If 2017 was the year the property boom stopped, 2018 experienced the fall out. So much has happened, and plenty is about to change.
Every client, course participant or business ally has had the same response to 2018: “It hasn’t been bad, but it’s been bloody hard work”. I wonder if this is fair! Maybe it’s normally tough and we have been spoilt by a property boom.
2018 was the year where clearance rates at auctions dropped below 50% and prices took a tumble. This had to be expected. The two drivers of the NSW property market have always been demand and the availability of cash.
The government shut down the competition. Approximately 10% of the property market is always international. All that changes is the nationality. 12% stamp duty and road blocks to immigration and foreign investment, has robbed the market of significant demand. This has now flowed on to other sectors.
Additionally, the credit squeeze had arrived before 2018. If that wasn’t enough, we then welcomed the banking Royal Commission. The banks have now, like a good bear, gone into hibernation. Getting deals across the line has become an absolute nightmare.
Mortgage brokers are leaving the industry in droves or seeking to expand. For the first time, we have given advice on a broker who has been put into liquidation.
The property market is still resilient however. Even with the hurdles, deals are occurring. The carnage expected because of the credit squeeze has not eventuated. Somehow, settlements have occurred without termination. It’s difficult, but as usual, it happens. It never ceases to surprise me how strong and resilient this industry can be.
You can look at change in two ways: it can be depressing, or it opens the door to innovation. Leverage likes this time because it is the moment in the sun for the clever and the innovative.
2018 has seen the emergence of Purple Brick and other similar platforms. Buyers agents have taken a foot hold and is now becoming a chosen profession.
We have also seen the arrival of vendor’s advocates. If you haven’t experienced it yet, wait for it. Vendor’s are hiring people to negotiate everything on their behalf including agent’s commission. Now you’ll have a sales project manager. Yes, it’s for the rich, but that is why the Eastern Suburbs of Sydney is the melting pot of innovation.
For Leverage, the year has been good. We have trained the biggest organisations in real estate, strata and stock and station. We have grown and expanded our influence in the property industry.
In the law firm, we started the year by settling a class action that made $250,000 for each of our client’s. The innovation age has allowed the law firm to grow, creating web portals, setting up innovative businesses, and protecting those unfairly accused. We have established our presence in the finance industry by acting for lenders and aggregators.
2019 will be new. We have new reforms that will change the industry more than anything in the past 70 years. Banks will be bashed, and we have two elections. Maybe it’s time to take a sabbatical if you have a weak heart. At Leverage we will embrace change and intend to be on the front line. We hope many of you are there with us. This is a resilient and strong industry, representing 12.5% of the country’s GDP, and so it will always survive.
I took a sabbatical from our newsletters. I thought you lads and lassies would be over my crap by now. I have been overwhelmed by the call for Leverage Review to return, and I have been ordered by my team to resume the job of talking to you. In 2019, you can look forward to a new innovative newsletter. Maybe, we may let others speak.
I always want to tell a refreshing story at Christmas. Agents are always called tight, but we have always averred the good in the industry. I spoke to a sports club who are struggling to pays the bills. For the past 15 years, one agent, no advertising requested or wanted, has funded this organisation to the value of one million dollars. This is more than a Christmas present. This may be the biggest I know of, but there are so many similar positive stories. My prayer for 2019 is that the REI and Fair Trading recognise these people.
To all of you who make our business, have a joyful Christmas. It’s all about kids, so look after them. For 2019, may the finance gods be with you.
This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.
To get in touch with Bailey, please email firstname.lastname@example.org or call 1300 438 538