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

Lessons Learnt

In October last year, Realmark took a large step into the unknown. Realmark separated from a franchise association and launched itself as its own brand. At the time we knew that the rebrand and repositioning was the right thing to do, but it didn’t make it any less scary.

What this experience really did highlight for me was that despite being in the industry for over twenty years, there was still plenty for me to learn. So today I am going to talk about some key things I have learnt during this process. Which is not so much a story about the real estate industry but business as a whole.

1. Everyone has to believe in the brand, not just you.

I think an easy mistake that can be made when creating an identity for a business is thinking that the brand is something that only has to work externally. It is so important to make sure the brand works internally, because your team members on the front line need to understand that it is more about the values behind the cosmetics of a brand. Everyone has to believe in it to be able to apply what it presents.

2. Don’t be overly optimistic.

There is nothing wrong with a bit of optimism here and there, but when you’re making big changes to a business being too optimistic can blind you to some of the warning signs that perhaps things are not going to plan and therefore they go on too long and become big issues.

It’s not about thinking the worst, it’s about being honest with yourself.

3. Never forget about the basic fundamentals of business.

While things may be changing in your business, the basic fundamentals of business don’t change so make sure you continue to apply them to everything you do. Don’t make ego based decisions. Make strategic decisions based on good practice and providing better value to your employees and your clients.

4. Have “non anxious” leadership presence.

Often people feel that being a good leader is about coming across as busy, energetic and motivated, but in times of change this can come across as an ‘anxious’ presence, which is far from motivating for those who work for you. It actually makes you seem uncertain, almost without direction and your team want to know that you are in control and therefore capable of making good decision for the business and for them.

5. Don’t be afraid of change, be open to learning and adapt.

Change can be a frightening thing, but it is an important part of business life. In real estate our industry is a moving thing and if you simply refuse to adapt, the industry, the market and the clients are all just going to keep on moving without you.

Also you never know it all, there is always more to learn and ways to grow. Read blogs, talk to people, go to seminars and consult your colleagues. Learn from your mistakes and your successes. Be honest with yourself.

Looking back the past year has been very challenging, but it has also been a very important and exciting chapter in Realmark’s business evolution. As we hoped, Realmark has grown significantly and we are achieving great results.

But I still have plenty more to learn.

first mover advantage

It is funny how people always feel so much more comfortable in a crowd. It’s human nature to want to run with the herd and the world of real estate is no exception. What people don’t realise is that finding the courage to go against the herd is often how the best and most successful decisions are made.

Right now my agents are seeing plenty of potential buyers at home opens and they are also seeing plenty of buyers who know they have found the right home. Yet many of them are so reluctant to make a move and make an offer because no one else is buying.

There are an amazing amount of things wrong with this mentality, why do people instinctively want to buy when everyone else is buying, when there is competition galore, negotiation opportunities are few and prices are up?

So my message to buyers out there is this, seize the first mover advantage. Today there is so much choice, limited competition and affordability has made a come back. So if you’re ready and have found the perfect home make an offer, know what you can afford and offer it. Sellers today are willing to negotiate and whatever you do, don’t sit and wait for the crowd to start buying because once the herd catches on its almost too late. I know that this isn’t the most comfortable thing to do, but it truly is the key to success in property.

Although there may be some price fluctuation remaining in the market, the advantage of moving now will out weight any short term movements in purchase price.

Go about things a little differently, go against the herd and get a good buy now.

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.

New Realmark Corporate Website

I'm very proud and pleased to announce that our new realmark.com.au website has been launched this week. This new website has a fresh, contemporary look inline with the brand positioning of Realmark and introduces a number of key advantages for our clients.

I invite you to view the new realmark.com.au.

Buyers no longer fear auction

Here at Realmark we have seen a noticeable lift in auction activity over the past month. Realmark auctioneers held five auctions held over the past two weeks. All have had bidders, with one selling under the hammer, one selling on the day and offers written on the other three which are still pending negotiations. All auctions drew an impressive crowd.

So why is this? Well sadly I don’t think it is because all of the property markets woes are over. I am also certain it doesn’t have anything to do with the Reserve Banks announcement of interest rate cuts.

I think it all comes down to the buyers.

In Western Australia the idea of the auction is relatively new, us sand gropers have always been far more comfortable with the private treaty sale. Many thought the auction was reserved for the multi-million dollar mansions scattered throughout the western suburbs. The auction was something that normal West Australians simply weren’t used to.

However our eastern counterparts have a long history with the auction, believe it or not, they think the private treaty sale is a little strange.

So what has changed in WA? I think the buyer has changed.

Today’s buyer is far more calculated and knowledgeable than the buyers of boom time. Buyers today are well informed when it comes to price and they want to negotiate in an honest, transparent environment. They don’t want sales spin, they want the facts. The auction provides all of the above and hence, they seem to be coming.

Don’t get me wrong, it is not as easy as sticking up an auction sign and buying a hammer, auctions have to be done right. But I believe the current market has spurned a new breed of buyer, and they are not afraid of an auction.

So what is the morale of the story? Simple. If the buyer has changed, we as agents need to change too. Boom time is over, its time to adapt.