Tougher market conditions, underquoting crackdown, and trust account misuse have left Victorian agents fighting to earn back clients’ confidence, with fundamental skills holding the key.
Melbourne has become more challenging for professionals in recent months, as key industry reforms have significantly impacted the state’s property market.
According to Barry Plant CEO Lisa Pennell, property professionals in Victoria have been forced to adapt to the new conditions, with experienced operators transitioning more smoothly.
Pennell said current market conditions have put pressure on the industry, setting skilful agents apart from the rest of the pack.
“When it’s a challenging market, the skills of selling actually come to the fore,” Pennell said on the Real Estate Exposed podcast.
“Agents who might have been used to just being able to list the property and then it would sell itself may not have developed good processes or may not have the skills to actually close a sale.”
She said that strong leadership was an important part of an office’s ability to navigate the property market amidst a downturn.
Pennell said the leader set the tone for the office, and should do all they could to be a cool and level presence for their team.
“I believe that it is the leader’s job to hold space. If you believe there’s a way through and that there’s an opportunity in every market, you will slow down, find the opportunity, and keep transacting.”
She said agents needed to stay patient and remember that the downturn wouldn’t last forever.
A market under scrutiny
In addition to challenging market conditions for agents, a crackdown on underquoting by Consumer Affairs Victoria has continued to erode trust in the industry.
The state’s body recently took action against an agency for underquoting on 11 separate properties, as well as suspending an agent for a “blatant disregard” for their trust account obligations.
Pennell said that the continued negative actions of the few had weighed heavily on consumers, making it harder to rebuild trust across the industry.
“I think it is quite concerning, and I have spoken quite vocally about my concerns around erosion of trust, particularly when big brands are involved in scandals,” Pennell said.
“It’s really important that when the wrong thing happens, then the right thing happens. Acting appropriately when wrongdoing is found is the most important thing.”
She said reversing the negative sentiment would require a concerted, industry-wide effort, starting with greater transparency.
Pennell said that to be more transparent, the network gave vendors access to the same data that went into their CRM.
“I think that’s a great trust builder with customers. We’re not playing around; we’re not hiding information,” she said.
Additionally, Pennell said professionals were frustrated at losing out to shady sales tactics, with many reports to Consumer Affairs Victoria (CAV) coming from others in the industry.
She said the state watchdog’s approach was “guilty until proven innocent”, and that enforcement actions should be supported by technology and AI tools.
“We shouldn’t be relying on phone calls; we’re in the modern world. We need to have a program that extends across the whole industry and keeps everyone accountable.”
What is coming next
With investors already looking away from Melbourne due to its difficult tax settings, the federal government’s budget changes exacerbated the problem.
While the removal of the capital gains tax discount and negative gearing for existing residential property was tipped to drive buyers into new-build homes, Pennell said the opposite happened in Melbourne.
“When the news first came, I rang the project’s director and said, ‘You must be pleased’, thinking new builds were going to be booming,” she said.
Instead, Pennell said the changes had actually killed the pipeline for new projects, with developers putting their builds on hold.
Despite facing challenging conditions across Victoria, Pennell said there was a silver lining for property professionals and their businesses.
She said that the conditions also created an opportunity for agencies to bolster their position in the market.
“This is the market in which good brands will grow their market share. We’re absolutely at a point where we are ready to scale and grow, and it’s a great time for us to showcase our skill.”
“I think the landscape will only become more complex, not less.”
Additionally, Pennell said Melbourne seemed prepared to rebound, but government intervention through changes to SMSF and property taxation had dampened its market.
Despite negative market sentiment, Pennell was optimistic that a potential change in government could mark the start of a rebound for Melbourne’s slow property market.
She said investors who had fled the city in recent years could be brought back, driven by its affordability.
“I believe post the election, we will potentially see more activity in Melbourne. We are heavily undervalued.”
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