 80sq/m
        Over the last 3 years i have seen prices fluctuate from high of $1.2m in 2017 peak then drop to around $1.0m when banks tightened credit after RC then rise again to 1.2m just before lockdown (but it has been patchy recovery) and now back down to around 1.0m again but again its patchy. Spreads between asking and bids are wide.

        • It just takes someone to come along and pay $1.3m and the whole street get revalued up. Equity finance loans can flow.
          Without banks forcing sales, the market doesnt collapse quickly.

          • Its also the lending standards. As soon as banks tighten credit the market falls.
            In Sydney the change in credit is very sensitive to house prices because its so levered up.
            So when banks say we are going from max 7x LTI to now 6x – prices drop 100k
            If they say we are going from average 90% LVR to 80% LVR there goes another 100k.
            Its that sensitive

        • Agreed, very sensitive to LVRs. and that is why LVRs can never be reduced for very long. Its a massive debt reliant asset bubble that needs continual support ( LVRs, lower rate, more immigration, FHB grants you name it ).
          It will never be allowed to collapse. People would rather be taken over by communist China than risk house price falls.

          • Sure but no country ever wanted their housing to collapse but it still occurred.
            The tipping point is the amount of capital banks hold and its dropping fast.
            In 2018 CET1 was around 12.5%.
            In end 2019 it was about 11.5%
            Now APRA say that they will allow banks to go under the minimum requirement if needed, which they will and are right now.
            That amount is 10.5%
            Now that is still above the global benchmark but once it hits 8% things get wobbly.

        • Hi DPM.
          You said:
          “So when banks say we are going from max 7x LTI to now 6x – prices drop 100k
          If they say we are going from average 90% LVR to 80% LVR there goes another 100k.
          It’s that sensitive”

          You need to check your maths.
          If LVR goes from 90% to 80% it HALVES the amount of credit given by the bank for any given deposit.
          People mistakenly think 90% to 80% means a 10% reduction in the loan amount. They’re looking at the wrong end of the equation. It’s the shift from 10% to 20% you have to concern yourself with. That’s a doubling, hence the halving on the other side of the equation.
          Example: You have $200k.
          90% LVR you can borrow $1.8M
          80% LVR you can only borrow $800K

          So the price doesn’t drop $100k when the LVR changes from 90% to 80%. It has to halve…unless you can magic up a bigger deposit.

          • @ 90% LVR you can borrow $1.8M – 9x your money lets you buy a $2M property
            @ 80% LVR you can only borrow $800K – 4x your money lets you buy a $1M property

            In the crazy days of 95% LVR, you could borrow 19x your money – $4M property!!

            The LVR equation is exponential on the way up…and on the way down

    • DPM
      Add in interest rates are going up and there may not even be 4 major banks in a year
      There is zero chance CM is correct
      He’s dreaming

      • Goldstandard1MEMBER

        You’ve always been a little more Armageddon than me….but…
        I’m thinking 30% down in 12-15 months but gap market drop will be interesting to see If timeframe is quicker

        • GS
          I have an assumption built in that no analyst is including
          Home loan interest rates are going to rise out of cycle
          Let’s reassess in 3 months…..there is a credit crisis already underway…..
          So if I’m correct GOLDS, do you think that my call is extreme ???

          • Goldstandard1MEMBER

            No, I agree with it. I think anyone who thinks we go back to debt bubbles has not factored a lot in.
            The human toll will be bad from this economic fallout.

    • Tim FullerMEMBER

      updated with podcast version now – had to wait for youtube to process the livestream

      • Hi Tim if Cameron is correct how would this change your view on bank shares?: Would they become a buy at current prices?

        • James you may as well throw your money down the toilet or just give it out to the homeless on the street

  7. Arthur Schopenhauer

    Murray makes a good case if the next few years carries on like the previous 10. It doesn’t apply down south in bubble land.

      • Arthur Schopenhauer

        I hear you Bcnich. The US might be mired in a civil war and unwilling to protect us. Interesting times.

  8. Good debate overall, appreciate all points of view.

    One thing I rather disagree with though is this perception that covid19 will affect just “poor people” or “blue collar workers”.

    In my company, we had to take a 40% pay cut, and I know of many redundancies (both here and other places), and others taking various pay cuts. Our jobs as as high paying white-collar as they get, and this is prime demographic for property purchases (investment or otherwise).

    It’s just not true that this has affected only poorer segments of the population.

    • working class hamMEMBER

      Paycuts and the possibility of redundancies change attitudes to leveraging real quick.
      Been through redundancies before, most people deleveraged well before the crunch time. That was in the middle of a boom.
      The reaches of a 20% downturn will decimate confidence. Construction will be the final straw.

  9. a) Peachy? Reuss?

    b) I admire what you guys at MB do. Inviting in a strong, articulate, highly intelligent person to argue a counterposition unfettered. Fantastic. Where else does that happen? And I believe that his point will not be shrugged-off in your own internal debates. Great stuff.


  10. Hill Billy 55MEMBER

    Basically its all good until its not, and now its not. Thanks for the podcast, good value.

  11. $139 billipn is now $70 billion, so the stimulus is no longer 25% of quarterly gdp, it is 12%!

    • Lol thanks for that. Good point out. Just goes to show how many companies did not.take up dole hider.