With the nation’s auction market in the doldrums and clearance rates tracking below 50% for two consecutive months, leading Sydney auctioneer Tom Panos gave his most pessimistic assessment yet, claiming Saturday’s auctions in Sydney were the worst in his career, which has spanned 30 years.
“Today was the worst auction day of my real estate auction career”, Panos said in his Saturday evening wrap. “I’ve been doing auctions for 30 years. Today was the worst. Zero out of six”.
“But that’s not the metric that’s going to concern you. I’ll tell you what the metric that’s going to concern you. I didn’t have a single person register to bid. Do you understand?”
“Not one registration, not one person even said to themselves, you know what? There’s a few bargains out there. I might go in and just see what’s actually happening… No one registered. I’ve never ever had that”, he said.
Panos warned that the zero registrations suggested that the appetite for real estate has vanished:
“To get zero registrations is a clear sign. It essentially has said the appetite for real estate is gone. And the only people that seem to be transacting are the must-have people”.
Panos also warned that if the Reserve Bank hikes interest rates next month, it will deal another hammer blow to the market.
“God help us on August 11”, he said in relation to the Reserve Bank’s next monetary meeting. “We definitely do not need a rate rise in the real estate market”.
“If we do have a rate rise in August and we do have more stock coming up in spring, there should be a further softening of prices”.
“We will have the increased stock in spring. We will have rate rises. And that’s going to basically mean that the demand and supply equation is going to help it even more in the buyers’ market”, Panos warned.
Finally, Panos warned that the decline in sales volumes will hammer real estate agents, state budgets, and others tied to the property industry.
Source: Cotality
“I’ve got to tell you, don’t worry about real estate agents… they’re getting smashed. Why? Because the volumes anecdotally are down nearly 40%”, Panos said.
“Prices don’t worry me anywhere near as much as volume does. Volume actually impacts people dramatically. It impacts people that are working in those services, removalists, renovators, lawyers, conveyances, furniture places”.
“But I tell you who gets impacted the most. Think about it. 25% of our state government’s revenue comes from stamp duty… State government’s revenues have just been smashed”, Panos warned.
Panos concluded his wrap, declaring that “Australia is entering into new territory and very scary territory”.
Louis Christopher, founder of SQM Research, noted on Twitter (X) that “when you are having well-known Sydney agents describing their worst auction day in 30 years, you know the housing market is in dire straits”, adding that rising spring listings and the possibility of another rate hike are bad omens for the market.
The above testimony by Tom Panos and Louis Christopher confirms why I believe that Australia is staring down the deepest house price correction in 40 years.
Source: Cotality
For those who believe Australia is immune to a deep housing correction, I suggest they look to New Zealand, which has the same banking system as Australia and has seen real house prices fall back to early 2018 levels:
Chart from Justin Fabo at Antipodean Macro
If you were to survey Kiwis in late 2021 about their views on New Zealand home values, few would have envisaged such deep and protracted declines.
