‘Immense value’ of agents highlighted by alarming buyer sentiment data

More than seven out of 10 Australian property owners are worried about the country falling into a recession this year, according to LocalAgentFinder’s latest Real Estate Sentiment Report. 

When asked whether they were concerned that Australia would experience a recession this year, an overwhelming 73 per cent of the 1,038 respondents agreed or strongly agreed that they were concerned about the prospect of a continuous economic downturn. 

Meanwhile, only 2 per cent of respondents strongly disagreed, 13 per cent disagreed and 12 per cent were unsure if they were concerned about this prospect. 

Findings showed that the Reserve Bank’s (RBA) interest rate rise cycle is also a matter of concern, with 66 per cent of respondents saying they were “a bit stressed” at the prospects of interest rates rising further in 2023. 

Only 11 per cent strongly disagreed and 21 per cent disagreed that they are concerned over the trajectory of the central bank’s monetary policy.

In addition to rate increases and the prospect of a recession, findings of the survey also showed that rising inflation is negatively affecting the wellbeing of Australians in many different ways. 

Almost nine out of 10 stated that they will be more prudent with their discretionary spending this year because of inflation, while seven out of 10 respondents said inflation had eroded their household’s savings and that the issue has them thinking twice about taking an overseas trip in 2023. 

Australian property owners were also “extremely sympathetic” to the barriers faced by first home buyers attempting to enter the market, with eight in 10 respondents believing that home ownership is out of reach for most people. 

Richard Stevens, the chief executive of LocalAgentFinder, said that the “health of the economy, the impact of inflation and rising interest rates” are now on top of the list of concerns among Australians.

“These concerns translate to the property market where a reasonably large cohort believes prices will fall this year, albeit somewhat moderately,” he said. 

When it came to views on property prices, 28 per cent of respondents believe residential property prices will increase over the year, 37 per cent expected no change and 34 per cent said that property values will fall.

The survey showed that younger Australian property owners were more optimistic, with the age group more likely to believe that house prices will rise this year, compared with older property owners who were more likely to believe that prices will fall.

Of those that expected falling prices, the majority (58 per cent) expected modest declines this year, ranging between one and 10 per cent. Thirty-one per cent of respondents expected falls of 11 to 25 per cent, with 5 per cent of respondents expecting declines of more than 25 per cent.

While the report has put a spotlight on the concerns of property owners, Mr Stevens noted that it also provided interesting insights for the future of the real estate industry. 

Firstly, the survey revealed that property owners “overwhelmingly believe” that real estate agents will be needed in the future.

“This point is supported by data from our report last year where nearly all respondents (91 per cent) believed that finding the right real estate agent was important to get the best price possible from a property sale,” he stated. 

With the majority of people still viewing the process of selling a property as an “extremely stressful experience”, Mr Stevens argued that “the right agent can alleviate some of that stress through honest and proactive communication whilst also offering vendors real ‘human’ support through the process”. 

“I suspect it’s a combination of these facts that have Australian property owners placing a lot of value in agents and expecting to do so in the future,” he opined.

Speaking exclusively to REB, Mr Stevens highlighted that the survey results renewed the “immense” value that property owners place on real estate agents even at a period when new technologies that are predicted to replace traditional human-to-human transactions are entering the scene. 

“The advent of ChatGPT and other artificial intelligence (AI) applications has many commentators across the world forecasting how industries like real estate will be changed, and people potentially replaced by new technologies over time. It seems like few sectors are immune from these discussions at present.

He pointed out that survey results showed that although many Australians are very comfortable using new or established technologies, real estate agents are still their go-to profession when it comes to property transactions. 

Despite advancements in technologies such as AI, the vast majority of Australian property owners believe that real estate agents will be needed in five years’ time. 

Also, over seven in 10 Australian property owners feel it is absolutely critical or very important to compare real estate agents when selling their property, with this proportion increasing to nearly eight in 10 for younger Australians.

He cited anecdotes of many respondents in the current survey who divulged that they would actively search online for agent reviews and recommendations, with seven out of 10 respondents believing that comparing agents was critical. 

Additionally, the majority of respondents (52 per cent) believed that three agents should be compared before a final decision is made and many are comfortable doing so online.

The figures are also backed by the firm’s survey results from the previous year, which showed that nearly all respondents believed that having a strong presence on online listing portals was critical.

“While it’s hard to predict what the future may hold, Australians clearly value the work that real estate agents do but also appreciate that new technologies can add value to the selling process — from online agent comparison all the way through to listing a property for sale. 

“I suspect that it is the agents that continue to focus on genuinely supporting their vendors through the selling journey, which includes exploring new digital and technology solutions, who will set the benchmark for the industry and enjoy success long into the future,” Mr Stevens stated. 

As for the property market as a whole, Mr Stevens is optimistic about the long-term outlook. 

While he acknowledged that property owners are “rightly concerned” about what 2023 has in store with rising interest rates, inflation at record highs and ongoing geopolitical issues, he noted that there is data indicating market activity will rebound in the near future. 

“When it comes to selling property in this context and as recent listing data suggests, there are not a lot of people taking their properties to market at present. 

“However, this situation could change quickly as our internal data is showing a large uptick [8.2 per cent] in people comparing real estate agents on our platform in January this year compared to January last year. The survey also showed that two out of 10 property owners are extremely serious about selling within the next 12 months,” he remarked.

He commented that the data points indicate many Australians are currently making preparations to sell or have plans to sell but are waiting for the market to stabilise or recover before doing so.

“While the survey suggests that property owners possess a degree of fear or concern around what this year may hold, the property market has shown incredible resilience and growth over the long term and it wouldn’t surprise me if activity, and even prices, pick up sooner than some may think,” Mr Stevens concluded.