Reading the market: quicker reaction time now required!

There is no question that we are living in times of uncertainty with economic trends turning corners with the blink of an eye. It seems that the days of the market cycle and change pace seen in past decades may now be replaced by much more volatility. We may now all need to adjust to a new market dynamic that provides much more frequent and dramatic shifts in direction and this will inevitably impact on everyone.

Taking a universal view, investments in all areas whether it is cash at bank, shares or property, the immediate future is likely to see lower returns on investment being accepted. People’s expectations are less and yields from investments are adjusting to a new world paradigm of lower and more volatile returns. This in turn, may influence a shift to more property investment due to the long term security and its tangible nature.

Property investors currently do not appear to be talking doom and gloom the way equity investors are. Why is that?

Property investment here is relatively safe compared to the volatilities of the share market and international economies. In the Australian property context yields have not vaporised overnight and during these unstable times, people are increasingly attracted to the long term capital return and base line security that property investment offers.

In terms of property trends, we are seeing a re-emergence of investor activity that is informed and considered in its decision making. They understand that it is not about bargain hunting but more importantly about securing the right asset in commercial and residential markets that would not normally be available, if not for the current times.

Affordability may be challenging however data would suggest that it is emerging in the Perth residential property market. Aligning this affordability aspect with a shift in sentiment will see a spike in buyer activity and possibly a sharper cycle adjustment than we have previously been accustomed. So property investors and agents need to be prepared to read the market quickly and adjust their approach.

The weekly selling and letting activity of Realmark covering various residential and commercial market types provide us with a unique advantage to anecdotally sense a shift in the market well ahead of it appearing in statistical reports months later. In today’s world, changes may occur in days and not quarters. Sellers and buyers for owner occupation or investment would be wise to build a direct relationship with a real estate agency that has this level of market connection so that they can maximise the benefit to them.

Whether trading in property short term, investing long term or simply wishing to achieve the best sale or rent price outcome, an effective agent can guide you to extract best results from a market that is constantly and quickly evolving.

John Percudani
Realmark Director