Where The F... Has All The Money Gone? With Tarric Brooker

Summary

The discussion argues that Australia is facing simultaneous pressure from weak growth, household strain, persistent inflation and a deteriorating housing market. The presenters question how large increases in government revenue and borrowing have translated into limited improvement in public services, infrastructure or household wellbeing.

Macro and fiscal outlook

• Australia reportedly received about $400 billion more government revenue than forecast—described as a “revenue rainbow”—and collected an additional $80 billion in tax, yet economic growth was weakening. The presenters argue some of the windfall could have gone toward debt reduction, infrastructure or other long-term investment.
• Unemployment was reported at 4.7%, earlier than the RBA had projected; the RBA had expected that level around March 2028. The speakers cautioned that employment survey figures are subject to substantial revisions and measurement uncertainty.
• Recent employment reports reportedly showed 17,000 jobs lost in July and 39,000 in September.
• Inflation remained above target: headline inflation was 4%, while the RBA’s trimmed-mean measure was 3.6%, against a 2–3% target range. The RBA therefore faces a conflict between containing inflation and limiting further labour-market deterioration.
• Energy costs and domestic inflation were identified as risks that could keep inflation elevated, even as higher rates and falling housing prices weigh on households and activity.
• The presenters criticized the composition of government spending, arguing that borrowing is increasingly supporting day-to-day expenditure rather than investment. They said public infrastructure investment as a share of GDP was about 50% higher in the 1970s than today, despite current population pressures.
• They also argued that Australia’s working-age population growth is now much more migration-driven: migration accounted for 62% of growth in people aged 15 and over, compared with an average of about 32% from 1981 to 2005. They said infrastructure and services have not kept pace with population growth.

Housing market and financial risks

• Australian housing was described as tracking the early stages of New Zealand’s housing downturn. New Zealand prices were said to remain about 20% below their peak after five years, though the comparison depends on the measure used and is not adjusted for inflation.
• 82% of areas were reported as having falling prices over the period cited. Some local markets were already down around 20%; the speakers stressed that national averages conceal much larger postcode-level declines.
• Sydney auction clearance rates reportedly reached their lowest level since SQM Research began recording them in February 2022. Auction volumes in Sydney and Melbourne were still around 25–35% below normal, which may be supporting clearance rates relative to what they would be at typical volumes.
• Property transactions were described as unusually depressed: roughly 4.5% of housing stock was selling annually, compared with over 9% in the late 1990s and early 2000s. Lower turnover also threatens stamp-duty revenue and spending tied to home moves, such as furniture, appliances and vehicles.
• The speakers warned that price falls can feed back into weaker consumption, construction and employment. They also noted that land values could fall, weakening the argument that construction costs create a firm floor under existing home prices. As a historical comparison, US residential construction value reportedly fell 64% from peak to trough after the Global Financial Crisis.
• Housing-price index revisions remain a concern. The presenters said recent revisions reduced capital-city estimates by about 1.5 percentage points over two months, with more severe revisions in markets where prices had turned sharply. Index data are incomplete and lagged: around 50–60% of transactions may flow into an index in a typical month, while sale data can lag by 40–42 days.
• S&P Global default data were described as rising, with the presenters noting a lag between mortgage stress and missed payments or defaults. They suggested this can take months or longer to show up in arrears data.

Scenario analysis discussed

Tarric Brooker presented a sensitivity exercise, not a forecast: if the recent 30-day pace of price falls continued, five-capital-city prices would be down approximately:

• 10.3% by year-end
• 14.6% after six months
• 22.2% by 14 October the following year

The speakers said such a path might prompt government intervention or RBA easing, but emphasized that the scenarios simply extrapolate recent conditions and are highly uncertain. Martin North separately described a best-, base- and worst-case approach, with roughly 10% to more than 20% falls in the latter scenarios.

Property investing and first-home buyers

• Investor lending growth was reportedly down nearly 20% year on year, but investor lending’s share was still higher than during 2017–19. A hypothetical return to early-1990s investor-loan levels could remove close to two-thirds of investor demand; Brooker presented this as a thought experiment, not a forecast.
• The presenters expect investors to adapt rather than disappear, potentially focusing on properties where rental yields and zoning allow additions such as granny flats. They cautioned that higher rates and uncertain policy make investment-property purchases less predictable.
• Martin North distinguished gross rental yields from net cash-flow yields. Gross yields may rise mechanically as purchase prices fall, but mortgage, management and maintenance costs can leave net returns negative. He said his modelling found net yields negative in about 60% of cases, compared with 5–6% returns available on term deposits. He also mentioned the AI sector as an alternative investment area, without recommending a specific asset.
• First-home buyers may not benefit immediately from lower prices if borrowing capacity is shrinking faster. North cited one buyer whose borrowing capacity had fallen 35% in six months, before prices had fallen by a comparable amount.
• The 5% deposit scheme was said to have helped bring more than 100,000 first-home buyers into the market, but the speakers argued that such schemes can bring demand forward and lift prices in eligible segments. The share of first-home-buyer loans using the scheme reportedly rose from just over 20% before the policy changes to an average above 50% afterward. Some buyers may face negative equity if prices fall further.
• Brooker cautioned that tax treatment, including negative gearing and capital-gains concessions, could change at a future election. Both presenters encouraged balanced investment decisions rather than assuming housing prices will reliably double every seven years.

Energy and geopolitical risk

• Attacks on commercial shipping around the Strait of Hormuz reportedly reached new highs, while oil and petroleum-product flows through the strait fell by more than one-third. The speakers linked this disruption to rising oil and diesel costs and warned that energy-price pressure could feed through to inflation globally.
• They argued that prolonged disruption or conflict could have effects lasting well beyond the next few months. No specific oil price or energy-security investment was recommended.

Frameworks and cautions

• Housing-market analysis: Look past headline averages; compare local and postcode-level data, sales volumes, auction activity, arrears and index revisions.
• Investor assessment: Evaluate net cash flow—rental income less mortgage, management and maintenance costs—rather than relying on gross yield or expected capital gains.
• Scenario analysis: Use best-, base- and worst-case sensitivities, and label straight-line extrapolations as illustrations rather than predictions.
• Public-finance assessment: Compare revenue and borrowing with outcomes in infrastructure, services, productivity and household wellbeing.
• Explicit disclaimer: Brooker said the housing scenarios were not financial advice and urged viewers to do their own research.

Assets, sectors and instruments mentioned

• Residential property and land, including investor properties, first-home-buyer housing and granny flats
• Mortgage and investor loans, including negative gearing and capital-gains tax concessions
• Term deposits (quoted return comparison: 5–6%)
• AI sector (mentioned as an alternative investment area, without a specific security)
• Oil, petroleum products and diesel
• Government debt, tax revenue and infrastructure spending

No individual stock tickers or ETFs were identified.

Presenters and sources

Presenters: Martin North and Tarric “TK” Brooker.

Sources and commentators mentioned: RBA; IMF; Australian Bureau of Statistics; S&P Global; Australian Financial Group; SQM Research and Louis Christopher; realestate.com.au; Richard Holden; Chris Richardson; Alan Kohler; Cameron Kusher; Mark the Graph; Commodity Context; Christopher Joy and Mark Bouris; Pew Research Center; Productivity Commission; and the Real Estate Institute of New Zealand.