2018 was certainly a year in transition. Over the past 5-years agents have had it good – it was a “sellers market”. Now the market is adjusting to a “buyers market”, with house prices falling.
Real estate markets in capital cities declined in terms of buyer demand. Stock on market has increased, auction clearance rates have dropped as more properties are passed in and agents are educating vendors on downward price expectations for the sale of their homes moving forward.
There are some key factors contributing to 2018, the year in transition. These include:
Love them or hate them our federal pollies did not carry themselves too well in 2018, with a leadership spill triggered right before the spring property market period. With the Prime Minister stepping down due to the leadership spill, Scott Morrison, or ‘scomo’, picked up the reins in leading the country. This created uncertainty for investors and with a federal election due (estimated May 2019), policies from both major parties will be closely reviewed. Interestingly, the Labor party plans to change the negative gearing policy adding further uncertainty for investors in the lead up to the election.
Parallel to the Government leadership spill, there was a Banking Royal Commission into responsible lending and financial advice. One outcome of the Royal Commission concentrates on stricter lending practices and as a result, more focus on verification of borrower’s expenses. The banks have already adjusted, and housing credit growth has fallen throughout the year in line with the dropping house prices. Alongside this, APRA has capped popular ‘interest only’ loans in the Banks overall credit mix. In short, the credit squeeze is on!
(Qualified) Buyers Getting Harder to Find
Whilst at the commencement of 2018 buyers were flooding into opens and submitting property enquiries, towards the end of the year this flow has reduced to a trickle, raising red flags of a potential buyer drought approaching. In a balanced market, less buyer demand contributes to lower prices, resulting in increased marketing periods for homes for sale. The result of this is a downward impact on house price values.
Though it’s not all doom and gloom, just an adjustment.
So what does 2019 look like for the real estate industry?
How are Real Estate Agents Dealing With Less Buyer Demand?
According to the Reserve Bank of Australia (RBA), total housing credit grew at 5.1% over the 2018 year. Whilst credit approvals have dropped there are still buyers “out there” looking for well-priced property.
Great agents don’t just put their head in the sand and say, “it’s just the market”. What we are seeing are quality agents adjusting their marketing strategies to align with the new market (perhaps a market we have not seen in 5 years). That means average run of the mill marketing, such as a newspaper advertisement, for sale sign boards and a listing in the online portals, is not going to cut it moving forward.
Education and Awareness of the ‘Digital Tool Set’
We are seeing increased education in the digital space for real estate agents. This was evident in AREC 2018, whereby our booth was inundated with agents asking questions about Facebook Pixels, buyer targeting and lead generation. Proactive agents realise education is the key to locating the best digital tools that match the marketing strategy for a vendor’s property.
Review Traditional Marketing Techniques
Advertising flows where the people go! Digital savvy agents realise readership of print media is dropping significantly and that letterbox drops are no longer effective in most areas of the country.
In 2018 agents began the transition of their marketing spend to digital channels. As agents become more digital savvy and due to slower property markets, we expect the migration from print advertising to targeted digital marketing to gather pace from a walk, to a stampede!
Measure Results and Question
Agents realise digital requires an investment in the channel and results don’t appear overnight. Agents that have committed to the digital channel are now benefitting with results measured by leads generated, click through rate and increased brand awareness. The digital ecosystem has been invested in and will continue to compound. The benefit of a well-oiled digital machine is that agents can generate their own leads at a lower cost than traditional methods.
Selecting a Digital Partner – With a Proven Track Record
It’s easy for digital providers to hit the agents with #digitaltech jargon, finish every sentence with “like wow awesome” and have a “we know best” type culture. We feel selecting a digital partner who can educate, consult and collaborate is a better long-term approach for the real estate agency/agent. In short you will get more out of the relationship.
2018 was a year where digital hit the mainstream in the real estate industry. We feel the slower property market in 2019 (particularly in the first 6 months), will drive agents to rethink their marketing strategies to find the elusive (finance qualified) buyer. It will be a buyer’s market.
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