Even in the face of continued rate rises, the real estate market is defying the speculators and pessimists.
We have seen a return to peak prices in Perth, Adelaide, Brisbane and Darwin, and there is anecdotal evidence that in some suburbs, we are now seeing new record prices being achieved.
It’s hard to believe, given the rollercoaster ride we’ve been on in the past 12 months.
Predictions of Australia following the case of New Zealand, which has seen in some parts of the country, an approximate 35 per cent correction, for now have been staved off.
The biggest challenge we are seeing play out in many real estate businesses is a painfully low number of listings coming to market and existing stock levels are depleting.
There are a couple of factors that are driving this.
The first is that we are still waging the war between reality and perception.
I live in Adelaide, one of the above mentioned cities.
Stock levels are brutally tight, causing compromised behaviour, yet buyer and bidder activity is very strong with an average of 7 registrations at auction.
Interestingly, I had a conversation with a local who upon learning about my industry commented on how bad the real estate market is.
Why is this so?
Sometimes we forget when we sit at the coal face of the market that the public aren’t aware of the market nuances, and national media reporting may not reflect the reality of local real estate trends.
I think we also forget how important our individual influence can be and how absolutely necessary it is to take control of the current market opportunity.
Are you reporting your activity to your community? Enquiry and open inspection numbers, bidder activity, sale results.
Each of these factors are the credible currency that you must use to create opportunities.
In February this year, an agent who sold me an investment property in 2021 called me to advise me of a relevant, recent sale in the unit group.
Before the call, my intentions for that property were long-term, believing the capital growth potential would be minimal in the short-term.
After the call, I began running the numbers and considering my options.
Cut to today where the property was styled and photographed in preparation for a full auction campaign.
Without that influence from the agent, I would be happily holding the property with no intention of selling.
In my case, the motivation was a positive one, we are the lucky beneficiaries of a healthy market.
However, while the motivation may not always be positive, there are many purchasers who entered the market within the last two to three years, encouraged by record-low interest rates who can not manage to maintain their commitments to their mortgage repayments.
Are you staying in touch with this group of past clients?
The other major contributing factor to low stock levels is the lack of stock to buy creating a blockage for buyer-sellers.
This is one of the biggest hurdles to overcome in the current market and while you won’t necessarily encourage all sitting within this pipeline category, it’s absolutely essential to do your best to take these properties out of the market.
That may seem easier said than done.
For anyone that is waiting for something to buy before they can sell their home, I recommend employing the ‘strategy meeting’.
The strategy meeting is an opportunity to get back into the living room and explain the complexities and high pressure that comes with buying and then preparing the home for sale, and how you can assist with their preparations and minimise their stress.
Advising that you can have the property photographed and lined up in the background so that when they do find their next property they are ready to shift immediately to being on the market, minimising their lag period between purchase and sale.
The intention of the strategy meeting is to list the property, take that pipeline seller out of circulation and help them step towards moving on.
Below is a checklist of actions that you can employ to add value to buyer-sellers and help them move through a very difficult market with low stock numbers.
- Send them all relevant listings that are available in the market. Even if they aren’t your stock, you may see something that they have missed and this will be highly valued.
- Take them to inspect property, possibly help them broaden their net and consider other property styles or locations.
- Invite them to any relevant listings in your business that are similar to their homes, helping them understand how to best present property and for them to see interest level from local buyers.
- Encourage them to list the property in readiness for their move, ensuring you will hold it in the background ready for them to launch when they find their next home.