Where is the happy ending?

It is human nature to want everything to be OK. That is why we love and crave a happy ending in a movie and always want our footy team to win. It is also why we are scrambling for a sign that the economy is going to be just fine, phew the hard times are over!

It is human nature to want everything to be OK. That is why we love and crave a happy ending in a movie and always want our footy team to win. It is also why we are scrambling for a sign that the economy is going to be just fine, phew the hard times are over!

Well it is a bit early for that yet. There is plenty of talk in the headlines around the first ‘green shoots’ of recovery, but in my opinion we are not going to get off quite that easy. It is likely we will be feeling this global financial crisis well in 2010 and any talk otherwise might make us all feel good on the inside, but really it is just spin. When you look at the fundamentals the second half of this year is going to throw up a range of challenges, from rising unemployment, to increased interest rates and the final deadline for the First Home Buyer Grant. The recent economic fall out is like nothing we have seen in recent decades and we need to understand that the issues we face are not going to vaporize so quickly. The regeneration of the economy takes time.

I am not saying that now is a time for pessimism, it is simply a time for realism. Clasping your hands over your eyes and blocking out the reality isn’t going to do anyone any favours. But fronting up to the real situation and forward thinking is.

If you are in business, you always need to think beyond the present day. You need to put strategies in place and be ready and willing to make changes. This is nothing new, even when times are good, solid businesses plan for the down times rather than just letting them sneak up.

If you are selling your home, it is a time to be informed and it is a time to find the right advice. Don’t choose an agent who just tells you what you want to hear, choose an agent who understands the market and is realistic. If you are looking to buy, then ensure you don’t make decisions on what the rest of the world is doing. Don’t be tempted to follow the herd, look at the facts and again, be informed.

No matter who you are, keep your eyes open for the opportunities that present themselves in this current climate, because I assure you they are there.

And in finishing, I have to say it is refreshing to see a little confidence return, it just needs to be harnessed in the right way.

Breath easy, the grant stays

So finally we have our answer, the first home buyers grant will remain for three months at the full rate and three months at a reduced rate.

*Insert collective sighs of relief from the entire real estate industry here.*

This is a good move by the Government and one that has seen the industry dodge a very large bullet. If the grant was ceased on June 30 first home buyer activity would have come to a screaming halt and the market place repercussions would have been quite dramatic.

Through phasing out the grant the Government has paved the way for a more orderly market adjustment. The economy is expected to stabilise over the next 6 months and interest rates are expected to stay low. Together these two factors provide an opportunity to offset any shock when the grants do finally stop. The move to keep the grant for both existing and new properties is also positive and avoids any distortion.

So what now? Well historically Government intervention coupled with low interest rates is the pre-curser to the upside of the property cycle. This doesn’t mean everything is roses, what is does mean I think is that the market is likely to continue ticking along as it is until well into 2010 – it is a time to have a positive, but balanced view of the market place.

What was missed in the budget is any sweeteners for investors and second and third tier buyers. Investors are a big piece of the puzzle that is missing right now and through creating strategies that would entice them back into market the Government could have created a far more balanced market place, rather than just relying on the first home buyers to keep us a float. Australia is also in the midst of an ever growing housing stock crisis which cannot be addressed by the first home buyers grant alone. I have pointed out the need to broaden the stimulus here before, so I won’t cover too much old territory there.

All in all budget night was a positive night for the industry. The ‘what ifs?’ around the first home buyers grant are now answered and it is business as usual.

Downturn? What Downturn?

It can be hard to ignore the endless headlines of doom and gloom, but I refuse to participate. Realmark is not participating in the recession.

I am not denying that things have certainly changed, but this is nothing new, this is what happens in this industry and I have seen it many a time before. Panic is not going to see you these times, being prepared and having a clear head will.

If you manage to look past all the bad news you will see a range of rare opportunities that don’t come about very often. The words recession and opportunity might not seem to fit together, but the way I see it, recession is a time full of opportunity for my business.

So exactly what opportunities am I talking about? Firstly the demand for agents has decreased significantly so recruiting quality people is much easier. Realmark has just employed seven new team members, something that was almost impossible during the boom. We are using the downturn to build our ‘dream team’. We launched an online careers website and to help us attract the right people and we have hired a full time human resources manager to help us retain the right people.

Now is also a time to stand out from your competitors. It was easy to be successful during the boom, being successful now takes skill because business doesn’t simply walk in the door. People will notice if you’re thriving now and it will build a premium and trust into your brand that is almost impossible to achieve during the good times.

Then there is the fact that now is a good time for growth into new markets, some competitors are going to scale back and opportunities will open up and we stand ready to take advantage of them.

So you can dwell on the bad news, but really what is that going to achieve? Open your eyes and look for the good news.

History Doesn't Always Repeat Itself

The market correction after the recent boom still seems to be rippling through the housing sector, with REIWA figures for the September quarter showing a fall in median prices for the third consecutive quarter.

However despite these official statistics and the messages of doom and gloom we regularly see in the media it is important to look at what is actually happening in the ‘real’ world.

Many of you will very clearly remember the stock market crash of 1987 which led to a surge of money flowing into the property sector. Then in 1989 it became apparent that property would suffer the same fate as the equities market. This typical boom to bust cycle left us with an oversupply of housing, high interest rates, high inflation and an extremely flat market for several years.

Unfortunately it’s impossible to predict the future of today’s property market, however given past history we can take a look at current conditions to see if we can draw any comparisons to the crash of 1989. Will history repeat itself?

In 1989 the property market was in a similar condition to today. However from my business and personal experience I definitely see hope in today’s market. We need to look at the ‘real’ market and the ‘real’ economy to really assess what we are seeing with the current conditions.

While figures and statistics can be extremely valuable they don’t necessarily reflect what’s happening on the street on a day to day level. In 1989 we saw the equities market drop 25% overnight. This was very dramatic and caused a tidal wave type surge straight into property. The current equities market has lost 50% of its value however this time it has been a more stepped decline. We have also seen that median house prices have also adjusted over the last periods but they have not dropped anywhere near as significantly as the stock market.

In many cases it is more that a sellers inflated expectations of price has returned to market normality.

Current market conditions also indicate that employment is still very tight, interest rates are very low (and lowering) and inflation is low. Perth also has a much broader population base than previously and is still experiencing strong population growth. This time round circumstances seem to be much better than the late ‘80s and early ‘90s.

I see two key factors dictating market stability, and buyer confidence. Firstly, the availability of money and people’s access to buy it. And secondly, the sustainability of employment. With the recent restructuring of the finance industry the availability of money has definitely stabilised and people are still finding good access to it. While employment will, most likely, be affected by economic conditions we are coming off a very tight market and we may see only marginal shifts in unemployment figures in WA. Buyers should continue to have confidence if they can still see value in the market.

There are still plenty of buyers active in the market. Attendances at auctions are still quite high and there is a really good energy to the bidding. We are also finding a really positive level of enquiries on internet listings, our online property magazine, over the phone and at a pen for inspections. Properties are still selling in a fair and reasonable time and at fair and reasonable prices.

Statistical trends will become clearer over the next quarter or so and we may continue to see some jittery and erratic results from suburb to suburb but there is still movement and energy in the market. People are still buying and selling so there is definitely still plenty of hope!
On this occasion history doesn’t have to repeat itself because the fundamentals are different.

The upside of uncertain times

These uncertain financial times have seen a real change of pace in this state and while the news definitely isn’t all good, it isn’t all bad either. Opportunities are certainly opening up for us at Realmark.

As an employer, things have really changed for us in the past four to six weeks. Previously and during boom time it was so hard to find good help. Many job seekers had this feeling that there was always more money or more benefits on offer and many followed cash, rather than the best career prospects. Don’t get me wrong, this does not apply to everyone, but it was very noticeable trend for most employers.

Today things are different. When we recruit we find we have much more choice when it comes to candidates, which gives us a far higher chance of finding the quality we seek. I see this as a massive time of opportunity for us. Realmark is going to continue to work hard to find the right people and build a premium team, not just the best agents, but the also best support and administration staff. We have even brought a full time HR manager on board to help us achieve this.

We are very lucky to already possess some of the best people this business has to offer, but there are gaps that need to be filled and now is the time. Our people are our biggest asset, and the right team means better results for our clients, which is the key to our success. We have always worked hard at being an employer of choice and we will continue to do so.

I think this is an important part of any business, making the most of all situations. Don’t get wrapped up in the hype around the financial crisis and miss opportunities because it’s true, there is an upside to everything. You just need to find it.

Check out our site dedicated to careers in real estate www.careersinproperty.com.au

LOOK ON THE BRIGHT SIDE

It’s no secret that the Perth real estate market is no longer booming. Naturally, everyone is constantly trying to pick that silver bullet that will fix everything and make the tough times go away. Many were hoping an interest rate cut was the answer, unfortunately it’s not that simple.

But let me put things into perspective. Sure the market is not an easy place but the news isn’t all bad. If you’re a buyer, the news is actually quite good. The market is full of choice and affordability has made a come back. The cost of money is starting to drop as indicated by the first cut in interest rates and buyers have the time to make informed decisions. Put simply, right now there is an abundance of opportunity out there for buyers. The challenge for buyers maybe the availability of loan funds although the Federal Governments $4 billion initiative last week will greatly assist funds liquidity for housing.

We are truly witnessing a buyers market and to be honest, it is probably about time they had a fair go and actually good for market fundamentals. Boom time pushed the Australian Dream further and further from the reach of many people and while Perth is by no means a ‘cheap’ place to buy, prices have corrected and there is value to be had. I see this continuing well into 2009.

However like all things, this buyer friendly market won’t last forever. The fact is this is simply a normal part of the property cycle and in time things will again turn in favour of the sellers, it’s the way the cycle works. World economic factors may distort and prolong the cycle timing but it will re-align itself.

While things are not going to dramatically change in the near future, Perth is poised for change. The following factors indicate that a strengthening of the market is on the horizon.

1) The dropping of interest rates is always the first trigger – the first sign of the ‘curve’ in the property cycle.

2) Demand for housing continues to accumulate as people move into the state looking to capitalise on the employment opportunities.

3) Another key factor is employment, all signs point to continued employment growth in WA. Security of employment encourages buying confidence.

If you understand the property cycle, you will understand that what we are going through now is completely normal and somewhat predictable. Trust me, I have been in this industry for a long time and I have seen it all before.