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The PROPERTY DOCTORS, Sydney Australia Novak Properties
EP. 1375 RATE CUT MANIA - WHAT DOES IT REALLY MEAN FOR DEE WHY
Join us as we unravel the complexities of interest rate changes that seem to ripple through every household decision. With the always insightful Billy Drury at our side, we unpack the latest buzz over a modest 0.25% rate cut and ponder its real impact on the Northern Beaches property market. How do these shifts affect the borrowing landscape, and what might they mean for your future buying power? We promise you'll finish this episode equipped with a clearer understanding of how these changes influence both the financial landscape and the hearts and minds of local buyers and sellers.
In a world where interest rates practically have their own cult following, Billy draws from his experiences, even those as poignant as attending a service at Saint Mary's Cathedral, to provide a human lens on this economic topic. From casual conversations to expert insights from Zach at Shore Financial, we delve into how the sentiment surrounding these rates builds, sometimes eclipsing the actual numbers. Whether you're a seasoned investor or a first-time buyer, we offer a perspective that goes beyond the headlines to explore the emotional and financial realities of property hunting amid the current rate frenzy.
Get ready to rumble. It is interest rate day today at 2.30, if it bleeds, it reads we're going to talk about the impact on these rates to our property prices.
Speaker 2:I'm the ringleader, so let's get up. Good morning, so giddy up.
Speaker 1:Good morning, Billy Drury. How are you? Yeah, I'm great. I'm great. How are you?
Speaker 2:Really good, really good, really good. This interest rate day. How are you? Yeah, I'm great, I'm great.
Speaker 1:How are you Really?
Speaker 2:good, really good, really good this interest rate day.
Speaker 1:Had a good day yesterday, yeah, you did.
Speaker 2:Do you want to give a little summary?
Speaker 1:I went to the funeral of the late Santo Severino. What a production it was. It was like something out of a movie like that. Saint mary's cathedral is a beautiful place. That's got to be one of the most beautiful churches I've ever been to. You've got to go, bill, get religious gotta go check it out.
Speaker 2:Um, it seems like this has just been going on forever.
Speaker 1:Last two years we've been, we've been talking about interest rates, the rates, well, you know, I'm just amazed that they can actually get people to keep reading about interest rates. And I even feel silly doing this, doing a segment on interest rates, because I just think it's so widely spoken about. But we couldn't not do it today, given where we are with the rate cut announcement, and it's been a while. It's been three months, two, three months since the RBA sat down and met.
Speaker 2:Yeah, yeah, and it's like an obsession. It's a bit of a mania, a bit of a frenzy in the media. But then what does it mean for DY? What does it mean for Northern Beaches families, buyers, sellers that we're meeting? That's what we're going to unpack today has?
Speaker 1:has the sentiment already been factored into the marketplace? Guys and girls have a think about that. Irrelevant to what rates, do they go down or they don't go down, today are people already making moves due to the sentiment, due to how they, how they feel about what they get, the direction they're going.
Speaker 2:Yeah, yeah, absolutely. Now there's four sort of things that I reckon you know the 0.25% change will get people thinking about. I think the most obvious thing for buyers that we're meeting is like how does it impact borrowing and affordability? Because they just want to buy a property, they know what they earn, they know what they've got to spend and they just want to get the job done. Yeah, so I think that's probably the biggest question I get from buyers. Are open homes like on a, on a local sort of um, local sort of playing field? Like people are just worried about what impact does that have on my borrowing and will it change property prices?
Speaker 1:Well, I think, providing your deposits fat enough and providing your incomes chubby enough. I think it can mean on 0.25,. If I remember what Zach said, what did he say?
Speaker 2:the other day was about 30 grand, 50 grand, yeah. So Zach's a mortgage broker at Shore Financial, gives us a bit of a finance update once a week and yeah, he's always said to. To sort of just cut the numbers up roughly a one percent change in in the cash rate, changes% in people's borrowing capacity, so a 0.25% decrease, you know, hopefully puts 2.5%, to be exact, back into people's pockets and I guess if you're borrowing a million bucks then you're still looking at sort of 25 grand. Good math, bill, good math, thank you. So like that it adds up. I guess you could say it adds up.
Speaker 1:It adds up and I think the biggest thing is, you know again, it's guys and girls, it's going back to this sentiment, this sentiment people are feeling. You know I had a, you know being a funeral. You talk to lots of people at one time they haven't seen in a long time and I was chatting yesterday being a funeral. You talk to lots of people at one time they haven't seen in a long time and I was chatting yesterday being a real estate agent. People want to talk real estate with you sometime often and the common theme that I had out there was how cooked prices are, how much, how high prices have gone over the last couple of years and what it's like at the moment.
Speaker 1:I felt I had to correct some people because they felt like the market had just gone out of control and it has not in some segments. For example, houses have clearly doubled at probably another 30% on top of that in 10 years, but units have not doubled. You know the unit of 600 grand 10 years ago is not 1.2. So yeah, I think the market's got some stamina in the affordable areas of the market. So, on the back of interest rates going down, if there is going to be a charge, I'd suggest it would be on the affordable stuff, not the premium stuff.
Speaker 2:Yeah, agreed, flavio has got a great comment here. Did anyone talk about interest rates being at 18% yesterday around the table?
Speaker 1:No, good point Good point. But I think that you know, I think the days of the 2% interest rate and the 18% interest rate were unicorn days. You know in terms of high, in terms of low, for whatever reason. So I think you know that average, you know where people are sort of, you know that that that average, you know where people are sort of, you know flopping around is always going to be that market average, is always going to be circa five to seven or eight percent yeah, so that that probably is the second biggest change sentiment, um, long term sort of costs and considerations.
Speaker 2:You know people, people have been budgeted in with these with these 0.25 percent increases or decreases from the get-go, so I don't think that's going to change people's long, long-term position and people that have been holding property through this um increase period they've kind of done the hard work.
Speaker 1:I think now people can see the light the other end of the tunnel yeah, and I think it's not like you know, buying fruit where you, you know, you just buy different fruit if times are tough, um, it's, you know, one day you're eating mangoes and a year later you're eating, uh, what's a cheap fruit? Bananas, I don't know. But you know, property, shelter, properties it's, and shelter is a really, really Important thing that we hold close to our heart. It's life-changing. So I think that people sort of think that there's gonna be more of a knee-jerk reaction on shelter, but it's shelter. Yeah, you sort of it's got to be done. Yeah, whether it's six percent or eight percent or four percent, it's got to be done. Yeah, whether it's six percent or eight percent or four percent, it's got to be done.
Speaker 2:Essential it is essential, essentially. I've got one more set of numbers to leave you with. Um, this is zach's little wow this is impressive bill. Look at the way you how yeah, well, I won't take credit for the layout, but I'll take it off the screen. So this is Zach's little summary of of his prediction for today. Um, now, up there you can see the U the US underlying inflation and interest rate versus Australia. So that's pretty interesting, just to have a look at which one's the US we are the one.
Speaker 2:Us is the one with the dotted line.
Speaker 1:Oh, yeah, and what are we, the solid bars?
Speaker 2:we're the solid bars yeah jeez, we're really fine yeah, and then underneath, I guess the really clever people in the room. They're not just looking at you know what goes into this decision today. They're looking at sort of what happens behind the scenes as well. So oil prices falling. This is, I guess, just a bit of an overview of what's happening out there House building costs, higher Home rent growth. Easing labour market's still strong high wages growth now easing. Retail sales remain robust house price growth easing. Us decides to leave rates on hold, inflation rising. Economies are strong and the economic growth growing. So if you want to know what's happening behind the scenes or from what the brokers are looking at, I thought that was helpful bit of an insight.
Speaker 1:I like that and also, um, I know that the government's closely been tracking employment and if um, people are still readily employed, if there is a pressure on employment ie there's less jobs out there that puts a pressure on it, on on the economy, because I'm often hearing in business the times are very hard, but then I'm not seeing that in the employment statistics. Interesting hmm.
Speaker 2:so your guess for today? Predictions Down, down. I think it's actually just going to hold, but I think the key to seeing a rate cut will be trying to slide one in before the election, which I think has to happen by May. So I think the government would love to deliver some good news.
Speaker 1:Well, there's a knock-on effect, I think as well. Where to see, once those rates change, to see them come into plays is a good couple of months later. So I think if, um, you know, before the election, if they want to see something to come into play, they want to do it now that's true.
Speaker 2:Mike borris put a really good little 60s 90 second video out and just said I like him, I like it. We applauded um the australian people for, you know, weathering the storm and yeah, I think, if, if we get a rate cut, it's just the. It's like, it's exciting, it's like we're finally there yeah, yeah, well, do you matter?
Speaker 1:what doesn't matter? When the next one comes on? I think this is just really relevant. This, this particular rate, cut it just. It just plants the direction the markets going in with rates.
Speaker 2:Let's put a good marketing campaign to the government. If rates go down, absolutely, yeah, big time Could be a happy day for a lot of people then good luck.
Speaker 1:Good luck, fingers crossed everyone 2 30 pm.
Speaker 2:What, what, uh?
Speaker 1:watch the social channels explode.
Speaker 2:Oh yeah, oh yeah big time.
Speaker 1:Have a good day. See everyone. Have a great day. Thanks, see you. Everyone. Have a great day. Thanks, bill. Cheers Bill the old and the young man's body, giddy up, love you.