Coping with a cooling market climate

By Douglas Driscoll

The once-in-a-lifetime market might be over, but that doesn’t mean the real estate industry has cause to panic.

In the midst of a cooling market, the industry is full of unnecessary doom and gloom. Now more than ever we need to take stock of our current predicament and focus on the many positives that still exist. Short-term pain often leads to long-term gain, as a change in market conditions can afford some unique opportunities, and a tough market is the perfect chance to prove your worth to vendors and demonstrate your value to the sales process.
It’s easy for some agents to lose perspective and prematurely scribe the market’s obituary. In particular, those who joined the industry in the last three years –  who might not have experienced the ups and downs of the real estate cycle – can struggle. Often it’s these agents who exit the industry when the market softens.

Yes, conditions have cooled. However let’s not forget that we are transitioning from not just a once-in-a-generation market, but potentially a once-in-a-lifetime market. Did we really expect the boom market to sustain such a steep growth trajectory? 

Tackling the market imbalance
The exponential rise of Sydney property prices added fuel to talk of a ‘bubble’, but thankfully the market has started to level off. The recently introduced macro-prudential measures may have put the cat amongst the pigeons but, despite the initial sense of confusion and uncertainty, they are needed. The market was outperforming even the most optimistic forecasts with property prices increasing at an alarming and potentially unsustainable rate. Encouraged by record-low interest rates, investors were acquiring a massively disproportionate amount of property, leaving scores of owner-occupiers on the sidelines. It’s a relief to see lending institutions now taking a more responsible approach. They have a greater focus on stimulating owner-occupier lending and ensuring investors aren’t exposed to unnecessary risk. These measures may not be universally popular, but they are necessary. After all, irresponsible lending was one of the main catalysts of the Global Financial Crisis.
“My advice for agents is to remain calm, maintain focus and make delivering exemplary service a priority.”
Back to basics
Inevitably, the cooling market does make properties slightly harder to sell. For agents, the key – as it always has been – is to get back to basics. This means providing clients with honest advice to help align their expectations with current market reality. There is the opportunity for all agents to exhibit exemplary service, demonstrate their skills and show value. As the market flattens, stronger agents will enjoy greater success. To differentiate themselves from competitors, agents should focus on taking a proactive approach to sales, concentrating on working their databases more arduously and becoming less reliant on web portals.

Despite the fact that lenders have raised interest rates and become more prudent, now is still a great time to be in the property game. My advice for agents is to remain calm, maintain focus and make delivering exemplary service a priority.  
Tips to help you survive and thrive in a tough market
Prioritise customer service and strive to maintain good client relationships. You should also work diligently towards attracting a steady stream of clients.

Return to databases
Work your database harder and allocate more resources to growing it and getting it into tip-top shape. You should focus on traditional sales techniques, such as advertising handouts, EDMs and phone calls, to create new business leads. 

Focus on education and skill development
Now is the perfect opportunity to place greater emphasis on upskilling, staff education and training programs. Take stock of your personal abilities, and concentrate on addressing your weaknesses and developing your strengths. Sales skills, in particular, should be polished and updated.

Concentrate on quality, not quantity
Focus on building strong client relationships, as today’s customer is tomorrow’s referral. Providing vendors with realistic, authentic advice and managing price expectations to reflect local market conditions are great ways to demonstrate your value. Maintaining good after-sales contact is another important consideration, as your attentiveness can play an important role in attracting new clients.

Maintain perspective
Instead of focusing on negative reports on the property market, concentrate on your on-the-ground experience. Pay close attention to any changes in area demographics and price points, with the goal of adapting sales campaigns to local market conditions.