Rapid fluctuations in interest rates have left the property market in a precarious position, with agents encouraged to be upfront and communicative with vendors to secure successful sales, a leading property professional told REB.
Recent Cotality data showed that while auction listing numbers had increased, clearance rates remained stubbornly low, highlighting a shift in the Australian property market.
Flynn Estate Agents founder Adam Flynn, who has almost 25 years in real estate, told REB that rising rates and economic conditions had raised questions about the market's stability.
“Over the next six months to 12 months, there will be a flood of properties coming onto the market, because serviceability will become a real issue,” Flynn said.
“When that happens, the whole supply and demand chain shifts, and the only way for one property to compete with another is to reduce prices.”
Flynn said that to succeed amid shifting market conditions, agents needed to focus on maintaining existing relationships while reaching out to new clients.
“In the current climate, agents need to keep prospecting and trying to find new business,” he said.
“Their communication levels need to be very high with vendors. Ideally, touching base with vendors once every couple of days, even if they don’t have much to say.”
He said agents were operating in unfamiliar territory and needed to find a way to have tough conversations about pricing, and the way they handled the process would give them a chance to separate themselves from the competition.
According to Flynn, while vendors didn’t want to have tough conversations around property values, they often understood and respected why it had to happen.
For properties that hadn’t reached the anticipated level of interest, Flynn said adjustments to pricing needed to be made, as buyers had clearly identified value elsewhere.
“It’s important for vendors to understand that what they think their property is worth is, respectfully, irrelevant because they don’t determine the value; the market determines the value.”
“If you’re positioning a property and no one is coming through, unless the marketing is horrendous, it’s the pricing.”
“You would rather be in a position where you are saying no to offers rather than buyers saying no to you.”
Flynn said that when it is hard for agents to convince vendors to lower their expectations, they should remind clients that market effects aren’t limited to them.
“It is important to reiterate to clients that the market isn’t isolated to that particular transaction.”
“If a vendor sells for less, they’ll also buy for less, and vice versa; it’s all relative,” Flynn concluded.
These comments come as the market expects to reach a four-year high in auction volume ahead of the Easter long weekend, with 4,163 homes set to go under the hammer.
