2008 – MARKETS OF CONFLICT AND RESULTS FOR THAT MATTER!

2008 – MARKETS OF CONFLICT AND RESULTS FOR THAT MATTER!

It’s was no surprise to read this week that consumer confidence has been somewhat dented given the global credit squeeze has been combined with significant declines in the share market. Residential property markets have many similarities with the stock markets, as they both identify the designated consumer comfort levels for price engagement. However stock brokers move much faster with price adjustments than real estate agents. Both have measurements that bear absolutely no similarities, aside from a common denominator of comparable sales. Comparable sales in the stock market happen much faster than real estate sales, where volumes bear no resemblance, except that share market sales happen in seconds and minutes and real estate transactions can take weeks and months, with a much greater emphasis on human error which is often equally shared between vendor(s) and agent. The first quarter of 2008 enjoyed mixed results and it should be noted that many of these properties were first valued back in late 2007, well before global financial market corrections.

All excuses aside, there is now sufficient market data available about real estate sales for agents to fine tune property valuations, which is exactly what some agencies are now doing. We are happy to report that some agencies are defying public perceptions in 2008 and getting the price right. When property markets are running strong this can be quickly forgotten, but it was highlighted in an advertisement we ran this week in the Tuesday in – Domain North.

Aside from the obvious fact that the experienced agents can read, adapt, then engage much faster in the prevailing conditions – it should also be noted that the web based real estate businesses continue to set higher price levels much faster than other agents . A point of difference in the current market conditions (not just Mosman but across Sydney) is who wants to lead the property markets and who wants to follow. Experience identifies that with property, when you follow you have then lost the leading edge. A great litmus test in changing markets, is for prospective vendors to go online to the respective agency websites and observe their current properties for sale. This will clearly identify the market leaders from the followers.

A long list identifies that in changing times, that while some are most capable of “talking the talk” they are struggling with walk. Over recent years the stronger and more dominant agencies have engaged in a “bigger is best” sales team philosophy – one that we have never agreed or believed in. This marketing mantra was exacerbated with the introduction of online marketing – a tool that we pioneered. What we are seeing today, is that quantity in no shape or form equates to quality, and this is further evidenced when market conditions change. When markets change, sales results leave a most obvious clue. Although market sentiment can be camouflaged with market result, by using the following graph in order to correct vendor price realisation, it, from our perspective it bears absolutely no resemblance to the strength of our property market. Misplaced confidence is seldom found again.

Consumers buy real estate – certainly not a case of when the” going gets tough .” There is absolutely nothing ” tough” about the 2008 market, it’s just that consumers are spending more time studying to understand the market.

It’s very easy for a real estate agencies to “buy” a vendor and much harder to “sell” a purchaser which has been the case in recent years . The market has changed, which means that real estate agencies must change too. Much like the United States subprime fiasco, where the American real estate mentality (as adopted in Australia in recent years i.e. quantity over quality) is being met with the same results. So it’s out with ” it can only happen in America” in Australia and not before time.

It does take markets to change. As for speculation that the residential top-end markets appear to be struggling in the Eastern Suburbs – you can treat that with a grain of salt. The Eastern Suburbs agencies offer ten times the number of houses that the Mosman market offers (just 4,900). When you see the word ‘record’ prices substituted for ‘record’ declines then there is a strong argument. Given the results that we are posting, we remain in the former.

We posted another $13,000,000 in sales this week – so each to their own. Each and every real estate agency has a testimonial – it’s just that ours is to lead. Cheers ^__^

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