Login
ISCOVER
Property analysts have warned that the Australian residential market faces a meltdown – a grim prospect for brokers already impacted by decreased revenue as a result of bank commission cuts.
There is a very real prospect of “a one-in-a-hundred-year slump”, John Edwards, CEO of Residex, told Mortgage Business.
To continue reading the rest of this article, please log in.
Looking for more benefits? Become a Premium Member.
Create free account to get unlimited news articles and more!
Looking for more benefits? Become a Premium Member.
“Never before have we seen every state in Australia move in such unison,” he said.
May loan approvals for owner-occupied dwellings fell by the largest amount in eight years.
According to Mr Edwards, median dwelling values also decreased in June across all capital city and regional areas.
“The market is changing very rapidly and it’s time to put pressure on the RBA and the Federal government to take action and prevent widespread negative growth,” he said.
This bleak outlook was shared by Michael McNamara, general manager of Australian Property Monitors, however he was reluctant to make any definitive calls about how brutal the property downswing would be.
“The market is definitely not in very good shape and it’s hard to be optimistic about the coming two to three years,” he said.
McNamara pointed to the effects of the credit crisis as a major factor in the deterioration of the property markets.
“Financing activity is like the oil that greases the property market and with it so weak it’s hard to see where any money to fuel a recovery in housing will come from,” he said. “Buyer confidence has been severely impacted.”
Brendan O’Donnell, chief executive officer of Choice Aggregation Services, said a potential downturn in residential borrowing reinforced the importance of alternative revenue streams.
“It can sometimes be difficult for a mortgage brokers to gain and sustain a competitive advantage by just focusing on residential mortgage lending, especially when the demand for property looks like it may be heading for a downward cycle,” he said.
“Rather than see the downswing in residential borrowing as a threat to their businesses, brokers should use this as a period of opportunity to expand their offerings and reinforce their service proposition to clients through a diversified product portfolio.”
Mr O’Donnell said that with a potential downturn in property markets, brokers should "develop sound business plans with realistic short-term goals".
“It’s a proven fact that those who plan and invest in the bad times are the ones that benefit significantly in the good times! Be well positioned for when the market turns – and it will turn,” he said.
Published: 15-07-08
