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After a record-setting 12 months of house price growth, there are signs that some of Australia’s largest property markets are starting to cool down.
The latest data from CoreLogic shows that both Sydney and Melbourne did not see house price growth in the month of February, while a number of other markets around the country have also started to see lower rates of growth.
Brisbane and Adelaide continue to be the standout performers from the capital city markets with increases of 1.8 per cent and 1.5 per cent last month, while Hobart also powered forward with growth of 1.2 per cent.
While regional values have continued to appreciate, with a sharp 1.6 per cent increase in dwelling values in February - significantly outpacing the combined capital cities that increased by just 0.3 per cent.
Canberra and Darwin grew by 0.4 per cent while Perth had a 0.3 per cent increase in dwelling values.
Sydney and Melbourne saw the softest conditions in the country with values falling by -0.1 per cent in Sydney and remaining flat in Melbourne.
According to CoreLogic’s director of research, Tim Lawless, all areas are now recording a slowing trend in value growth.
“Sydney and Melbourne have shown the sharpest slowdown, with Sydney (-0.1 per cent) posting the first decline in housing values since September 2020, while Melbourne housing values (0.0 per cent) were unchanged over the month, following similar results in December (- 0.1 per cent) and January (+0.2 per cent),” he said.
“Conditions are easing less noticeably across the smaller capitals, especially Brisbane, Adelaide and Hobart, where housing values rose by more than 1 per cent in February. Similarly, regional markets have been somewhat insulated to slowing growth conditions, with five of the six rest-of-state regions continuing to record monthly gains in excess of 1.2 per cent.”
Regional house prices have been strong performers over the past 12 months and increased by an impressive 5.7 per cent on a quarterly basis. However, this too is down slightly from the peak of 6.6 per cent recorded in April last year.
“Regional housing markets aren’t immune from the higher cost of debt as fixed-term mortgage rates rise,” Mr Lawless said.
“These markets are also increasingly impacted by worsening affordability constraints as housing prices consistently outpace incomes. However, demographic tailwinds, low inventory levels and ongoing demand for coastal or treechange housing options are continuing to support strong upwards price pressures across regional housing markets.”
“The slower growth conditions in Australian housing values goes well beyond the rising expectation of interest rate hikes later this year.”
“The pace of growth in housing values started to ease in April last year when fixed-term mortgage rates began to face upwards pressure, fiscal support was expiring and housing affordability was becoming more stretched.”
“With rising global uncertainty and the potential for weaker consumer sentiment amidst tighter monetary policy settings, the downside risk for housing markets has become more pronounced in recent months.”
Total listings are continuing to trend higher, however, overall they are still 13.3 per cent lower than the same time last year. Sydney and Melbourne are the two cities where listings are now back to normal levels, with Melbourne seeing listings 4.7 per cent above the 5-year average.
Mr Lawless said more listings is helping buyers, but there are still discrepancies between states.
“The cities where housing values are rising more rapidly continue to show a clear lack of available properties to purchase,” he said.
“Total listings across Brisbane and Adelaide remain more than 20 per cent lower than a year ago and more than 40 per cent below the previous five-year average. Similarly, the combined rest-of-state markets continue to see low advertised supply, 24.9 per cent below last year and almost 45 per cent below the five-year average.”
Pressure on renters is also still a factor in the current market with CoreLogic stating that rents increased by 0.8 per cent across the country a figure that was the same as January.
The February rise in rents was focused within the unit market with the national unit rental index up 0.9 per cent over the month and 2.4 per cent higher over the rolling quarter compared to +0.7 per cent and 2.0 per cent for houses respectfully.
According to Mr Lawless, this stronger trend in unit rents is most visible in Sydney and Melbourne.
“Anecdotally, demand for unit rentals in these cities has been bolstered by a combination of worsening rental affordability deflecting more demand towards the higher density sector, where rents tend to be lower, and demand starting to return from overseas arrivals,” he said.
CoreLogic notes that many of the factors that have driven house prices to record high levels are now starting to fade. Interest rates are as low as they can possibly go, listings are beginning to increase and the host of fiscal stimulus has now ended.
Meanwhile, the prospect of rising interest rates from the RBA and affordability issues will likely dampen demand.
However, there are also positives as borders are now open internationally, which will encourage people to return to CBDs and inner city areas. Improving economic conditions and higher wages growth should also help to keep a floor under housing demand and distressed property sales to a minimum.
Property prices across Australia have grown by 16.1% over the past 12 months…
In real estate, your name is your brand and unless your brand presents itself as trustworthy, it’s going to be difficult to continue to grow your business.
In years gone by real estate agents have had image issues with trust, which stemmed from a small minority of agents using dubious tactics to win listings and equally questionable sales tactics.
More recently, the industry has changed a great deal, and with data on property prices readily available to both buyers and sellers, the way real estate is conducted is more transparent and fairer than ever before.
With more data and technology at the fingertips of both agents and clients, the agent themselves becomes the differentiating factor within competition. For this reason, respect and trust within agents is more important than ever. Furthermore, it is often the most important factor a vendor contemplates when deciding on an agent.
Here are some things you can do to improve your trust with clients.
Being completely honest with a vendor is one of the most important elements in building trust.
Vendors want to know how much their property is actually worth and what the current market is like for their property. While it might be great in the short term to win a listing by telling a vendor that you can achieve a record price for their property, that will likely only lead to both parties being disappointed with the end outcome.
By being honest and having integrity on all matters, you’re going to be building a reputation for yourself that will resonate within the industry. In the short term, it might cost you a listing, but in the long term, honesty will build trust and set you up for a long career.
Vendors need to know what’s happening throughout the entire process of selling their property. Most really do appreciate all the small details and it’s important that you keep an open line of communication with them at all times. They certainly shouldn’t have to wait more than 24 hours for you to be calling them back.
While different vendors will prefer different forms of communication, be sure to keep them in the loop. That way they feel a part of the process and you are also building your relationship along the way.
Actions speak louder than words, and given the previous reputation of real estate agents, it’s imperative that promises are kept.
Nothing can hurt trust between two parties more than saying you’ll do something and not doing it. Not following through on your word can often be interpreted as a false promise or lying, and in business this can be a deal-breaker.
If you make a promise to a client, ensure you deliver. If you can’t, get on the front foot immediately and let them know why, and what you’re going to do about it.
A vendor doesn’t expect perfection, but they do expect you to be proactive and to stick to your word.
We all know that real estate agents are busy and are often on call seven days a week. Regardless, it’s still important that you always act promptly when someone reaches out to you. Even if you can’t resolve the issue that is being brought to you at that time, acknowledge the vendor and their problem, and provide them with a timeline of when you can get back to them with more capacity for problem solving, or perhaps even come back with a solution.
Simply getting back to someone's SMS, email or phone call gives the impression that you genuinely care and are proactive. From a vendor's point of view, they want an agent who is there ready to rally as many buyers as they can for their property.
With so much focus on making sales and winning listings, it can be easy to forget that you are dealing with real people who have genuine problems and are often going through big life changes.
Listen to what your clients are telling you and then do your best to solve the problem for them. Just the act of listening to someone immediately builds rapport and trust because so few people genuinely listen to others in a meaningful way.
For fast-talking, busy agents it can be tempting to throw down your sales pitch, but you’re far better off learning to take a step back and working on your listening skills. By listening to your vendors instead of talking at them, you will be able to better understand their needs and then fulfil those needs.
By building and maintaining honesty and integrity with your vendors, you are much more likely to create positive experiences which will improve your reputation as an agent.
OUR INDUSTRY CHAMPIONS is a celebration of the people behind property.
From administrative staff to sales agents and directors, we’re showcasing the human core of real estate. Creative thinkers, technological innovators and early adopters, local pillars of the community, the champions of our industry come in many shapes.
These are the authentic faces of real estate, and we can’t wait to share them with you!
To learn more about our current Industry Champion, TARYN QUINN, please click here.
It’s not often that people will walk through an agency's door ready to list.
Closing deals and generating quality leads comes from creating a well-nurtured experience informed by good prospecting.
Technology and strategy work hand-in-hand in real estate sales and management, and we want to give you a leg up in taking your agency's understanding to the next level.
Join our presenters Daniel Streek, Tech Stack Consultant at PropTech Group, and James Ramsay, Customer Success Manager at Eagle Software for this on-demand webinar as they take you through their top tips for boosting lead generation and revenue through the VaultRE and Eagle CRMs, including:
Here are the six videos we presented during the webinar, which demonstrate some of the Vault and Eagle CRM key benefits.
As house prices continue to surge higher around the country, there are concerns that affordability is now a major issue for potential buyers.
Recently, a report from CoreLogic and ANZ noted that the ratio of housing values to household incomes reached a new record high. Meaning that Australian’s are spending more than ever on their mortgages. At the same time, incomes have been stagnating, and when compared to the high level of inflation we’re currently seeing, in real terms most household incomes are going backwards.
For first home buyers and upgraders, this is a concerning trend and it is contributing to a worse quality of life than most people had only a generation ago, where it was possible to raise a family on a single income alone.
For real estate agents, it’s important to acknowledge the rise in affordability constraints and understand what the impacts might be for home buyers and vendors alike.
In the past 12 months, property prices across Australia have risen by more than 20% in most areas. However, the surge in capital growth has clearly been led by freestanding homes. With people working from home and stuck inside for extended periods, demand quickly changed from inner-city locations to outer suburbs and semi-regional areas.
Now, we’re starting to see the second stage of the prices rise and how that has impacted affordability. Many freestanding homes in popular areas are simply too expensive which has forced people to look at different options including townhouses or apartments.
This trend is likely to continue and in the short-term, demand for smaller, more affordable types of properties will be high.
For first home buyers today, it’s not uncommon to borrow 95% of the value of the property or even 100%. Going forward, first home buyers are likely going to need to use different strategies for obtaining finance just to get their foot in the door.
Now, it’s already standard practice for this group of buyers to take out guarantor loans, pay LMI to obtain a higher LVR or look to use Government assisted programs such as the FHLDS.
These types of programs and options are helpful, but they do often mean the finance approval process takes longer. For agents, this is important to consider when assessing offers and working with buyers and vendors to facilitate a deal.
Many first home buyers are now faced with the prospect of not being able to buy into their preferred area and for many people in the larger cities, not being able to afford anything at all.
This might lead to a change in approach for younger people, who will look to invest in different areas that are more affordable, such as the regions. In a bid to get their foot on the property ladder. They will then likely rent in their preferred location.
In the past 12 months, we’ve already seen a big surge in the value of regional properties, which has come on the back of owner-occupiers looking to exit the cities and investors getting involved in the rising prices.
When potential clients come to you for advice, it’s up to you to be on the pulse with current market trends, but also how some consumers are navigating through those trends. A true professional real estate agent will be up to date with strategies like rentvesting and making the most of Government schemes such as FHLDS. Clients will appreciate your knowledge in the field.
In the likes of Sydney and Melbourne, there is a growing trend towards older first home buyers.
Younger couples and singles in Australia’s two most expensive cities are forced to work longer to save for a deposit. We’re also seeing many couples choosing to delay having children simply due to the financial burden of rising living costs, which is predominately due to high mortgages and rents.
For agents, it’s important to understand the demographic that will be buying a certain property and how that is changing with higher prices.
With many people already stretched to their limit, it’s important to monitor what the RBA chooses to do with monetary policy. While RBA Governor Lowe is still maintaining his stance on keeping interest rates low, there will come a point where they must rise due to ongoing inflationary pressures.
This could lead to lower demand from buyers as borrowing capacity has already started coming under pressure from the likes of APRA who are already raising their serviceability buffer ahead of any potential rate rises.
Rising rates will put further pressure on affordability and exaggerate all already stretch living costs. As a real estate agent, it’s important to understand what your potential buyers are faced with. When coming from a position of empathy and understanding, your clients and potential clients are more likely to trust and identify with you, thus building your relationships.
2021 was a year of record house price growth across the country, with values increasing 22.1% in 12 months according to the latest data from CoreLogic.
In December, national house prices increased by 1.0%, down from 1.3% in November. Once again, it was Brisbane and Adelaide that were the strongest two markets in December, increasing by 2.9% and 2.6% respectively. Sydney property prices saw a modest 0.3% increase last month, while Melbourne recorded a fall of -0.1%.
Over the past 12 months, Hobart has been the strongest market in the country with a gain of 28.1%, with Brisbane increasing by 27.4% and Sydney by 25.3%.
CoreLogic’s Research Director Tim Lawless says momentum has started to slow in both Sydney and Melbourne.
“A surge in freshly advertised listings through December has been a key factor in taking some heat out of the Melbourne and Sydney housing markets, along with some demand headwinds caused by significant affordability constraints and negative interstate migration,” Mr Lawless said.
“We have seen this trend in previous growth cycles, where more expensive housing markets have shown greater levels of volatility; housing values tend to rise more through the upswing but record a larger decline through the down phase of the cycle.”
According to CoreLogic, Brisbane and Adelaide, along with regional Queensland, are the only broad regions where there is no evidence of growth slowing down,
“These regions show less of an affordability challenge relative to the larger capitals, as well as better support for housing demand with Queensland in particular showing strong interstate migration. Additionally, we haven’t seen the same level of supply response seen in other regions, with the trend in advertised supply remaining well below average in these markets.”
The most popular regional markets have seen housing values rise more than 30% over the calendar year, with the Southern Highlands and Shoalhaven recording the highest annual rise in home values at 37.7%, followed by Queensland’s Sunshine Coast at 33.7%.
Regional markets, especially on the East Coast are continuing to see strong growth and have rebounded while other capital city markets have started to slow down. Since March 2020, housing values across regional Australia are up 32.0% compared to the 20.0% lift in values seen across the combined capitals.
Stock levels in regional Australia finished the year 35.9% below the five-year average. This compares to combined capital cities seeing stock 14.2% below the five-year average.
According to Mr Lawless, stock levels should continue to normalise over the course of 2022.
“The number of homes available to purchase has been a key factor underlying the trend in housing values. Cities where advertised stock levels are above average or close to normal, such as Melbourne and Sydney, have shown a more obvious slow down relative to cities with persistently low advertised supply, like Brisbane and Adelaide,” Mr Lawless said.
“Such a significant mismatch between available housing supply and the level of demand is a fundamental reason why housing prices have risen so sharply over the year. As stock levels normalise and affordability constraints along with tighter credit conditions drag down demand, it’s reasonable to expect growth conditions will be more subdued in 2022,” Mr Lawless said.
Nationally, rents increased by 9.4% over the course of 2021. Unit rents were up 7.5% over the year compared to the 10.1% increase recorded rents for freestanding homes.
2021 has been a record year for Australian housing markets, but 2022 is likely to see a further easing in the pace of capital gains according to CoreLogic.
With house prices increasing at the fastest rate since the late 1980s it’s becoming increasingly difficult for many homebuyers to afford to buy in many areas of the country.
Sellers have had the upper hand for many months, but CoreLogic believes buyers are starting to regain some leverage. With demand outweighing advertised supply, vendors have started to see more room to negotiate and less competition.
Another downside risk is an early lift in interest rates and tighter credit policies. CoreLogic says ‘an early lift in the cash rate implies the economy has improved enough to tighten monetary policy, however, housing markets are likely to be sensitive to any increase in the cost of debt.”
Overall, while there are headwinds that will slow the growth of housing markets, CoreLogic expects national housing values will continue to rise in the short term. However, there is likely to be large discrepancies between different markets around the country based on short-term supply and demand as well as other lifestyle factors.
While technology is rapidly changing the world of property, there are still plenty of elements of ‘old school’ real estate that will likely remain relevant well into the future of the real estate industry.
Technology is certainly making life a lot easier and more efficient for all those involved in the real estate industry, however, there are a number of areas that are unlikely to change any time soon.
The vast majority of people who work in the real estate industry have especially well-developed people skills.
Typically, the real estate industry lends itself to those who are outgoing, friendly, and effective communicators. While technology might change or even enhance some of the forms of communication, the ability connect with people is an essential part of successful real estate.
If anything, the rise of technology puts more focus on agents with the very best people skills. Now that automation is the standard across real estate agencies, it's the human touch that separates good real estate agents from the mediocre and the bad.
The implementation of such technology is likely to create a division between agents with interpersonal skills, and those without. Most technology is easily accessible and quite intuitive, in comparison to communication skills which are acquired and developed over a period of time. If you’re an old school agent with great interpersonal skills, you could be very valuable in the years ahead.
One element of real estate which has not changed throughout the years is the need to build and maintain relationships. Relationships have always been an integral part of the industry, and continue to do so despite all the other changes the industry has seen in recent years.
While the implementation of technology and the ability to automate processes has changed, the essential essence of real estate has not. By going out and building a good network of business connections and referral partners, then you will be setting yourself up for success. The same is true when it comes to dealing with vendors and buyers.
Much of an agent’s business comes through the ability to sit down with a person and build a genuine connection. Building a connection often comes from a place of understanding. Listening to the problems of buyers, vendors, or business partners, and trying to offer advice or solve a problem is foundational in building relationships.
Your ability to build a relationship is a skill that will never go out of fashion, nor be replaced by new technology.
In recent years, there have been many new technology platforms that have become available to assist with the selling process.
However, most of the country still sells through an offer and acceptance process, or through auctions. Whilst technology has assisted in the administration process for auctions, the fundamental elements of the auction are very much human. An important part of an agent hosting an auction is engaging with the crowd and getting them excited by building an exciting atmosphere and environment.
As an agent, part of your job is to extract the very best price for your vendor. In a hot market, it’s quite likely that you will have people competing for a property. In a slower market, or when dealing with a less desirable property, you will need to be able to use those interpersonal communication skills in order to negotiate successfully to get the best deal you possibly can for your client.
Effective negotiation is a skill that the agents of yesteryear needed, and are still a predominant skill amongst agents now, despite the influx of new technology.
An often-overlooked job of a successful agent is understanding the best approach to take to market and sell a property.
There’s no point trying to sell a property at auction if there is only one interested buyer. Similarly, there’s no point selling a property off-market, if a vendor wants the best price and their property is in-demand.
Knowing the best approach to take is a classic skill of a real estate agent. Good agents will know the state of the market and then tailor a strategy for the vendor to extract the best value.
While there are tools that can help along the way, ultimately, the skill, understanding and knowledge of the agent is what will get the vendor the best possible result.
This can also apply to the marketing side as well. A good agent knows how to market a property based on who the likely buyer is and then goes about generating interest. While it’s easy to sell a property in a strong market, it takes a lot more skill, persistence, and know-how to be successful in softer markets.
When analysing the success of real estate agents, people usually think of the agents who sell the highest-priced homes, or earn the highest commissions over the course of the year.
While a sizeable commission is an important end goal for many agents, there is a far more dynamic range of elements to assess when judging your level of success.
An important consideration to remember is that all agents are at different stages in their journey and career. A rookie agent shouldn’t be judging their success by comparing themselves to the top earners who have been in the industry for decades. Fortunately, there are a number of things you can look at to determine if you’ve had a successful year.
In real estate, success doesn’t happen overnight. In fact, it takes a significant amount of time to market, sell and settle on just one property. There’s a lot of time in the day, which should be filled with doing the simple things that will ultimately drive more business.
One of the most important metrics for most agents is the number of phone calls made. This metric is so important because phone calls to prospective vendors is a tried and true way of generating new business.
Each year, you should have a goal in mind for how many people you will reach out to, this can be broken down into a monthly or even weekly basis to be more manageable. Your success should be linked simply to how many of those calls you actually made. From there, you will able to establish conversion rate to learn how effective your phone calls are.
If you’ve exceeded your goals, you will likely have a solid pipeline of work ahead to set yourself up for success.
When starting out as a new agent, it’s important to prospect every single day and continue to drive that pipeline. You aren’t expected to be the top performed agent in your first year. But it is possible to make the most calls and that should be your goal for next year.
An integral part of real estate is networking. Every week, you should be going out and actively looking to expand your network to help drive more business.
This can be as simple as sitting down for a coffee with potential referral partners or even going to property-related events with the goal of building up new relationships.
Once those relationships have been established, you also have to continue to develop and nurture them. You can do this by looking to assist your network in any way you can. After all, creating a relationship only to let it dissolve by ignoring is counterproductive and a waste of time, energy and resources.
It takes time to grow a business network, and it is never too late to start. Set the goal of building your network by a few people each week and by the end of the year, you might have created over 100 new quality business contacts.
In many ways, the network you have in place is far more valuable than your other resources as it has the potential to sustain and grow your business for many years to come. It could be the most important indicator of success in the future.
A recent survey from REALTOR Magazine found that around 30% of sales volume comes from past client referrals, and 30% are from repeat business with past clients.
If you are looking after the needs of the vendors well, it is going to see your business continue to grow. This is also very true of buyers and potential buyers as well. As an agent, ensuring you make a good impression and genuinely help and solve problems for people is vital, as it solidifies your relationships with vendors. Oftentimes, a personal touch or going the extra mile can be the difference between making and breaking a deal.
If you’ve only sold a few properties over the course of a year, but you’ve achieved outstanding results for your clients, that’s more important than going through the motions on a larger volume of transactions.
Link your success to the level of customer satisfaction. You can obtain this from client surveys that you should be regularly conducting and also from ratings and reviews.
Building momentum as an agent takes time, but it all starts with small steps. Over the past 12 months, have you kept up with all you personal marketing efforts that you set out to achieve?
Did you grow that social media presence like you had hoped? Have you been sending regular email newsletters? Have you been doing regular letter drops? Have you been attending property-related events and networking effectively with potential buyers?
Whatever form of marketing you choose to do, it’s important that you have stuck to your plan. If you are unsure how to market yourself, read through our guide on How to Market Yourself as a Real Estate Agent.
Success in real estate is about turning up every single day and doing the small things. You will ultimately be successful if you break down those goals and focus on smaller daily activities. Then in time, if you do those daily activities, the transactions and commissions will come.