More than 80 per cent of Australian real estate agencies are confident in the business landscape going forward, according to new research.
Data from the new Optus Business Real Estate Industry Pulse 2022 report showed that despite a challenging end to 2022, the industry remains optimistic.
Optimism is highest in Western Australia, where 100 per cent of those surveyed said they were either very confident or quite confident about the business outlook.
Nationally, 81 per cent of agencies surveyed are confident about a successful year.
At the opposite end of the scale, 26 per cent of real estate businesses in South Australia and the Northern Territory said they were not at all confident or not very confident about the year to come.
“The size of the business also influenced opinion and confidence,” the report said.
“Of the largest companies surveyed, 97 per cent are very confident or quite confident. These numbers change for the small real estate businesses surveyed (with between one and four employees) where 80 per cent were confident about their prospects in the year ahead, and 1 per cent were not at all confident.”
The research, which was conducted by ACA research on behalf of Optus Enterprise and Business in partnership with the Real Estate Institute of Australia, showed the potential impact of interest rate rises on the market and business activity were key challenges for between 16 and 18 per cent of respondents.
Time management (25 per cent), economic uncertainty affecting demand (24 per cent), and mental health (24 per cent) were listed as the biggest challenges to meeting business objectives.
More than one third of those surveyed said they planned to grow their business in the next 12 months, with 11 per cent tipping a significant increase in profits, while 40 per cent expect a slight increase.
Just 1 per cent anticipate a significant decrease in profits, while 16 per cent expect a slight decrease.
Sean Casey, Vice President Customer Care, Enterprise and Business at Optus, said in his report overview that economic conditions had moved against the industry since the initial post-pandemic rebound.
“Whilst the real estate industry averaged 1.5 per cent growth per year between 2017 and 2022, the first increases in interest rates in 12 years by the Reserve Bank of Australia have had an immediate negative effect on house prices and sales, he said.
“Yet optimism overall remains high amongst those surveyed. Many are planning for growth over the next 12 months, and consideration for advances in virtual technology and artificial intelligence (AI) is on the rise.”
The report showed growth was less of a focus for smaller companies employing between one and four people (35 per cent) but was much more important to the larger companies (between 61 per cent and 67 per cent).
“Half of all those surveyed expect to invest and grow employee numbers as well as grow revenues,” the report noted.
“For example, 52 per cent expect to increase capital expenditure, and 49 per cent expect to add employees to their businesses.
“At the same time, 50 per cent expect to see operating costs increase: real estate businesses are prepared to invest to grow, and appear to be comfortable in absorbing the necessary increases in costs and investment.”
The report showed that 39 per cent of agencies surveyed regard technology as extremely important, while 89 per cent say it is important overall.
“Technology is recognised as an enabler of efficiency, cost control and business growth leading to improved revenue,” the report noted.
“What’s more, technology is increasingly regarded as being strategic, going beyond immediate savings in time and improvements in efficiency.”
There were also several barriers to introducing technology, with 37 per cent of respondents saying there was no demand for it, while 36 per cent said it was hard to integrate with existing IT solutions.
Issues relating to data security and privacy were also an issue (30 per cent).
“Businesses are tackling these issues: 51 per cent are investing in training designed to streamline the transition to new technology, 42 per cent are forming strategic relationships with trusted technology partners, and 34 per cent are completing training for their employees regularly,” the report said.
“Inevitably, larger businesses adopt new technology sooner than smaller companies, with over two-thirds of all medium and larger businesses considering themselves leaders when it comes to adopting new technology.”
The report also revealed 78 per cent of businesses surveyed continue to be concerned by the threat of cyber attacks, with 22 per cent of respondents saying their businesses were very secure.
This report was based on a survey of over 400 respondents in the Australian real estate industry. All businesses had between one and 300 employees (the data has been weighted by location and number of employees to provide a true reflection of the Australian real estate industry). Of those surveyed, 77 per cent were either business owners, CEOs or CFOs.