We are halfway through 2022, and we’ve passed the shortest day of the year.
This winter, as temperatures plummet, interest rates are rapidly increasing, and we can expect more increases before the end of the year.
In the world of real estate, despite doom-and-gloom predictions from the pundits, we are still tracking for another solid year.
The good news is buyer demand is still higher than it was pre-COVID. The PropTrack Potential Buyers Index, which measures the number of people seriously interested in buying, shows that while demand has been trending downwards since March this year, it remains 50 per cent higher than during the pre-COVID period in early 2020.
What does it mean for the industry in the second half of 2022?
We can expect demand for homes to ease as higher interest rates bite into buyers’ capacity to repay.
Buyers will become more cautious, and some may even delay making a purchase hoping that as interest rates rise, prices will fall.
Vendors may also become equally as cautious and may sell prior to auction is something I am suggesting to my clients as we treat auction as a process rather than an event.
Throw in inflation running around 7 per cent, and it makes for a more challenging market for real estate professionals.
The reality is we have been dealing with all factors outside of our control in one way or another other out entire working lives. The solution is to “control the controllables” i.e. your prospecting plan, your database management, your buyer and vendor expectations, and your personal and property marketing strategies.
OK, we are unlikely to experience buyers paying 30 per cent above the reserve price; however, there will always be buyers.
Our first challenge is to work closer with buyers to assure them that prices are not going to plummet. If there is any easing in prices, it will be in “single digits” and it won’t last.
The second challenge is to manage seller expectations of what is achievable for their property by relying on objective market feedback, including views/engagements from REA and Domain, buyer offers and number of open house attendees.
The second half of 2022 will throw up some surprises and the usual challenges, but as always, they create opportunities to increase market share given inevitable agent attrition and skill repurposing within the industry.
Adrian Bo is a licensed agent and auctioneer, sales training academy founder and author.