The latest edition of Between The Lines Live, hosted by Ray White head of research Vanessa Rader, brought together Peter Vines, Director of RWC Western Sydney, and Domenic Lo Surdo, Group Executive Chairman at Stamford Capital, to explore the outlook across key asset classes, lending conditions, and shifting market dynamics.
Lingering caution despite rate cut hopes
Reflecting on the final stretch of the financial year, Peter Vines noted a spike in transactions driven by FOMO.
“People were concerned they’d be missing out,” he said, referring to the late rush in activity.
However, the momentum was less about renewed confidence and more about opportunism amid uncertainty. According to Mr Lo Surdo, market expectations were ahead of reality.
“It was a bit of a false start,” he said. “A lot of people thought interest rates would fall dramatically, and that just hasn’t happened. It’s been a low-activity year and confidence remains soft.”
Ms Rader added that nearly 97 per cent of people believed there would be a rate cut in July, a belief that didn’t eventuate. While there is some anticipation around a potential August cut, Mr Lo Surdo isn’t convinced it will be the confidence boost many are hoping for.
“Even if rates drop, it is uncertain whether it will stimulate a whole lot of confidence in the market.”
Mr Vines agreed the market may see a mild uptick in transaction volume. “Buyers are sophisticated now. They’ve been burned in recent years and are extremely cautious, deals need to be squeaky clean before anyone commits.”
Employment, AI and a shifting labour market
The discussion also turned to employment trends, with Mr Vines noting an interesting disconnect between corporate layoffs and broader unemployment figures.
“We’ve heard about significant layoffs at property firms and banks, but unemployment hasn’t risen as much as we expected. It feels like more of a natural progression.”
Ms Rader acknowledged that many highly skilled professionals are actively looking for work, while Mr Lo Surdo pointed to an impending shift in labour dynamics with the rise of AI.
“We haven’t even felt the full impact of AI yet. When it really hits, we may see unemployment rise. It’s a balance that businesses need to be thinking about now.”
Yet, not all signals are negative. Ms Rader observed a revival in office attendance, particularly in Sydney. “Trains and the city streets are noticeably busier - people are returning to workplaces, which is a good sign for the office market.”
Residential: Hope meets hard reality
Turning to residential development, the panellists painted a complex picture of potential and challenge.
“If we start seeing revenue growth in the mid-market, some of these stalled developments will start activating,” said Mr Lo Surdo. “At Stamford, we’ve extended loans on existing sites because developers are showing renewed confidence.”
Ms Rader acknowledged the longer timelines in development. “It now takes significantly more time to get a project off the ground. All the checks and balances are necessary, but it has to be factored into feasibility.”
Mr Vines commended the NSW Government’s planning efforts but warned that location remains a critical issue.
“The LMR changes are intended to deliver housing, but not necessarily in affordable areas. We risk oversupply in affluent suburbs - $10 million units that most can’t afford. Growth needs to come from middle-ring areas like Homebush and Sydney Olympic Park.”
He also raised concerns about the increasingly complex development environment.
“Builders and developers are facing too many hurdles. These are the people delivering our essential housing-government needs to make it easier, not harder.”
Mr Lo Surdo echoed the challenge. “We ran a capital markets survey - 97 out of 100 respondents wanted to do more. But feasibility is the issue. Until revenues improve, we won’t see a major shift.”
Still, there’s optimism. “If a project stacks up, capital is available - and at increasingly competitive rates,” he added.
Retail resilience and the rise of non-discretionary assets
Retail has been one of the more resilient asset classes, with strong transaction levels and a steady investor base. “The fundamentals look solid,” said Ms Rader, opening the discussion on the sector.
Mr Vines agreed: “Services, food, supermarkets - these are still performing well. Things like fashion are tougher. But street-front owner-occupiers are achieving good rates and doing well.”
Mr Lo Surdo highlighted strong support from finance markets for non-discretionary retail.
“Even large format retail is holding up. Yields have remained pretty firm.”
Childcare, liquidity and investor strategy
The panellists also touched on the childcare sector, which has experienced fluctuations but remains a popular investment.
“Childcare is a very understandable product - long leases, no land tax,” said Vines. “But due diligence is key. In Western Sydney, we’re seeing a lot of new centres. You have to ask, does the area justify the investment?”
He noted strong liquidity in the sub-$5 million market. “That sector is very active. Between $5–7 million it’s still strong, but above $7 million, it becomes more complex and the buyers are far more sophisticated.”
What’s next for the year ahead?
As the conversation wrapped up, Ms Rader asked both panellists to share their market outlook for the next 12 months.
Mr Vines doesn’t expect land values to improve in the short term. "People are borrowing at very high rates and can’t hold land indefinitely. Good assets will remain good. In industrial, we’re seeing more demand for refurbishments. Buyers are focused on controllable, quantifiable profits.”
Mr Lo Surdo is holding firm on industrial and retail. “We’re seeing assets trade at replacement cost. If you're a long-term buyer, it’s a great time to invest. I believe we will see rents come up. I also hope we see more residential development kick off - not just for the market, but for the broader economy.”
