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There is no denying that 2011 has been somewhat of a turbulent year for the residential property market across Australia with a variety of factors, including affordability concerns, interest rate uncertainty and upheaval in global financial markets resulting in many prospective property buyers delaying their purchase decision.
It is my belief that the market may have already experienced the worst – in fact, I suspect that when looking back on 2011 the pundits will conclude that the market actually bottomed out in August/September 2011. Furthermore, a number of factors lead me to think that the Australian real estate market is fairly well positioned going into 2012 and that the year to come could present some good opportunities for mortgage professionals as a result.
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Not unsurprisingly, I suspect 2012 will likely be a year that sees increased activity in the first and second home buyer markets – making these key markets that mortgage professionals should look to seize opportunity in. A tight rental market and the subsequent rising of rental rates, alongside the Reserve Bank’s decision to lower the official cash rate in November and December, could be the encouragement many prospective purchasers need – potentially resulting in increased buyer activity in the initial months of the year. With the potential for this steady flow of transactions it is likely that 2012 will start to see the stabilisation of values and a return to growth in property values, particularly at this end of the market.
Having said this, such potential buyers will need to act quickly if they are to secure a property. While there has been much talk of high levels of available stock over this year, Century 21 is already starting to experience a reversal of this trend, with less and less properties coming on to the market.
For at least the initial months of 2012, the upper-end of the market will likely continue to be impacted by events in global financial markets where resolution has unfortunately not yet been achieved. Many Australians are either directly or indirectly impacted by international events, and this will factor into their decisions as to whether or not to buy or sell a property. Discounting in this market will probably still be evident next year as those vendors that absolutely must sell may need to adjust their price expectations to meet buyer offers – presenting good purchase opportunities for those who are looking to buy and financially able to do so.
Considering these factors and others, 2012 looks to be an interesting year for mortgage brokers, and is certainly likely to present some good opportunities. In order to take advantage of such prospects, it is my feeling that brokers must look to move into a position where they are receiving good quality, pre-qualified leads – increasing the amount of time that can be spent working with genuine business prospects and writing mortgages.
Brokers should note that over the course of the year to come, the relationships they hold with clients will become increasingly important. With the growing complexity of the mortgage market, given changing lending criteria, regulatory reform and movement in interest rates, there is a strong possibility that buyers, and owners looking to refinance, may increasingly look to mortgage professionals for advice surrounding appropriate finance packages. Mortgage brokers would do well to cement these relationships, potentially securing customer loyalty and further word-of-mouth business.
Rapidly advancing technologies should also be of interest to mortgage brokers and may even provide a platform for brokers to alter their approach, with a focus on catering to the preferences of the active purchasers in their areas of operation. For example, in locations with a large number of tech-savvy first home buyers who are comfortable with various forms of online banking, brokers may find that more suitable finance products could be found in lenders with a largely online presence as opposed to a physical shop front.
All in all, current conditions may indicate a strengthening of the Australian residential property market as we move into 2012. The potential for steadily returning levels of transactions and subsequent growth in values in various parts of the market should provide good opportunities for astute mortgage brokers who are intelligent in their approach and look to form strong client relationships.
Charles Tarbey is Chairman of Century 21 Home Loans
