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Sometime over the course of the next six to 12 months, confidence will return to the market, and listings will in turn be boosted, according to the CEO of Domain.
Speaking to REB following the release of Domain Group’s most recent half-yearly results announcement to the ASX and reflecting on the current environment, Jason Pellegrino noted that “there is a lot of surprise through the entire property ecosystem.”
“What’s causing that surprise is, frankly, the surprise in consumers who are out there.”
According to the managing director and CEO of the real estate giant, everyone has been “suffering from a bit of shock and awe from the scale and speed of those interest rate increases.”
“The settings or the expectation was interest rates were not going to increase for two years — [that] was what was said. And then you fast forward to a period where all of a sudden, the interest rates start increasing in incredibly rapid rates and no one can see the end of this.”
“What that does, it just completely saps confidence,” he conceded.
“Someone doesn’t just sell their home because they feel like it on a whim or the price is right. These transactions are driven by births, deaths, marriages, divorces, [and] new jobs like demographic changes, immigration, for example.”
While those drivers do keep going, Mr Pellegrino notes that a lack of confidence does mean home owners “don’t step through those really scary gates that you are needed to go through to bring your property to market — or you slow down through those gates.”
But it’s not about hitting a peak of interest rates or seeing interest rates decrease that would see confidence come back, and sellers “speed up through those gates”, Mr Pellegrino flagged.
He highlighted how Australia has had “very healthy property market environments with interest rates well north of where they are now — with inflation, well north of where it is now.”
“What puts confidence back is that people feel they can predict the future with a reasonable level of tolerance,” the managing director advised.
From his position, what consumers are looking for is guidance backed by statistics and data.
“That says that whilst we don’t know exactly when interest rates will peak, we’re not going to see the rate of change that we’ve seen in the last nine months or the rate of surprises.”
In essence, they’re looking for fewer surprises going forward.
And when that confidence does return, what you’ll see is “these listings that didn’t happen in the last half”, start to come onto the market.
Stressing that previously lost listings haven’t simply disappeared, Mr Pellegrino espoused that they “start to come back to the market and in many instances, they can come back ... quite rapidly.”
“They will come back and confidence will return, and history proves that.”
Despite the positive outlook and being “absolutely confident” that listings will return, Mr Pellegrino considers it “a bit of a fool’s errand” to put a concrete timeline on that occurring.
But he does see the market gaining pace “sometime over the course of the next six to 12 months.”
During the conversation, Mr Pellegrino also took the time to comment on the importance of ESG decision-making. You can read all about it here.
ABOUT THE AUTHOR
Grace Ormsby
Grace is a journalist across Momentum property and investment brands. Grace joined Momentum Media in 2018, bringing with her a Bachelor of Laws and a Bachelor of Communication (Journalism) from the University of Newcastle. She’s passionate about delivering easy to digest information and content relevant to her key audiences and stakeholders.
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