Prepare for the worst! The end is nigh! These types of comments pretty much sum up the way the news has been describing the current state of the market.
Headlines have been predicting massive falls of up to 25 per cent in house prices, while some commentators are even claiming falls of 40 per cent are on the cards.
Almost everything you read about the market is negative and pushes a tired narrative that strongly suggests the market is on the verge of collapse.
“If it bleeds it leads.”
The news media has always preferred negative headlines but as we’ve progressed into the social media age, where every Tom, Dick and Harry is scrambling for attention and trying to convince you to click through, headlines have become even more sensational.
Just like this article you’re reading now, you’re probably here because the headline hooked you and hopefully this article is keeping you interested.
I’m here because in my role at Market Buy it’s my job to keep Market Buy and its benefits top of mind for you – it’s just a bonus that I enjoy being the voice of reason.
But it all affects our perception of reality. If we’re inundated with negative messaging everywhere we look, we can’t help but start to believe it, which in turn impacts how we act.
The reality of the real estate market tells a different story than the media’s tall tales of doom and gloom.
In fact, we’re experiencing a solid market, it’s not at the record highs of last year, but it hasn’t fallen back as far as headlines would have you believe.
I’d go as far as saying that reality has caught up with sellers’ expectations, properties are still selling and selling well, but we’re not seeing the sale price being as wildly over the asking price as it was last year.
There’s still strong competition for properties and there is still a significant supply and demand issue at play. While interest rate increases will ease the demand issue a little bit, it won’t be enough. We still have huge shortages in the building industry, new houses can’t be built fast enough.
We’re seeing a significant shortage of residential stock for sale as well, so until supply outstrips demand, the market isn’t going to collapse. It’ll have the occasional small correction (think single digit per centages) but it’s not going to collapse.
For the market to transition into a “Buyers Market” there has to be more sellers than buyers looking to buy and that is just not the case.
The proof is in the pudding as it were and a quick look at Market Buy’s figures shows the market is strong, just not as strong as the record breaking highs of 2021.
If we compare buyer activity in the current quarter to the same quarter last year (a record quarter), we can see what is actually happening.
Firstly, the number of active buyers making offers for properties on Market Buy (nationally) has only dropped by 0.3 buyers per property. In other words, nationally, it’s still close to the same situation in terms of how many buyers are out there.
Secondly, the number of offers being made is still averaging over 15 offers per property.
And thirdly, sale completions are up 23.8 per cent on a record quarter in 2021.
To sum it up, there are a similar number of buyers and they’re still aggressive when trying to secure a property.
The supply issue hasn’t been addressed, nor can it be for some time now, interest rate rises will have some small impact on buyers’ abilities to purchase, however that may be offset by buyers who were looking to build, moving back towards the established market.
Without addressing the supply issue, the demand for Australian housing won’t dissipate.
What will happen though, is a return to the typical annual real estate cycle. Covid threw that cycle out of whack and resulted in this crazy record breaking period we’ve just seen.
Moving forward, with interest rates returning to a somewhat normal level, we’ll see the traditional strong spring and summer selling seasons, solid autumns and quieter winters.
It’s easy to forget that we’re currently in a period that’s seen an election, winter and the calming of an insane record breaking market and the media having a field day with doom and gloom predictions – all factors that affect buyer activity in a traditional annual real estate cycle.
Coming back from a record market to a strong or even solid market, is not doom and gloom, it’s normal.
Unfortunately, many agents are dropping their heads and buying into the narrative. The good agents though – the professionals – are not. They’re looking forward to the market we’re moving into, as that is where they really shine.
Good agents are getting prepared. In the last five years the world has become increasingly digital – this move was accelerated by Covid.
Now is the time to upskill, now is the time to really embrace digital and ensure you’re able to leverage its advantages.
Even when the market does shift, being a digital agent will set you apart.
Tools like Market Buy will make buyer and seller management much easier, giving you back time to put more effort into generating new business.
You’ll also be able to leverage your results in Market Buy to pick-up new listings and build better relationships with your sellers.
Communication is so important to the real estate transaction, keeping everyone fully informed in real-time changes the conversations you’re having with qualified buyers and your sellers.
Your sellers see the market feedback on screen in front of them, if they’re wanting $1.2m for a property, but the market is saying it’s only worth $1.1m, that information is being delivered to them in real time as offers come in.
Your conversation shifts to a far more profitable, action-oriented discussion – you’re not spending your time convincing them they need to adjust the price, they can see it for themselves.
With so much doom and gloom about and so many buyers, now is the time for good agents to put Market Buy to use.
While other agents are talking about the market collapsing – agents using Market Buy are demonstrating why they’re a cut above, bringing more buyers into the sale and continuing to create great results, all in real-time.
