REB speaks to some of the country’s top network heads to find out the challenges agents are facing and what they are doing about it.
What is the biggest challenge facing real estate agents now?
Grant Harrod, LJ Hooker: Lack of transactions. We’re seeing a real contraction in listings on the east coast, particularly in metro markets, and that’s a structural shift and it’s a structural shift due to a host of different factors.
We’ve ended up in a scenario where vendors are now making a decision about not selling until they can buy their next place. In the old world, it always used to be ‘never buy until you’ve sold’.
Go to the west coast, it’s a different issue. Plenty of listings and no buyers. But again, in every market, we’re seeing a contraction in transactions.
The stats of this year will show that we’ll probably close the calendar year at about 450,000 transactions. Last year, we were at 475,000 transactions across Australia. That’s not just us by the way, that’s the whole industry. If you go back to the last peak, it was in 2002 when 600,000 properties transacted in Australia. Since then, one million more dwellings have been constructed, a lot of them admittedly are probably high-rise apartments. And we’re getting 1.4 per cent compound annual population growth.
What we are seeing is a real shift in behaviour of home owners that could be staying in their homes longer. We’re seeing obviously more bathrooms being upgraded, kitchens, etc and that’s reflected in the results by those that participate in that renovation market like Bunnings and everyone else.
But what we do know is there is demand, there is an appetite for customers to want to upgrade their lifestyle to their next property purchase. Because we do know there are lots of property decisions based on lifestyle choices, so whether it’s starting a family, having kids, kids get a little bit older, kids leave home ... every one of those situations results in a property decision.
What we’re starting to see is that some of those steps are not occurring, so home ownership is extending from about eight years to probably closer to 12 years now and that’s going to consolidate the industry. There’s going to be a lot of marginal operators that won’t survive.
One of the things that we work very closely with those in our network is to have a diversified business. We have a very big focus on property management. LJ Hooker would be by far the biggest managers of rental properties in Australia, with something like about 140-odd thousand properties being managed through our network. And that creates a diversified income stream that certainly underpins the operations of a real estate office in our network to help manage the volatility of the sale cycle. In our view, that consolidation will create opportunity, the good will get better. And certainly, the good leaders will stand out. Our summation of the market coming up is going to be one in which there’s going to be consolidation.
Randall Curry, Freedom Property: I think agents are fearing change and they’re looking outside of themselves at the moment for where that change is coming from.
We hear this key word of ‘disruption’. I believe this franchise group is the start of the disruption. The disruption’s not going to come from outside, it’s going to come from the agents themselves.
I believe it’s going to be the media companies and everyone else who’s disrupted by the agents, and I’m going to be the one to make that happen because these franchise groups at the moment don’t want to have any bar of it. This is just Freedom Property at the moment but I’m building it with a bigger goal in mind.
John Stewart, One Agency: The declining market. It’s a real challenge as you will know. The number of listings are down and sales are tight and slow, that’s without question the big challenge.
Sadly, of course, when times get difficult like that, people get a little bit focused on the minutiae. I won’t make light of it, but worrying about things that only a sale will change [is pointless]. They’re focusing on the results of lack of sales rather than getting out there and going for it and finding that perhaps the restrictions are still there.
Many of the larger groups are very prescriptive in the way people are allowed to operate and it’s times like now that you need knowledgeable initiative.
Agents are looking for that freedom. We hear about that time and again, and I have to say at the moment ... we’re talking about it across the board.