Episode 117 | The next Great Depression? The next Roaring 20s? | Dr. Shane Oliver, AMP Capital

As the Coronavirus delivers more blows economists work around the clock to try to predict and reshape the economy to lessen the damages.
In another Coronavirus special episode we are honoured to have arguably the most well known economist in Australia, Dr. Shane Oliver. Shane is the Head of Investment Strategy and Economics and Chief Economist at AMP Capital. Shane breaks down the current economic climate, locally and globally, showcasing the various economic indicators revealing the direction we are all heading towards.

Here’s what we covered:

• Major differences between recession and a depression

• Is the world economy heading towards a depression?

• How will the stimulus package work?

• Was the USA too late to act in shutting down?

• Where will the government find the money for the stimulus package

• Where will the world be when the dust settles?

• Has Australia done enough to flatten the curve?

• How high will unemployment climb?

• Recognising the opportunity?

• Which industry is at the most risk?

• What economic indicators should we look towards

MENTIONED EPISODES:
Episode 115 | Eliza Owen
Episode 114 | Fool or Forecaster 2020 
Episode 112 | First Covid-19 update

Shane Oliver’s Articles:
AMP Capital: Is Coronavirus driving a recession, depression or an economic hit like no other
AMP Capital: The Threat to Australia house prices from Coronavirus
Business Insider Australia: The 9 bad habits of highly ineffective investors 

HOST LINKS:
Looking for a Sydney Buyers Agent? www.gooddeeds.com.au
Work with Veronica: info@gooddeeds.com.au 

Looking for a Mortgage Broker? www.wealthful.com.au
Work with Chris: hello@wealthful.com.au

Buy the book - AUCTION READY How to buy property at auction even though you’re scared s#!tless:www.getauctionready.com.au
Use the coupon ELEPHANT for your 30% listener discount.

EPISODE TRANSCRIPT: 
Please note that this has been transcribed by half-human-half-robot, so brace yourself for typos and the odd bit of weirdness…
This episode was recorded on 2 April, 2020.

Veronica Morgan: You're listening to the elephant in the room property podcast where the big things that never get talked about actually get talked about. I'm Veronica Morgan real estate agent buyer's agent, cohost of Foxtel's location, location, location Australia and author of a new book called auction ready, how to buy property at auction. Even though you're scared shitless.

Chris Bates: And I'm Chris Bates, financial planner, mortgage broker, and together we're going to uncover who's really making the decisions when you buy a property.

Veronica Morgan: Don't forget that you can access the transcript for this episode on the website as well as download our free fool or forecaster report, which experts can you trust to get it right, the elephant in the room.com. Dot. AAU.

Chris Bates: Please stick around for this week's elephant rider boot camp and we have a cracking Dumbo the week coming up

Chris Bates: Before we get started, everything we talk about on this podcast is generally nature and should never be considered to be personal financial advice. If you're looking to get advice, please seek the help of a licensed financial advisor or buyers agent. They will tailor and document their advice to your personal circumstances. Now let's get cracking.

Veronica Morgan: It's all anybody's talking about the Corona virus and how it's changing the very fabric of our lives. Now we're all feeling it in one way or another and some have experienced an immediate financial impact and we're all facing a protracted period of uncertainty. Talk has gone from whether we'll face a technical recession to a full blown recession and in recent days as depression has even been mooted. And what does this mean for the property market? Well, we have 20% price falls and who is really doing enough to make predictions at the moment. Anyway, in this episode we pick the brains of arguably the most quoted economist in the Australian media doctors' chain. Oliver. Shane is the head of investment strategy and economics and chief economist P capital and we are honored to have him on the podcast today. Thank you very much for joining us, Shane.

Shane Oliver: My pleasure, Veronica. Thanks for having me.

Chris Bates: Thank you. Shane. I mean we're just getting comfortable with the word recession. I think. You know, we've kind of given up and after, you know, 27 years or whatever it is. Maybe it's steady is now, but depression, it's a bit of a scary word. What's the major difference you see between every session and that depression would,

Shane Oliver: There's a lot of debate about that that if you sort of giggled wig and compare the two like depression is generally a dig bar, longer vision of the recession. If you get back to the post world war II period recessions rolled all economic downturns and they didn't really use the word depression until we got to the great depression, which was clearly worse than any previous recession. So they, well they they sort of used a, that I came up, would that turn depression?

Shane Oliver: And recession became the more common term for milder, setbacks in the economy. This I guess use of the term does elicit a lot of fear because the great depression is well known. Unemployment in Australia went to 20% of us. It went to 25% economic activity in the U S I think contracted something like 25% or more. I can prove it up as high as 30%. In Australia it'll say contracted quite substantially. And to be honest with you, I think there's going to be elements of both in what we experience in the next little while. Obviously we're all stuck at home. That means we cant spend, lots of businesses have shut their doors, so big chunks of the economy will be affected. So you'll see quite a sharp drop off in economic activity shop. And then we've seen in the whole of the post war period more akin to what you see and what we saw in the great depression.

Shane Oliver: By the same token, there are many differences that they grabbed. Depressed depression was per se by the roaring twenties. Yeah, sorry. There was a preceding boom. We haven't really had a proceeding` in Australia. In fact, the debate in recent years has been about how weak growth has been overall. You know, we've had pockets of strengths. The housing market's sort of was up and down. I'm a bit of a building boom in Sydney and Melbourne, but bond lodge, you know, it's been a pretty soak period. So we haven't had a roaring twenties equivalent speak. So we haven't had a boom to go bass. Yeah, no. If we had the accesses that went with that boom PRI in the 1920s we haven't had the massive Dick Russ to the same degree. We haven't had a, and thought I should problem or we haven't had central banks jamming on the brakes.

Shane Oliver: We haven't had had overbuilding in the economy. So the sort of accesses that normally precede recessions and depressions haven't been evidence evidence. So the other thing which is big, hugely different is that this is I downturn which has been tendon by government in response to the ground virus situation that I've taken a look at Italy and said, well Italy's going to death rate now of over 11% problem is Bay in that if too many people get the crown and Barbara said wants roughly 20% night to go to hospital a which quarter does need intensive care? If everyone gets it once, then a lot of people aren't going to be able to make it into a hospital, let alone get intensive care. Therefore we can't look what happened in Italy happened here. We've got to distance ourselves and hence the shutdown in the economy hits the hit to the economy, but that can be turned off at some point as well.

Shane Oliver: Once we get to the virus under control. The other big difference compared to the great depression has that we've seen massive policy stimulus in the economy on the part of government and the reserve bank. Whereas going into the great depression, we didn't see any of that. In fact, I made it worse. So I think there's huge differences between now and the great depression, even though the economic data when it comes out over the next few months, my look pretty depression lock.

Chris Bates: Yeah. I mean, obviously Australia hasn't had that big roaring twenties, but I mean, what about the biggest superpower out there? You know, I guess China in the US do you think they've got a lot more to be concerned around or depression and I coming up well at first if you look at China did have very strong growth, but most of that very strong growth was last decade.

Shane Oliver: It spent much of this decade slowing down to more manageable pace of growth. And I know a lot of people say you should worry about this in relation to China or worry about that or something that at the end of the diet does borrow from itself. It has a very high national savings, right? It hasn't gone on the date binge that other countries have periods gone on. And the recent experience with the with China is that I had quite a severe shut down a kid to the one Italy's now going through starting January 23rd and recently they've got the Corona virus under control. Not completely, there's still risks around it, particularly from important cases. But they were able to sort of gradually start up in their economy after the little gate from the end of February as we went through March. And so the worst fingers crossed seems to be behind us for the Chinese economy.

Shane Oliver: And then when we look at the U S I mean a lot of people say, well their share market's going to record highs, but that was after going nowhere over that whole of the 2000 to 2013 period. There's SMP 500 spun its wheels through the tech break and the GFC. And yeah, the us has a big, big decline in unemployment, but the household debt, corporate debt hasn't gone through the roof dramatically and us economic growth, the on the fall and the unemployment rate hasn't been thin excessive. They, it's sort of long life from what I would call boom time conditions in the U S maybe there's been a bit of exuberance in the cycle. Fang stocks book, Amazon, Apple NIPSCO was get these confused on Netflix googles and they will though it's time. It's not. But, but beyond that, I think we've seen anything like the exuberance we so going into the tech them in bust, the the GFC, the reason I did get worried about America that hosted it, it shut down has been a bit halfhearted.

Shane Oliver: They've looked at things a bit too light like Italy did and therefore they seem further away from getting the coronavirus situation on a control. And decided Australia I fingers crossed in relationship Australia again, but that, that I'll take is the biggest worry in the U S the other thing I don't like about America or is that a, I liked the fact that they've got a huge stimulus program. I think that's very important. They need to learn from Australia here and I think Australia or keep strong one thing that goes on the next thing. What a Scott Morrison didn't probably didn't like it. Josh Frydenberg probably didn't like, was all those people queued up outside. Centerlink not a good look. Not a good thing. Horrible. and that was gonna mean much harder on employment. So what does he do? They go back to the drawing books and come up with the subsidy, which I'd say was a very good news because it keeps people in jobs, keeps them connected to their employer.

Shane Oliver: He'll put business out if they're still paying your wages, helps the worker out. If the business can't pay the wages and his people down, those people can't be defined as unemployed. They know they're at home, they're getting paid $1,500 a fortnight, but they're not unemployed. That I think is very poor.

Veronica Morgan: It's an efficiency move as well. Let's face it because then the small businesses or businesses are actually then distributing a welfare effectively rather than centrelink.

Shane Oliver: That's right. They are and like go to choices to have do it's the company is already paying the salaries. Then the company gets to keep that to $100. The company had to stand the people down. Then it just passes the money on. There's fun time tuning around that. If the person was getting paid less than $1500, then you've got to top it up so the person gets to depend on your dollars.

Shane Oliver: Some people actually get more than I used to get paid. It is a good move and it's, it's also a time limited. Six months starting into March, we're starting now basically. It's a, hopefully if the shutdown goes six months and it's now longer than that, talking three months this morning, but hopefully if it's, that's the length of time, then, then a lot of people will be protected. Whereas America's gone down. The pathway originally went down, which was top up unemployment benefits which then means people still lose their jobs and get unemployed, tend to prefer the Australian products. For a whole bunch of reasons. It's good psychologically for the people that picked a good for businesses keeps the headline unemployment rate down. So I think that's a far healthier approach to the U S farm.

Veronica Morgan: Businesses more likely about a kickoff and continue trading at the end of it rather than then have to stop from a standing still standing start. You know, I saw personally as a business owner who you potentially might need to benefit from this. I'm very happy.

Shane Oliver: You should be. And I know there's lots of Australians who are, I mean, we had this question, well, how are we going to fund this? Where's the money? Gonna come pick it up. We'll get it out of thin air. Well, the short answer is that they will borrow it from other Australians. Many Australians still have their jobs. They're at home, working at home, but they're not spending that money just goes into their bank accounts. So the federal government logically say, is that, can we put all this money sitting around here? Let's borrowed some of it and help us get through these periods. And yes, we'll be, we'll end up with a bit of debt. Maybe all went good. The text cups I was looking forward to, and you guys weren't either in 2022 but I reckon that's a price where prepaid pie to keep the foundations of the economy intact and to enable a good startup when the time comes, once the virus is back under control.

Shane Oliver: And the watch subsidy certainly helps us do that. I mean, imagine if a business has to lie. Let's often five minutes time it finds it demands come back again. But it's got to go and hire all those people. People have to apply for the jobs. What a complete waste of time. Just keep them on in those jobs that get home.

Veronica Morgan: Totally agree. I mean it's, it's an official, but I'm always curious so I'm not an economist. Okay. But I wonder whether in a way, the way that governments are borrowing money is bit like a giant Ponzi scheme. There's a lot to disappear at some point.

Shane Oliver: Well, it goes somewhere. It's a, well, there's lots of debate about this. The simple answer is Taika chillax there's something, a lot that we had the other side of you where it came from a combination of chill and relax, but as it didn't get it, but anyway, this is the way it works. Australia has a liberal of public data and that's past deficits ended up basically if you will, after the assets of the reserve bank. And the pitch upon our net public debt is around 22% of GDP in Australia. That's the number. In America it's around 80% of GDP and in comparable countries, comparable advanced countries, Europe, Japan, and so on to beat average is around 80%. So we've got about a quarter net that these other countries have. So we are in a better position to take on more public debt. It does involve borrowing from this, let's try public set of budget deficits. Gonna look worse this year and next and that has to be pie down at some point. All Beasley in the short term it's a little bit easier for government to borrow because the interest rates are hardly anything. Yeah. We think we've got low mortgage rates.

Shane Oliver: The borrowing, the wholesale market that can borrow cuts for eight years at 0.25% can borrow for the 10 years about 0.75%. So it's not costing them a lot in interest to borrow. The trick I think is, yeah, at some point we need to start paying it down that mountain lane high, high a Texas one day down the track. Obviously the reserve bank is helping out all of this because it's now doing a thing called quantitative easing, which involves using printed money to buy government bonds, not directly from the government, but in the money market. Might be the case that the reserve bank will have to hold those bonds for longer in their balance sheets. But I think at the end of the day, it is something that Australia can afford to do. We do have relatively low public dates. There are a bunch of people earning income sitting around at home, doing their job, but not spending much money. Can't go on the holiday account, buy that new car they want to cut. Maybe not for the wall. I can't rush that button. Your property though. So those things are the main deciding rights. The many Australians will actually go up and unpacking back to Kenzie and economics. If you have studied economics in like saints and Tom's lot days for the government to borrow that money.

Chris Bates: And so you said I mean they're around one of the things about getting government debt or any debt, even just personal debt is inflation, right? So if you've got over time, if that debt is worth less because the dollar is worth less, the problem is I think a lot of economies have been trying to get inflation and they can't get it. So they've got this debt. Yes it's low interest rates, but they can't, it's still worth the same every year. Do you think that's a problem where they just can't really inflight it away, which has been the old strategy?

Shane Oliver: It is a bit of an issue. I have a feeling that at some point in flash, and we'll start to pick out, because you can think about the low end flash and wait environment we came into, it was partly due to globalization. Globalization is sort of, they needed a bit of a retreat lately, obviously led by Donald Trump and it's now going to be in a bigger retreat because lots of countries will say, you know, we want to use that Andi malarial drug as an antiviral for [inaudible] that you guys are making. We can't get it. So it looks like, yeah, we'd have to make it ourselves. You can imagine a situation where countries go through a process of saying, well we need to make these essential items. And so they have a bit of an unwanted globalization, which can mean a bit of upward pressure on prices.

Shane Oliver: It will sell. You've got all these central banks out there continuously pumping money to the system, which could eventually give us some inflation. But you're right, right now bison is very low. That makes it a lot harder to inflight that data away. Likewise for Australians borrowing on their home, they end up with that debt for much longer because it stays at that level in real terms and they why just don't come up as much. So that that is an issue. Could've been we left for the dip for longer. But I do think at some point out there will this a stimulus and what have you. Might cause a bit of a pickup and I'm flushing probably not hyperinflation cause we still got technological innovation working through the system paving process down. But I suspect that at some point inflation might pick up a little bit.

Chris Bates: Is that the problem? Japan's had though is that if just kept on taking government debt thinking they can inflight it away but just haven't been able to get the economy to grow as fast to kind of start to pay it off. Cause there's always a concern that we're going to become a lot of Japan, Japan I guess in terms of lots of high debt and very low rights for a very, very long time.

Shane Oliver: That's right. Japan has been in this situation now for almost two decades interestingly. And sometimes we refer to, you know, we're all going to go Japanese turning Japanese or something. Cool. And Japan's a little bit of a complicated bomb. I mean I, I don't rely on foreign side of these data sets. Just the household sector and the corporate sector lending to the government, somebody out to themselves. It's not like grace or something. And grace obviously ran in trouble cause I had to borrow from others and they couldn't, they flight the current seats so they had to pay exorbitant interest rates and that led to where the Dick crosses in grace. But Japan's one's an interesting one. Their economic growth right. Hasn't been too bad. Might look for a slide, but their population is actually falling. You allow for that. The real rate of economic hasn't been too bad since been comparable to ours. So to us. So but by the time poker and I haven't gotten in Fleischer you don't, they expect to stop coming through and that's meant that they did public debt burden has remind off for longer flip side though of course is that the interest rates, government borrowing rights in Japan are about zero. So they're not paying any interest on this.

Veronica Morgan: Sorry, can I ask a question before you keep going to this Scott Morrison question? I'm curious. As I said earlier, I've not studied economics, we've read a bit about it, but till I'm a complete novice, why do we need growth? And I know that growth has been slowing down previous season you said think going into this not coming out of a boom. And so we've been getting used to a lower growth environment I think in recent years. But why do we need breath? Why can't we just get on with loss without having to worry about price?

Shane Oliver: Well that's an interesting philosophical question. In some ways a growth, the growth phenomenon is a little bit complicated. The basic raise and we need a bit of growth is that there's new entrance to the workforce each year and we need to absorb those people. So therefore we need to expand the economy.

Shane Oliver: A big chunk of those new interests are coming from immigrants. So you can make an argument that if we cut our immigration level to zero, then we can do with much slower economic growth because we've done need to grow the economy to absorb those new entrants into the workforce. So it's really, you know, we think about Australia and the norm used to be 3% economic growth. Population growth is about one and a half percent. We cut out the migrants. You could say even lower. So the, the real focus should be on that component of what you call per capita gross gross in the economy beyond the growth in the population. And that relates to rising living standards. I guess it comes back to what we really want. If we want our living standards to rise over time, feel that we're getting a hit, then we do need some met off.

Shane Oliver: And so we do need some economic growth but it mine real little lights to just a rise in living standards. Like I kind of think in some ways you could sort of imagine a situation where you've got everything you want and then while we need to have any more gross, cause you've got everything. But it seems to me that a human desire continues to want more. I remember when I started my career, 35 years ago, an equity analyst said, well we've got everything we want. Yeah, we've got a microwave, we've got dishwashers, we've got wall to wall carpet. This is getting a conditioning cause stopped when we want them to. Yeah, what more do we need? I've got quality. They videos, what more do we need? And then here we are 35 years later and lots of other things that come along that have sort of stated those things including the technology we use in cadet to record this podcast. And the things that people are using to work at home from and to entertain themselves at not time. So I think it really comes down to human engineer and you know, I don't like to see a lot of the origin and growth comes from that. I mean, there is a desire to, to, to say year standard in crew, but there's also I think a desire to make better things to come up with Bitwise and doing things. And that results in economic growth,

Veronica Morgan: Which would be the way could be the upshot of this whole thing. You know, I think, you know, these conversations going in different direction of course, but you know, the, the planets groaning under the wait of our desire to live better. And so, yes, it's going to be an interesting to see the ingenuity and the, and that comes out. If I'm six months being forced to work from home and some businesses being forced to reinvent themselves, a very interesting world,

Shane Oliver: It will. And a carbon footprint will go down dramatically through this period. Talbot emissions will collapse. Obviously power stations is still going, but the stop bitching out about cause what pain, lots of other things when they, I'm sorry, it could accelerate that shift to the extent that more people do more online activity work from home. Probably essential extra shift to a sort of a lower carbon future. I mean there is a lot of debate about, you know, the, the, the well groaning under the wider human ingenuity, but I'm going to see why is it looking at this, and this is where we get into the dismal science. So the economics, the, the negative view was Thomas Malthus who said something like there's near mobile desires but limited resources and therefore eventually you know, the best advice you can can on the problem and eventually the world runs out of food and will die and so on.

Shane Oliver: But that was out of a two or 300 years ago. Then we sold the club of Rome, various others in the light sixties, 70s size, similar sort of things. But what mankind has managed to do is reduce its requirement for resources. So a lot of the growth we've experienced in racing since painting the form of technology, which doesn't really require a lot of resources, you know, the amount of metals and stuff that goes into a TV has declined, can pit past cows. And now what molecule efficients bomb will feel efficient. In fact Hey aligns the sign. So we just tend to be using less and less of things.

Veronica Morgan: Fort Lewis and he's sort of per car for instance, uses less raw material, less fuel, that sort of stuff. But then you've got more human beings with cars.

Shane Oliver: That's true. So you have to manage that somehow. And that's, I think the big challenge here, that advanced countries of saying, yeah, it's probably easier a abouts countries to control their initiatives to solve resources. But it is harder in emerging countries and emerging countries. I, we just want to get signed living standard. Do you have, is that how you stop us from putting in these power stations or whatever you said? There is an issue they had, but I kind of think that it's up to the advanced countries to lead the way.

Chris Bates: Yeah. So Scott Marson, I've been shouting at the TV, like most Australians around inaction, I guess to do the hard things. But if you were say him, what were some of the things that jerking they've done enough? You know, in terms of stimulus or do you have done less or would you have done more? Would you have done anything different if you were kind of trying to spark the economy back into life? What would you have done? Well, that's a good question. 

Shane Oliver: I, I mean I, I mean it's easy to take pot shots at birth and they've been criticized as the prime minister and the government that actually, I think they've been in line with my thinking. When the issue started to come to the floor in early March, particularly, I thought they needed to do at least a 1% of GDP stimulus, which

Shane Oliver: There's dietary wakes. The guy that I came up with a, that was the roughly 20 billion or something stimulus. And I thought that that was pretty good. I've done this, you know, and then, then we worked out, Oh, that's not enough. At all. And then yeah, that needed to do more. Yeah. Maybe it needs to be 60 billion and that's the one from Sunday a wakey go not last Sunday, the one before. And then of course, you know, we settled the paper, wound up out of link that's on Lake. And we moved to the job subsidy, which is another hundred 30 billion. So go ahead. The ball like to get about 200 billion particularly you're adding the 11 doing also the States have done. So I think there's sort of roughly been in line with my thinking. I did take earlier that a wage subsidy was the way to go and this was something that was being talked about at Tom North.

Shane Oliver: There was a good idea and so I was a little bit surprised they didn't do that with the second stimulus package, but that's the only difference I would have with them. And I have got there anyway. And I liked the, the ability of the government to sort of ideas from different sides of politics. Got it done. Things better, which I think he's quite healthy in Australia to say that sort of thing. And also to, to say these things get through parliament set quickly is also very good. So by and large I've, I'd give them a big tick for all of this.

Chris Bates: And what about the RBA through this journey? I mean know, do you think that the quantity of easing things a good idea and you know, would you do more or less or what's your view on that?

Shane Oliver: Well, I mean for a quick, very quickly, I thought for some time the economy was wakened in the yabby I was at, see, I mean I kept saying, well, we're going to be taking up through this year. And I didn't think they would, I didn't think we would pick up. And so I was thinking I should have been cutting rates earlier. You obviously coronavirus thing time along and times the situation dramatically. And I've realized that that had to do more than they have reacted very quickly. So, so far I think what they've done is the right thing. Got rights to knee zero, not good for my mother. Who has some money in bank deposits will like, we all do some degree. But particularly for older Australians living with that money, it's not good. But yeah, the amount of household debt in Australia is roughly double the value of household bank deposits.

Shane Oliver: So the benefit for the household take her as a whole from lower interest rates, swamps or the loss of income for those who miss out on low get low bank deposit rights. But I think the move into quantitative easing is a good move. They need to do that. What was happening a couple of weeks ago when the RBI my day mid match emergency announcements was that markets were starting to become dysfunctional. The 10 year bond yield was going through the roof. Yeah. Having full and [inaudible] sort of put that in, put some perspective that's big. That was partly the cause. Don manages insane ne shared values full and then I stopped getting redemption. So people just say, I can't get me out of the high growth. Optionality spits on my super to the low growth option. That means by definition they have to sell some assets to do that.

Shane Oliver: The ribbit loves to sell shares. I would doing a bit of that, but I often have to sell me winning positions, which includes government, bones and bones had been railing. So suddenly you get these why even selling a bone stock just in Australia, but globally and bond yields start rising. And that was a bit of a perverse outcome. Central banks needed to intervene and change that. We're also starting to see markets become dysfunctional. Yeah, it was getting harder for the banks to raise money in the money market. They get a big chunk of their money from bank deposits, but they lend out to home homeowners and borrowers that they also get a big chunk from the money markets. And the money markets are getting harder to access. So I think it was right for the RBI to cap rights under tight quantitative AC to get the phone market back under control, push point, inspect down.

Shane Oliver: And at the same time provide cheap funding for the banks that $90 billion they provided almost Cabos, the a hundred billion dollars that the full NIJ banks access each year from the money markets. So fed I think was a good move and the low cost of it 0.25% has enabled the banks to cut a whole range of interest rates and it'll sell off of these a six month payment holidays, if you call it that. So because it's sort of, it's allow a day cost of funding dramatically. And so therefore they can say, okay, well we can do a whole bunch of things to help out our customers for this period. So that I think was all great stuff. There's probably some more things there was a bank will have to do. They've said they won't cut interest rates negative by re-open that yesterday. Yesterday's that 0.2% is probably the low, but they might have to I suspect extend that chief funding program for the banks.

Shane Oliver: A little bit might be for another year doing it the next year as well. And I might also have to do some of the lending programs that the fed is doing that the us federal reserve has been buying up corporate debt to, to bring down corporate borrowing rights. We might have said, who's a banker this time sort of thing in Australia,

Chris Bates: One of that companies need to borrow money, which pretty much every company wants to put more money in the back in the bottom drawer, I guess at the moment. And then I guess the companies that are struggling there, their cost of funding is going to be rising quite sharply, I guess that's right.

Shane Oliver: And therefore it's, it's, it's key role here for the central bank to end today and, and get that cost of funding back down, that that's what it's all about and make sure that the banks can still lend to companies if they, if company companies needed or alternatively make it easier for companies to roll over any bonds that they had.

Shane Oliver: If you think back to the time of the GFC, the problems at the time, one is banks founded how to access funding. Took a while, a while longer for the reserve bank to cotton on and do something about that. But they did, but it just took a little bit longer. And likewise you hear these stories about various companies having to roll over borrowings or some of the property trusts were at the forefront of that. And so what these moves bottoms, a bank of Donna's sort of make it easier to avoid a refinancing crunch for Australian companies, if you like. That's why we're not seeing those sort of headlines. We may still say some of them, but yeah, the quick action by the central bank and the federal reserve and the U S is hoping to head that off.

Veronica Morgan: Rolling into the property market.

Shane Oliver: Well it is going to impact the property back in the minority has because we now banned a traditional houses and auctions and that led to a passway kin way. There's lots of properties all lined up and so listings went through the roof and Baus held back because yeah, they're a bit wary of online buying perhaps or you know, everyone's sort of thinking, well maybe now's not the best time to move perhaps.

Veronica Morgan: Well, there's quite a bit of transaction. There's quite a few transactions going on and it's sorta interesting because it really has stuffed up one of our indicators hasn't it? I mean we use auction clearance rights and as a, as a pretty, almost timely benchmark or what's happening in the market and all of a sudden it's like completely stuffed. What do we look at?

Shane Oliver: Yeah, it is rotten is useless. 31% percent is a meaningless number. Now if you translate that to house prices, they're going to crash. But it's also, it's useful, but

Veronica Morgan: One of the reasons it's, you know, 30 odd percent is because there's a whole bunch of properties that were withdrawn from auction that purely was because the agent's decision to sell them differently, not because there was no interest. Whereas normally properties are withdrawn from auction because there's no interest. And so that goes into the clearance rate and it's, it's a, it's, it's reflective of the market conditions, whereas these withdrawal and property from auction is not reflective of market conditions. So much as, as the restrictions have been put in place and whether they want to go online or not, always I can go online or up.

Shane Oliver: It's last weekend gains, auction clearance rights off. Well there is something rather but on, don't, no, you wouldn't, you wouldn't read too much into the, made the why. 

Chris Bates: So like every day, pretty much on every paper today, you pretty much every pipe is cotton on that. You said the potentially 20% falls in property market, which is Australia's favorite past time. So, I mean, you know, obviously you've, you've probably put a bit more context to that in those conversations with the media, right, where they always latch onto that 20%.

Shane Oliver: Yeah, they do. There is a bit of context around that. It is, it does get complicated. We, you're talking about look at it cause there's some new force operating in a different direction. When I put those forecast together, my base case was a 5% decline. Yeah. And this was before any talk about a bank holiday or a bank payment holiday or wife subsidies. So lots of what the unemployment rate we got to seven and a half of saints that would go pause to hold back and we'd say process give up. About half of the GYNs were saying since the middle of last year, put it all in context. National property processes pate. Around September, I think it was a 2007 ane fill about 10%. The low point, which was June last year, then has since rallied about 10%. Taking them back to around the previous size, depending on the state hearing city you're in.

Shane Oliver: But that's the national sort of capital city average. I thought, well you're not gonna implement guys up. That's going to cause a bit of a hit to the property market. Prices might fall off 5% through this period of on city. And then yeah, once we kind of the other side, the very a lot of pent up demand it distracts will be LOA, the only stimulus in the system. And then we'll, we'll resume the the RA's and crane, maybe not at the time bright group saying since the middle of last year, but still receiving the rosin print. I had a, a risk heist and our average since the 20% number, which you see in the unimportant rate guys, 10%. Yeah, everything's a lot data now sits then on the one hand you could argue well or the shutdowns of intensified, the economy is clearly going to be deeper than obvious. The CMU a couple of weeks back they pull the close to the 20% working. The other way though is the bank payment holiday people affected. So therefore probably not. And also wage subsidies and we're probably not going to say a lot of force selling sort of these period. In any case.

Shane Oliver: And we still got the lot rights. So I think on balanced process will come up a bit that it's a, the assignment you conflicting forces here that I think it would be, yeah, my bicycle is, it'll probably come up at least talk the sand, but I I by operating 20%, but somewhere in that range depending on the city. But there are a lot of conflicting poses here and it is a bit like the share markets sale is the share market bottom now and it's like could come down another could come down some move, but then you sort of think, well it's the same for property buys is shahbaz instead of thinking about the same process, come up a little bit and now it gets very quiet and you can still manage to buy a property, then you might take advantage of the quieter times or the lower prices to do that because it will be quite a times, yes, they'll be less sellers and those entry level buyers, they are probably the law that, you know, you'd sort of do what you know the term dollar cost averaging can't quite do it with with property because you've done, have your cat spread it out across lots of building unless you really rich.

Shane Oliver: But you might sort of use these period to sort of quietly look around say thing is that you you think you might've missed out on and then you good shots, he might pick them out but a bog and or a lot of process. And I, I got two in March, March. So that's why I said, well, one thing he's done for sure and that is they will be less transactions through these periods simply because people will be less comfortable buying things on the back of online doing perhaps sell as fellows. But sellers might think, Oh well, just wait a little bit longer. But it'd be both ways. You know, the sellers will be saying, well, I'm not going to sell now. I'll just like silly things back to normal. You know, what I want, what do I want to move for now about social distancing?

Shane Oliver: And buyers will think the same, so want to go but providing we're 60, this is critically important here. It relates to the broader economy for boarding. We were successful in minimizing the collateral damage to the economy. So we take the hit from the virus, we have the recession, it feels a bit depression in terms of the speed of the full and the extent of the full providing. We keep the bulk of companies and individuals in reasonable shape in hibernation so they can come out the other side, excessively incumbent and, and, and still solvent. Then you have to allow that the property market like the rest of the economy will then start to come back again. And in that scenario, yeah. Dislike in chaise, now's the time you start looking around. I suppose you might not rushing, you might have a look around to see what bargains. You can pick up properties. You can pick up my thought just two weeks ago you had no chance of getting, yeah,

Veronica Morgan: I think it's a little bit similar in some regards to the end of 2018 where most people didn't recognize that the hold them was almost upon us pretty much. December 18 I think we all accept now. And you know, there was opportunity there. If you look back two years earlier to certainly bought substantially less. A lot of, lot of good properties around. And I think now if you've got motivated owners, cause there are people that get caught in the crossfire, he, the people that have actually bought on the strength of the market previously and took the risk thinking I didn't have bridging finance in place and all of a sudden they're under a lot of stress, but it's a finite group of people that put themselves in that situation. And then there will be some people who basically live month to month on credit card and begin to feel the pressure at some point that will come on. But it's not a uniform. He said, I mean it's not like we want to straight, you're going to have everybody. So

Shane Oliver: No you want it. Most people want to do anything nice. People will still, even if unemployment goes to, looks like worst case, we get to 20% I get to send it there, we'll still have a job. I will keep going. But then that's an and I think you're going to say that, but 

Chris Bates: But some areas will get a lot more than 20%. So I think, you know, there's obviously the property market, but then within that, as you know, cities, none within the cities, there's inner ring, middle ring, outer ring, and then but then there's also kind of regional areas as well. I mean, what parts of Australia do you think that are not going to be able to bounce back? Say you know, the services industries in the capital cities, but you know, like tourism areas and things like that. What areas do you think are really gonna tight? You know, find out how the next, you know, coming period.

Shane Oliver: Oh, I think retail is probably the most at risk. Yeah. We were going to be going up eventually to restaurants and cafes again, and we're going to go on holidays and we got to use personal services like beauticians and others and go to the gym and lots of stuff. But one area that might take longer to recover is retailing. That's, that's probably the most at risk sector. Who is already struggling a bit with the shift to online. And this will probably accentuate that to some degree. And just as the rosin EOC Dola did a decade or so ago and we, we discovered how cheap things can be online. You know, this, this will push a new group of people to, to online purchasing as well. So we'll take a bit longer to recover than the rest.

Veronica Morgan: Will it recover though? Will it have to reinvent itself? Because I mean, even online was actually pretty soft before this.

Shane Oliver: Yeah, it was, well that was because the economy generally was pretty soft. So people would decline discretionary spending. Now they cutting discretionary spending. I think it'll survive, but yeah, it does have to reinvent itself. And it's not, shopping centers aren't doing that, so they, they become a destination of entertainment. So you go there and you'd do a bit of your shopping, but you also do things that, anytime you and so that's the key to it. So I think it would just have to reinvent itself. And many will do that successfully. Obviously a lot of businesses already had good online presence and they, they will survive. Those that didn't have good online presence, smart struggle a lot more.

Chris Bates: You did an interesting blog, different tact a few years ago that I love, there was basically the common mistakes that investors make. Now they're all good points. That 0.4. I thought it was quite hilarious. She said one of the mistakes is investors rely on experts tell you where the market's going a bit too much. Can you kind of elaborate on that? Because I do think it's, you know, Australians or the world wants to follow experts, but now there are challenges.

Shane Oliver: That's right. No matter how many times I've written that I've even read it whole nuts on it. How difficult point forecasting is in particular, but it's still, they want the point forecast and they wrote them down and then they go into tables and newspapers and then after a year old Saudi guy back inside, he got crisis and he was further away. Even though it's a bit of a pointless exercise in some ways. Maybe I should decide this on the economist, I'll get thrown out of the economist. The reality is that when you make a full cast at that point in time and based on information you have at that point in time and as time goes by, your revise that forecast up or down. Now obviously if we've all had to do that in relation to how this evil pan apps and, but so if you just focus on that point for our customer.

Shane Oliver: So I've got, I've got my expert opinion now, I'll just go on that. It's, it's not going to be that reliable because you know, formation comes in and that that forecast will need revising. The point there is that the reality of a full casting was so easy. We wouldn't be doing this or I wouldn't be doing this. I'd be off somewhere else. Yeah. I used to say in the South approach to make Sam Pinal, but do I want to say I wouldn't want to be in South of France at the moment. You say I'm fine. I'd rather go on throughout the championship, but a full casting is difficult. 

Chris Bates: What do you think some of that nature, the major biases though, that you know, that you're susceptible to? Like I, and like everyone is that, you know, basically means that even forecast is a struggling to process things,

Shane Oliver: Right? Yeah, that's right. Full cast does suffer from the same bosses as everybody else. And one of the worst bosses is to give too much weight to the current situation. So it, things going up and the band going up to a wall and you just see him that it'll just keep going up and the thing's going down. You're just to see him not kick going down or stay down. Another one is to look for we call that and representativeness, you know, boss by the current situation. There's another one way you look for confirming information. So confirmation bias. So you can say this on Twitter, the opinions of people regarding the housing market. If you're a gloomy sort of person, then you just get followers, say to the prognosticators. Yeah. Cause that along with your gloominess. And vice versa for the optimist. So you just want for confirming information.

Shane Oliver: So if you've got a forecast process will go down, then you look for those who confirmed that in that this reinforces your view or not the Rodney's to anchor and adjust and it get some new information. It's, it's actually suggests things that radically changing and I reckon I was subject to a bit of this around my last year. So at my going into my last year, I thought there was quite a bit more downside in Australian property markets. We had the, my election, we had the right tests and so on. And I adjusted my view and said, well, we might be close to the bottom, but I didn't quickly turn around enough. You know, I sort of said, yeah, this, this is a completely new ballgame and we're not going up. I sort of just hedge it a little bit. So that was a classic case of banker and adjust.

Shane Oliver: But just adjusted my forecast a little bit. Gross should have gone on the full lie and said, yeah, we've probably seen a lot of weeks hiking off. And I did that a motto, so lighter. So I've got in there in the end, but anchor and justice, we just incrementally trying to forecast where it's thinking with motion, which suggest a more made for more radical change. Another one is to be overly influenced by the crowds. So when everyone's buying sigh, Lisa getting convinced the only way is up. You I get as much data as possible, I'll be fine. And likewise, everything is doom and gloom like it is at the moment.

Shane Oliver: Anyways, it's all me. A Seattle blend. Me just look at these, the news on the tape and dah, dah, dah. And sometimes we'll get subject to crowd psychology, whereas well the evidence tells us that the crowd is wrong at the extreme. Now when the crowd is the most bullish, that's usually a time when the risk is getting greatest. And when the crowd is most negative and everyone is negative and everyone's sold and that's usually the time when we're getting close to the bottom. So they, I guess forward the main ones they affect, I mean, economists forecast as experts, whatever you call them will get affected by those things. But I try and by looking at, well, look at your history by looking at relationships known to apply between certain variables. I usually cut interest rates that positive for the property market. You're try and buy us, you try and screen out for those biases. And I think the other thing that experts can give you a corner miss can give you some sense of history, critically important.

Chris Bates: If you went back to all the years that you've been doing this as every year, what you think going to happen hasn't happened and what you think might, you know, warden wouldn't happen, has happened. You know, like, you know, we've got CRO and then we've got the bushfires, they've got Trump, Brexit, you know, we could go back every year. You're a debt crisis. GFC. Yeah. 11 tech stocks, like, you know, do you really just every year you just have no idea what's going to happen. And and that's, and that's just one of the real challenges of really forecasting the unthinkable happens.

Shane Oliver: That's right. And it is true every year then something comes along from left field and surprises you and I will not an economist called dr Don STEMI used to call that factorX or still calls that factor X. Ubut, but what I would say though is that despite those things, most of the time it sort of pans out. Okay. Yeah. If you think about the Australian economy, Australian tech does try and share market data back a long time. I can use out of 10, since 1900, it has a positive return. Uso generally things turn out okay. I mean, usually in those okays, I'm surprised at the strength that the market goes up by a lot more than I thought it would. Uthe gummy versus the grizzly, which I do want to go. Yeah. That's another, I liked that one because,uyou know, there's nobody about, now we in gum, you demo grizzly bear, it feels pretty grizzly, but there is a chastity and we could actually be hauling. We manage this well. Uand so therefore it,unot quite as grizzly. It's like the little lollies toast dummy. Not that I've ever had a wbay, but I did say pepper tea, I've never had one.

Veronica Morgan: They will include the links to these articles that you've written on this. Actually in the shy nights fit the spit. It is interesting because, you know, hindsight is so wonderful isn't it? I'm looking forward to 12 months and you look back and say, Hey, you actually didn't predict this until they sort of say bearish.

Shane Oliver: Yeah, that's right. Everything's clear in hindsight. So that's why when people go through these events, they say, well, how come you didn't predict it? It's pretty obvious this was going to happen. It wasn't, did you predict the GFC? Did you predict the 87 grid, blah, blah, blah, blah, blah. And, and if you look back through history though, I mean, yeah, those things seem pretty obvious now that though they happened.

Shane Oliver: But it makes it look more certain that that would happen at any disaster was a certainty. Whereas if you go through all my career, I've had people coming along with absolute certainty saying we're all going to be real this year or next year or next year with that every year there's been a lot of that. And then now we are more exposed to that on the internet. And so we get affected by that doom gloom. In 2016 I remember I was reading articles on the internet. Well, not on paper will qualify. Yeah. He's such the things I've talked about the financial crosses in 2016, it turned out okay. They were convinced that the tribal was going to destroy the world between the Trump and Shauna or the Brexit and Trump getting elected, which was surprises but destroy things. But 2017 was actually a good year.

Veronica Morgan: What are the articles that you've read? 2016 rather? 2016. 2016 was a good year. One of the articles that you've, you've written has got this chart. And once again we'll include the link in the show notes. It's got a chat in there, but the bear markets in Australian shares since 1,908 is very interesting looking through that because I think, okay, well world war two for instance, you know, you've got 61 months, it lasted four, which of course has five new war was six years, wasn't it? You know, and then it fell over that period of time that he's 2% and then after 12 months after the end of the war, it was up 30. But, but also, I mean, cause I was born in, I'm not going to say when I was born, I think everyone's probably guessing if they're missing this podcast enough, but I certainly was alive in the 70s, put it that way. And you know, I think this is a 70 to 71. You know, the share market fell 39%. Well, my parents didn't have to sell their house, you know, 73 to 74 share market went down 59%. My parents still didn't have the sell their house. So when he seeks to see, you know what I mean? It's like we all think, Oh my God, this is it. The world's going to end. Actually, no, no, it isn't. We gonna keep living if we get

Shane Oliver: Bad things happened around that 59% full in the 70s. It held this paid is said a lot from Hawaii in January 73 when the market peaked. And then some people say you put on right on and really delay that and lift the building. I'm still the buddy that one as well. And they, and in my fabric she had the Brady bunch was candied 74, which was the font and I only call them for the Shamrock. And but anyway, they all notice things. It wasn't the end of the world. My parents kept their house. I think somewhere in that period, my father managed to eliminate his days, which he'd taken out in 1956. And so we, we survived it even though it didn't feel terrible at the time. But that's a big point actually.

Chris Bates: I think a lot of people were in, you know, more lower debt versus income. So they were being able to get on their mortgages a lot more so that potentially would have been a lot less debt over those years.

Veronica Morgan: Potentially a different world. But I mean the point I want to make is that we are going to continue living. It's like when I watched nine 11, you know, I was like, Oh my God, life is going to change forever and has, but we still fundamentally keep on living and this too, we'll have the same outcome at some point. Well just get on with it and it'll be, some people will be impacted more than others. Obviously we need to be compassionate around that. But the fact is we will keep on going. So what is, what do you say at the end of all of these shine?

Shane Oliver: Well this too will pass. Like all those other things, all of these things is slightly different from the previous crosses. Dials, they'll follow a pattern. You know, there's some horrible shock. Markets come down that affects the economy and can affect the property market. And then you get to a point where the news stocks to become a bit less negative of that. Maybe fingers crossed, Italy starts to get its cases. I'm in control if I can then might a weekend. And then eventually, you know, the, this, some medical and bots antivirals vaccines or we just managed to get it under control. And so we can relax the shot. Dan's a little bit and then we will start to recover again. And then in a couple of years time we'll be talking about something very different and we'll move onto the next the next thing and it will become part of the history books.

Shane Oliver: I will just update that little table there of a share market bear markets and we'll know there whether it's a gummy or a grizzly or that period and it will be a tough time. But yeah, you're right. We will move on the history of the Shamrock and if the Australian property market, which incidentally you have similar longterm returns once you allow the dividends and a range and a lap across and so on. The history of those things is that they have occasional setbacks. I think one of the worst setbacks in Australian property market was in world war two. It started to come down through the grant depression, but obviously the property market was hit in world war two, particularly when the midget submarines broken to Sydney. I know the people in the Eastern suburbs said, Oh, gee whiz, we've got to get outta here. And they sold up in the barrel.

Veronica Morgan: This is a great show. I'm on ABC. Well, it was a great show and it's called who's been sleeping in my bed? And it was, it's hosted by an anthropologist. Hey, did a story on this. This Pennington a terrorists. These people had these old house and they want to know the history of the house. And he discovered that was a, there was a Jewish couple of childless Jewish couple who at the, when the mids, you know the submarines coming to Sydney Harbor and everybody freaked out. Now the DVDs, this is a great, actually really good precursor to these because everybody freaked out and went, we're all going to be coming, you know, settle out in Japan and they filed out of the property market and frogged all these properties and these, these couple boats, something like 90 a lot anyway, of terraces in Paddington for bog and Viceland processes and they still had all these properties. 50 60 years later, you'll have them all rented out there. I would maintain them all themselves know very, very frugally themselves. And the reason that Paddington is so well preserved in terms of all these rows, terraces basically because this couple owns so many of them because they had cash at the time. When else was panicking

Shane Oliver: Biling out of the market. Wow, that's amazing. I should try giggle that. No said fun. Now look that, show up. See if it's still.

Chris Bates: So shy. And you just mentioned that a K. Dot. Points you're watching, you know, easily, Mmm. You know, maybe a vaccine or some type of medical sort of a solution, you know. Is there any other things that you're thinking that the media is not really watching, but you'll Connie in the background sort of, ah, digging a bit deeper on to kind of say when things recover or showing signs of probably further distress.

Shane Oliver: Mean, just to run through a list of things, obviously number of new cases granted borrows. I think there's a Kate watch here in the SARS episode. Shane market's bottomed out and then eventually economies in Asia hit their low once the number of new cases that peak. So you can still have a rise in cases, but if you get a peak in the number of new cases, that can be a very positive sign. If we get any bottles come along or accelerated backstage and that would be extremely positive. Yeah. Italy I think is the one to watch right now. And then following that spine obviously the U S they keep an all in there, but they're a bit on this one because it affects confidence globally so much. And also Australia a kind of a little bit better in Australia lightly. Hopefully that continues. Uthen I'd be watching,uobviously economic indicators. Uyou look at,uChina for example, some of the best ones to watch word track of congestion or people riding subways. You know, once you started to say more traffic out there as the shutdowns start to eventually relax a little bit, then that will show that people are getting back out there and said, we'll get to a point way economic activity will deteriorated a lot, but we will then start to grow again.

Shane Oliver: And that's, that inflection point I think is a key thing to what she also watching the unemployment rate very closely. All right. It has such a psychological impact. I think if we can keep that below 10%, it's going to rise. If we can keep that below 10%, that would be a very positive sign for Australia. I like to watch what we call credit spreads. That's the gap between the amount of money a corporate can borrow went versus the government can borrow when those spreads have blown out in recent times. If we can get that back in, that's supposed to do song that the money is still flowing to corporates. And obviously the stimulus measures, you know, we've done a lot there, but if I keep iterating to improve things make it easier. I'll be saying I've made it easier for people with mortgages, businesses, large time. It's they will, there is also now going to be an issue for landlords with tenants. Obviously I'd send to Mike lock ESEA for those tenants who were having trouble in terms of paying the rents that we'll say we need to consider whether we can do more for landlords. It's a potential issue and us the space. At some point we models, I need to provide a bit more help to the household sector in Australia to sort of get them, get them spinning again when the time comes.

Shane Oliver: John lye. Yeah. Bon lodge. I'd say that the things government has done have been pretty good. So he runs through all of those songs. He attend sided Ross and penalty positive signs in France, Italy. And then we'll sit down the bottom there and be to government action to help limit the full act from old days.

Chris Bates: Every week we hear incredible stories of the dumb things, property buyers do, dumb things that end up costing a whole lot of money and, or a whole lot of stress mistakes that can be avoided. Please Shane. Can you give us an example of a property Dumbo? We can all learn what not to do from these stories.

Shane Oliver: But I'll, I'll give you my own story. I happened to buy into the Sydney property market and the house I'm sitting in now in 1995 and it was a time when interest rates had come down. It's really the early nineties recession then, and then going back up again that Rebecca talked about Tampa saints and it was the middle of winter. The Hasset passed it an auction. And it was I think one of the best purchases I'd ever made. Cause I'd just just haul lots to may the importance of, you know, when no one else is buying cars is driving along with my mother. My father just passed away at the top driving along with my mother. So this open house went in there and no one else was there. There was the agent there and he told me how much they wanted for and I thought, gee, it's almost affordable for me.

Shane Oliver: And I just think, geez, how lucky I was with that. But it just highlights the importance of buying when no one else is around. When the crowd is gone, when you've got plenty of time to think about it and do the tricks and all those sorts of things along that beef on it. Which I think is incredibly important. I have heard stories. You've got people who've gotten, you know, over the head with too much debt and then have to offload often the unreasonable process. But the trick for me is, yeah, make sure you don't take on too much debt and wherever possible look to try and buy in when, when others are.

Chris Bates: It's a good point actually because I think you're right once when the market's hot or frantic and find buyers in the market and you've got lots of paper though have missed out on lots of properties and are frustrated and desperate you kind of have to conform with that. And I think you become desperate as well because everyone else is acting like that. And then we then do is you end up buying the wrong property cause you rushed it or you don't do your checks and your building and pest and you potentially overpay because you're so fearful of losing it again. So this is going to be one of the positives over this period is you might have a lot less people competing with you, which allows you to make it much better, say, more informed decision. Would you agree Veronica?

Veronica Morgan: Absolutely. And we've seen that too. I mean we price you know, we go through a very rigorous processing process for every property that we evaluate. And, and when the market's rising, we know that if this competition allowed to generate, then it's going to push it to the top of that range may be involved. Whereas now, because there isn't the competition there, and it's not to say that people aren't making offers, they are, we've seen quite a lot of transactions, but there's, the competition has taken out in terms of there's a whole layer of BAAs that I'm getting access to the property or decided to wait. And so therefore there's not that frenzy. You've got more time and you know, it's more likely you've been abroad that property at the bottom end of that range or in some cases underneath depending on how panicked the owner is or the, or the agent for that matter.

Veronica Morgan: So absolutely. I've seen that. And, and also also, I think that's a great point there, Cheyenne, about, you know, taking the time to do your due diligence. You know that when we see FOMO at, at at its heart, I haven't said that actually I'll go to a bit of a Dunbar. I'll talk about yesterday. So clod Ahmad had their property on the market for sale whilst simultaneously looking to buy and they actually needed to sell first. And so I've been coaching this through this the whole time going, you know, yes we can find property and we can be ready to buy that property, but you can't go for it until you've actually sold. And so they had an offer on the property, they are home yesterday morning with a cooling off period and the property they wanted to go for was going to walk to the lesson five days.

Veronica Morgan: And so that's the sticky point. You can't go for it. They have another buy goes through in the afternoon. The agent takes his buyer through is a bit of a bit of a Dick swinger, you know, somebody can buy. And so he's going to show how goodies and say, Hey walks through these property. And because he's told another buyer's got an offer on it, he's like, well I can it, I'll come out on conditional cause on. I'm pretty good. And goes into the agent's office straight after the inspection rings, the solicit, it shoots the contract over, I guess it reviewed, comes back with a 66 w which means you can buy it unconditionally buys it all in the spice, a couple of hours of first seeing it now building and pest inspection. No real thought about what is, you know, it's phenomenal and it just sinks. So even in this market you've got people who are so cavalier that they don't do their due diligence. So there's a good Dumbo for you anyway. Delighted clients. We actually secured a great property at a really reasonable price. At the end of the day they did two transactions in one day. You know, and I think their bar was an idiot. But that's who Kay is.

Chris Bates: Thank you. Shine fear. I'm Tom, we really appreciate it.

Shane Oliver: Great to talk to you. Thank you very much.

Chris Bates: We want to make you a better elephant rider. And this week's elephant rider training is

Veronica Morgan: Well following on from that really great, very interesting. Interview with Shane. I would say we just have to remember to keep calm and carry on. I mean, one thing that's really clear from all these is that things do ultimately get back to normal. And if you are in your own home and you're happy in your own home and you can afford your own home, stay in your own home. If you need to upgrade, well, look at your life plans and actually what you need and stay the course. I mean, this is not about knee jerking and the world is not going to fall off the end of a cliff. You know, I make sure, obviously it's easier if you're in a good job and you've got good buffers in place and all the rest of it. But I just think really the boot today is really keep calm and carry on.