The Block auctioneer Tom Panos claims many Australian real estate agents won't survive as rising interest rates sink the property market - as Sydney and Melbourne's home values suffered their biggest falls in two years.
The Reserve Bank of Australia is widely expected to raise interest rates on Tuesday - the first increase in more than a decade - in an attempt to arrest surging inflation.
As rates rise, demand for property falls, leading to a reduction in real estate values.
Data from CoreLogic showed the Sydney median house price fell 0.1 per cent in April and by 0.3 per cent for the quarter to $1.417million, while in Melbourne prices fell 0.2 per cent in April and 0.5 per cent for the quarter to $1.001million - the biggest falls since the Covid pandemic lockdowns in 2020.
Mr Panos warned that he is already seeing property values drop 'in real time' - with homes that would sell for $3million already selling for $2.5million.
'The drop is happening,' he told Daily Mail Australia.
The property expert warned that a rise in interest rates could also be bad news for two groups of people: mortgage-holders, should interest rates start to soar; and those he calls 'real estate backpackers', people in the industry for short term gain.
The Block auctioneer Tom Panos has put Australia's real estate agents on notice with experts tipping the Reserve Bank of Australia will raise interest rates on Tuesday
Mr Panos said he has already seen the market in the two major cities fall between five and 10 per cent and warned 'real estate backpackers' their time is up
For customers, Mr Panos said as rates go up, fewer people will be borrowing less money, which will see prices for vendors decrease.
'You'll also see as rates go up, which is forecast to two per cent, that's when you cop it as a customer,' Mr Panos said.
'You'd have been on a low rate, but as rates go up, you're in for really big payments.'
For real estate agents as a whole, the shift could send some agents packing.
'Real estate has a low barrier to entry. You could be sweeping the streets, go off and do a short course, and you have the qualifications to be in real estate,' he said.
'When the market gets good, people get attracted to real estate; to the flash cars and Hugo Boss suits. But when the market changes they run for cover.'
Mr Panos said he had a strong sense for 'commission breath' when working with new agents, adding he won't work with people he thinks are only in it for short-term money.
'They were always real estate backpackers. They want to go in and make short-term money,' he said.
'I can smell very quickly if they've got 'commission breath' and they're only focused on how soon and how much money can they can make. I dismiss them.'
The auctioneer for The Block, who has worked in the industry for 35 years, said 'solid agents' should see their market share grow because they have long-term goals and stability that 'Instagram agents' don't have.
'It's like Warren Buffet said: 'Only when the tide goes out do you discover who's been swimming naked',' he said.
Mr Panos is the millionaire auctioneer featured on Channel Nine's The Block
Real estate data group CoreLogic on Monday revealed the first quarterly drops in the Sydney and Melbourne property markets since mid to late 2020, when the Australia suffered through lockdowns and a ban on open homes and public auctions.
The downturns were the steepest since the era before the Reserve Bank slashed the cash rate to a record-low of 0.1 per cent.
But with inflation surging by 5.1 per cent in the year to March - the fastest annual pace since mid-2001 - the Reserve Bank is widely expected to raise interest rates on Tuesday.
Three of Australia's Big Four banks - ANZ, Westpac and NAB - are expecting a May rate rise, which would be the first from the RBA since November 2010.
Someone buying a $1million house with a 20 per cent deposit would owe the bank $800,000 as a new borrower.
A small 0.15 percentage point rate rise, as predicted by the banks, would see monthly repayments climb by $62 to $3,137 as the cash rate rose to 0.25 per cent.
