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As we kick off 2017, the Journal spoke to industry leaders to find out their thoughts about the year that was and what they'll be focusing on in the year ahead.

CHALLENGES

What was the biggest challenge the market faced in 2016?

TONY BRASIER
Chairman and Managing Director at PRDnationwide
 

DAMIEN COOLEY
Director at Cooley Auctions
 
One of the biggest challenges of 2017 was the new underquoting guidelines. Agents needed to adapt to tighter quoting requirements and keep better records of price conversations with buyers. This was a good step toward improving professional standards and I’ve witnessed many agents make big changes to the way they promote price since 1 January 2016.

Another challenge we faced was overcoming buyers’ concerns about underquoting given the strength of the boom market. Many buyers still can’t understand how a hugely competitive result – one that is well above reserve – can have nothing to do with underquoting.

DOUGLAS DRISCOLL
CEO at Starr Partners

Another major factor contributing to our property shortage was that investors continued to snap-up nearly half of all properties across Sydney. Why was this a problem? The average owner-occupier now holds a property for approximately 11 years, whereas we believe investors hold on to properties for nearly twice as long.

MARK MORRISON
CEO at Harcourts NSW
Listings for the first half of 2016 were down considerably from 2015, and while vendors were getting great prices for properties they were reluctant to sell unless they were downsizing or relocating. This also had an adverse effect on professional fees in areas where some agents have been discounting to win listings.

CHARLES TARBEY
Chairman and Owner at Century 21 Australasia
The lowering of interest rates beyond what was expected created a burst in market activity just when the expectation of a slowdown was imminent. This increased activity placed immense pressure on supply lines, causing prices to surge in many markets and, in the process, leaving some agents without adequate stock levels to satisfy demand. In turn, this created downward pressure on agents’ commissions, as they began negotiating their fees to a level well below that required to run a viable business in order to gain listings.

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INSPIRATIONS
Where do you look to for business and/or leadership inspiration?

TONY BRASIER
Chairman and Managing Director at PRDnationwide

Anyone who has built a business and maintained growth over a significant period of time is a definite source of inspiration. People like Gerry Harvey, Kerry Stokes and Frank Lowy have been successful for extended periods of time in both business generally and property.

GRANT HARROD
CEO at LJ Hooker
I find inspiration in lots of places. Dominos for their use of technology to engage their clients, including gamification to build your own pizza and their pizza tracking app. Qantas for their focus on the customer experience across all transactions with their brand. And Facebook for their innovation and for maximising their customer relationships.

RICHARD HORNE
Managing Director at Knight Frank NSW
I don’t tend to follow specific companies or organisations, but admire those that hold values and culture at the forefront of the way they operate. One that springs to mind is the All Blacks rugby team, which has clearly demonstrated a market-leading presence over a long period of time and at the heart of this is reinforcing a very strong culture.

JOHN McGRATH
Founder & Executive Director at McGrath Estate Agents
I’m very excited about what’s happening in the digital space at the moment. Companies like Uber and Airbnb have come from nowhere and filled great needs in their respective markets, as well as leveraging excess inventory.

If you’re looking for inspiration, just pick up a copy of Fast Company magazine – the CEOs and founders of any of the featured companies are a source of great inspiration.

TIM McKIBBIN
REINSW CEO

EWAN MORTON
Managing Director at Morton Real Estate
My fellow real estate principals are a source of inspiration, particularly those who have developed practical solutions to real estate problems. They never fail to amaze me. I’m actively cultivating relationships with technology leaders. They are also looking to solve real estate problems, but are generally looking from a far broader perspective and this gives me insights and learnings.

 
ANGUS RAINE
Executive Chairman at Raine & Horne

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INFLUENCES
What is going to influence the way you do business in 2017?

DAMIEN COOLEY
Director at Cooley Auctions

Auctions will always have a place in the way property is transacted and we have many exciting developments ahead, with our live streaming of auctions and online auction platform launching in 2017.

The increase in popularity in off-market transactions could continue to affect our business, but this will change when agents realise the only way of selling a property for the best result, in the most effective manner, is to auction it.

GRANT HARROD
CEO at LJ Hooker
 

RICHARD HARVEY
Managing Director at propertybuyer
Our core business values of commitment, excellence, integrity, teamwork and enthusiasm are at the core of everything we do. As buyers’ agents, in 2017 we’ll continue to find ways to do better research, gain market insights, build better agent relationships and I’ll continue to train my team in how to deliver a great client experience.

SHANE KEMPTON
CEO at Professionals
The growing importance of digital media at all levels of society will clearly have a major impact on how we conduct our business over the coming year. Social syndication and lead generation is a key objective over 2017. Professionals will be implementing innovative strategies to create income producing opportunities for our members in NSW over the coming year.

JOHN McGRATH
Founder & Executive Director at McGrath Estate Agents
I think there are a couple of clear trends the industry needs to be on top of going forward. Firstly, Asia – because this is where a huge proportion of our buyers will be originating from going forward. Second, technology and digital marketing – because we’ll see these two areas become more and more critical for us in order to operate effectively.

TIM McKIBBIN
REINSW CEO
Technology and the way we use it will definitely be a big influence. Sitting still is dangerous and, in my view, the best defence is attack. We must view every issue and problem that parties to the property transaction have as an opportunity to add value and be more relevant. Defending our turf is best achieved by becoming a disruptor ourselves – wrapping up our traditional offering with the products and services of others, such as insurance, utility connections and so on. To the fullest extent possible, we should be the one-stop solution. Technology is only a threat if we sit still. But if we embrace it first, it can be a shield from the disruptors.

LEANNE PILKINGTON
Managing Director at Laing+Simmons
The drive to innovate is going to be a huge influence. Investing in tools and systems that empower our people has been a focus for Laing+Simmons in recent years and we’re seeing some powerful returns. We need to keep investigating new ways to free up our team members to focus on what they do best. It’s something we’ve had considerable success with in recent times and the feedback from our network is that we need to keep going to cement our point of difference. We’re boutique, so our offering needs to be more personalised and localised, and we need to keep innovating to align with these values.

 
ANGUS RAINE
Executive Chairman at Raine & Horne
Interest rates remained at historic lows, which means there was little pressure on owners to list their properties for sale in 2016.

Some Donald Trump inspired interest rate hikes in the US could influence our central bank to follow a similar course in 2017. In turn, higher interest rates in Australia might force the financial issue for some overextended mortgagees and get listings moving again.

At the same time, escalating legal and political costs need to be addressed. Stamp duty, imposed by state governments, is a major impost – particularly for downsizers who might be considering selling a larger family home to free up some capital for retirement. The trouble is they face the payment of duties on their next smaller home, which eats into their retirement wealth.

CHARLES TARBEY
Chairman and Owner at Century 21 Australasia
The drive to go back to basics as a means of improving skill levels within the organisation will be a big driver for us. We believe that this, in turn, will create consistency in performance. This is necessary due to the impact that digital disrupters and discounters will have, and have been having, on the industry.

In addition, the boom market we’ve experienced has brought more people into the industry who haven’t had sufficient training to be effective in the changing market conditions we’ll likely to experience in 2017.

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PREDICTIONS
What is your prediction for the market in 2017?

DOUGLAS DRISCOLL
CEO at Starr Partners
As Mark Twain famously once said: “prediction is difficult, particularly when it involves the future.” Having said that, I anticipate that market conditions will not change a great deal from what we’re currently experiencing. Property prices will continue to rise, albeit at a much more subdued rate. In the absence of further macro-prudential measures or an unexpected rise in interest rates, investors will continue to be prevalent – keeping scores of first homebuyers on the sidelines.

We can also expect to see further significant investment from overseas buyers. With the political volatility in the United States, the retroactive foreign buyers tax recently introduced in Canada and the uncertainty of Brexit, Australia looks like a relative haven by comparison.

RICHARD HARVEY
Managing Director at propertybuyer
NSW will remain Australia’s strongest economy, but the market will continue to slow due to buyer exhaustion, continued affordability constraints, tighter lending criteria, excessive transaction costs and reduced enthusiasm from foreign buyers due to the introduction of withholding tax regulations for properties over $2m. There will be wide variances between specific localities though.

More investors will look to add value rather than relying on market growth, however if the draft Medium Density Housing Code is implemented there will be some new opportunities for small developments without having to go through the full DA process, which can be costly and lengthy.

RICHARD HORNE
Managing Director at Knight Frank NSW
Our prediction for 2017 is largely positive, with continued activity in the commercial leasing market and effective rental growth – especially in the Sydney CBD and Parramatta. We anticipate there will be more sales activity and yields will continue to set record benchmarks. Unforeseen global events may have some impact on market conditions, but this is difficult to predict.

SHANE KEMPTON
CEO at Professionals
I expect the property market in NSW to return to more moderate and sustainable levels of capital growth. Over the past year, the median price of a house in Sydney surged by 14.4% and this has had a flow on effect on the rest of the State. Property price growth has been outstripping even wage growth, and the affordability factor will become an even bigger issue for the NSW property market during 2017. A positive is population growth should continue to underpin the local property market with the State having the second fastest growing population in Australia after Victoria.

MARK MORRISON
CEO at Harcourts NSW
Indications at this stage are that the market will pretty much stay as it is. Interest rates look like staying on hold and stock levels may go up a little, but the demand is still there. Most banks are predicting that prices will flatline in 2017 after significant increases over the last few years, which is hard to argue with. However the good news is that they also don’t believe there will a big correction.

EWAN MORTON
Managing Director at Morton Real Estate
The prediction for 2016 was that values would decline. They didn’t, but volumes did. I’m hoping for a calming of prices so that volumes pick up. But, to be honest, we’ll concentrate on making sure we do the best job we can, as many times as we can, regardless of market conditions.

The threats of disintermediation and disruption will still have currency in 2017 and as a business and in fact as an industry, we need to keep on our toes and ensure we are adding value to our clients.

2016 was largely about acceptance that change is coming but confusion around what that change actually was and the impacts. This will continue into 2017, but I am confident Morton will be well placed to cope.

LEANNE PILKINGTON
Managing Director at Laing+Simmons
Prices should remain firm, transactions should tick over depending on stock levels, and the balance of power between buyers and sellers should stay relatively even in the coming year.

One positive change to look forward to is the proposed reforms around improving education, training and practical experience to improve standards of professionalism in the real estate industry. These reforms can only generate positive outcomes for agents and consumers.

The conversation around affordability is gathering momentum. New perspectives to address affordability are needed. It’s more a desire than a prediction, but I’d like to see a coordinated approach to address affordability gain traction in 2017.