Leading Sydney auctioneer and agent Tom Panos has issued a warning for Australian home buyers.
Panos believes that Australia’s property market is the hottest it has been since the Covid boom and will only get worse once the Albanese government’s 5% deposit scheme for first home buyers comes into effect next month.
In his weekly auction wrap on YouTube, Panos said, the “market’s hot”, “number one, because people think prices are going to go up”.
“It’s only going to get worse for buyers”, Panos says, because “on October 1, there’s going to be significantly more buyers in the lower price points around the country with the 5% deposit guarantee scheme”.
“There are people lining up. There are people within my own family who are now thinking about property because they just thought to themselves, we’ll never get to a 20% deposit. Now they’re thinking, hey, a 5% deposit on a $700,000 property. Hey, that’s doable”.
Panos is not wrong. As illustrated below by Justin Fabo from Antipodean Macro, house price expectations, as measured by the Westpac Consumer Sentiment Survey, are tracking at a 15-year high.
Westpac’s ‘time to buy a dwelling index’ has also rebounded strongly from cyclical lows.
Then there is Australia’s auction market, which has seen final auction clearance rates rise to their highest level since February 2024.
This weekend’s auction results remained strong, with a national preliminary clearance rate of 74.8% recorded from very high volumes.
Source: Cotality
There is also the prospect of further interest rate reductions, with the futures market forecasting two 25 bp cuts by mid-2026.
The following chart from CBA shows that homes typically rise in value by double-digit rates following a rate-cutting cycle:
Falling mortgage rates and the Albanese government’s 5% First Home Guarantee scheme will pour fuel on the house price bonfire.
As a result, Australian housing will become structurally less affordable.
