Bill Evans is Westpac’s Chief Economist, and has been so since 1991. As identified in our video, he is known for being clear and fearless in his predictions.

I was fortunate enough to hear Bill speak at this morning’s Westpac Property Breakfast. This article is intended to pass on the insights gained in order to help our community make better decisions in the short to medium future.

Rate Cuts

Evans pointed out that the RBA Governor is willing to cut rates down to 0% eventually. This will depend on the reaction from other central banks around the world, such as the Fed. We are already seeing negative interest rates in Europe!

In Australia, further rate cuts are expected in October 2019 and February 2020 by Evans.

In the USA, Evans believes we will see cuts in September, October and November!

Photo of the Best Rates


“I don’t see a recession happening in the USA” was the opinion. Obviously this has been discussed a lot lately with so much happening across the world and in the US. “Those people who say there is a 40% chance of recession… if a recession happens they say they predicted it. If it doesn’t, they say ‘well that wasn’t even my major position”.

Thank you Bill Evans, for your directness.

“Those people are useless”.

Many look at the US’s inverse yield curves as a sign of trouble, but Mr. Evans interpreted this as the attractiveness of US bonds to international investors. As he puts it, these look a lot more promising than other alternatives internationally.

Currency and the Dollar

The Australian Dollar is predicted to continue to lower in relation to the US Dollar, down to around 0.66 in 2020. This is making attractive commercial property investment in Sydney and Melbourne. As valuations are favorable on these markets, a weaker Aussie Dollar will create incentives for foreigners here.

The Euro is also expected to fall in relation to the US Dollar. Sounds like a good time to stock up on some USD!

Australian Economy

Two big areas of concentration are poor wages growth and unemployment numbers.

Wages growth is required for consumer spending to rise. Consumer spending increases business confidence. This in turn drives the economy.

The savings from interest and tax rate cuts will bolster household incomes, but this is likely to be allocated towards debt. Consumer spending will not be bolstered Evans believes – in fact consumer spending will continue to be weak.


The sharp increase in auction clearance rates post election in Sydney and Melbourne is very predictive according to Mr. Evans. It indicates the recovery is likely stable and here to stay.

Sydney and Melbourne prices have steadied since May, and increased by 1%. Some outlets are predicting 10% increases in prices in Sydney over the next 12 months. Evans strongly disagreed with this idea, and few could doubt this stance. Increases of this size would not be sustained as affordability thresholds would hamper these gains.

The consistent story for price changes is a period of steady growth, which seems highly likely. The downturn does appear to be behind us.

Population Growth

Population growth remains strong in NSW and will remain a positive driver. The economy is driven by productivity and population growth. For NSW, this migration comes internationally of course.

Population GrowthInterestingly, Evans predicted when the impact of migration on prices would really be seen. Forecasts at the moment are that construction completions will level off in the middle of 2020. After this we can expect to see stronger demand as a result of strong population growth.

Rental Market

Sydney’s rental market is in it’s worst state since the early 2000’s. Vacancy rates are at 3.3%, and we are noticing this directly in our office. Despite this our property management team have had some properties leased off first inspections. But this is only when prices are correct at the start of a campaign.

Otherwise we’re seeing old apartments in particular suffer from longer vacancies and days on market. Based on the insights from the Breakfast, we see this picture changing once construction completions level off in the middle of 2020.

Summary – what does this mean for me?

If you are looking to buy in Sydney, the next 12 months seems like a great time to do so. Particularly if the rental market is rectified to help with those holding costs.

This doesn’t shift my opinion in terms of what to buy though – check out our resources at Sydney Listings for guidance on good area features and property features.

If taking advantage of low interest rates, make sure you allow a buffer but we don’t expect a sharp rise any time soon. It never makes sense to be fully leveraged, especially when there is uncertainty in other areas of the world economy.

By Joe Wehbe