May 27th, 2019
The future of the real estate industry
The end of 2019 marked the end of the 2010s—a decade characterised by change. From the rapid rise of mobile tech and social media to the launch of voice assistants, the world is changing at an alarmingly rapid rate.
As a result, the real estate industry is also constantly changing. Here are eight industry experts with their real estate predictions for 2020 and beyond:
According to Suzannah Toop, CEO Property Investment & Finance at Toop&Toop, the property management model has remained relatively unchanged over the last 25 years while the whole world has moved on.
“In the new world, 24/7 connectivity, digital experiences and instant access to information are now the norm,” Toop said.
“The old model is struggling to keep up. High-stress, high staff turnover, unhappy clients and unsustainable work environments are not uncommon in many property management businesses across the globe.”
Toop remarked “The challenge is clients expect more, and our teams expect more”.
She believes that real estate in the future will be an entirely new offering to customers. Businesses will be able to leverage cutting-edge technology to deliver amazing customer experiences with ease.
Here are some key trends that Toop has been seeing recently:
“The biggest thing we can do is let go of good, for great. This means reinventing ourselves and shedding legacy from the business. At Toop&Toop we are excited for the new world of property management, a world where renting is easy and enjoyable for everyone.”
Dave Skow, Director at RE/MAX Elite predicts that first home buyers will take full advantage of the First Home Loan Deposit Scheme (FHLDS).
“It will open the door for more first home buyers to get into the market sooner by having to have only 5% deposit,” Skow said.
“I have a number of brokers telling me they have been flooded with enquiries from this segment of the market and that the first allocation of 10,000 is likely to be exhausted well before the end of the financial year.”
If this ends up being the case, Skow expects the Federal Government to open up the scheme to a further 10,000 first home buyers.
Hayley Mitchell, Director at Geelong Property Managers and MitchellPT remarked that with the changes to the Residential Tenancies Act coming into play in various states, it’s going to be a very interesting year ahead.
“For many people, change is hard and in some cases very scary but I don’t think it has to be. For the most part I believe the changes are required. We need greater clarity about landlord and tenant obligations and I am hoping we will get that,” Mitchell said.
“We also need to bring the legislation in line with how we conduct property management today. For example, in 1997 when the Victoria Act was written, clients expected a very different level of service than they have come to expect now. We need to adjust and lift our standards to match the increasing demand.”
Mitchell’s main predictions are as follows:
“2020 is going to be a huge year as we learn on the run. I am actually excited and think it will clean up the Industry and hopefully will make landlords more accountable for the properties that they own.”
Glenn Hardman, Managing Director at Ray White Geelong shed light on residential sales, property technology and property management trends in his real estate predictions for 2020.
“After the banking royal commission and federal election in 2019, the real estate market slowed to glacial pace. But 2020 looks like much smoother sailing with buyers returning to the market with confidence and prices starting to rise again, albeit not to the extent that we were seeing in 2017-18. The Olympics will slow the market as it always does but I believe 2020 looks like a great time for real estate sales.”
In regards to property technology, Hardman believes that the industry is generally about 10 years behind. However, he remarked that “real estate technology gets better every year and those agents who ignore or choose not to embrace it will struggle in the long term”.
“Agents are generally not great with technology and best advice to providers is to keep it simple. Our clients expect cutting edge and we need to embrace it.”
He also said that there were many “interesting additions” to the new legislation being introduced in Victoria in 2020.
“At worst, mum and dad investors may exit the market in favour of shares. At best, it continues to be the same with modifications and we can all get by with minimal impact.”
According to Hardman, time will tell what impacts the new legislation will have. Ultimately, agents must embrace the change and educate landlords on its implications.
Michael Love, Partner at Love & Co said that “Following the shortage caused by the banking royal commission and restrictions to lending to builders and developers, we are still seeing reduced supply of properties in the market.”
“With money becoming a little bit more accessible toward the end of 2019, we are seeing some increased activity at auctions and more planning applications beginning to be processed.”
With the expected interest rate cuts in 2020, Love predicts that demand levels will be maintained and supply will slowly increase towards the end of the year.
“The market will remain steady as supply and demand remain balanced and growth in the market will be there. However, in the lower price range of the market we will see more competition and possibly more growth as we see first home buyers continue to enter the market.”
John Carey, Head of Property Management at Harris Real Estate believes that the main focus this year will be using technology to provide higher levels of service to landlords and tenants.
“Having the right technology and using it properly will be essential to providing an exceptional service at a competitive price,” Carey said.
“Property Managers need to be passionate about caring for their clients’ interests. They are now career focused professionals who embrace best practice, training and systems.”
He believes that agencies that offer property management services must make technology and service a major focus to achieve rapid growth. Additionally, marketing efforts must include compelling copy, sparkling images and engaging social media campaigns.
“Outsourcing will continue to grow but artificial intelligence will also be important in managing day-to-day rent collection, maintenance and inspections. Both need to be professional and seamless.”
Dean O’Brien, Director at OBrien Real Estate predicts that the first half of 2020 will see much of the same buoyant price growth that the market saw in the second half of 2019.
O’Brien cited “continued population growth, cheap liquidity, strong investor and first home demand, low new housing stock and tight housing turnover” as the reasons for his prediction.
“Investors will return to the market in 2020. Investors in 2019 sat on the sidelines and accounted for less than 25% of total sales which is in fact the lowest participation level on record. Investors will no doubt be lured back by the potential of bigger capital gains and the low interest rates,” O’Brien said.
“The next major catalyst for market growth will come from the first home buyer with new incentives, which we believe will impact demand in most suburbs through both apartment and detached home sales.”
“Population in Australia hit the 25 million mark in 2019 and population growth is a main driver of economic growth and property prices. 2019 saw the slowest growth rate in 25 years and can be attributed to the slowing birth rate. However Victoria was by far the strongest state with a 2.08% increase in population.”
He also believes that economic stability will improve in 2020 with the United States and China trade deal, new jobs growth, infrastructure projects and real wage growth. Additionally, housing supply will improve in the second half of the year due to the recent increase in building approvals, and in turn, stock turnover is expected to increase.
“Overall the economy is slowly recovering with business confidence rising and our international trade is now in surplus by $7.9 billion so there are many positive signs for 2020.”
Lastly, O’Brien provided the following suburb predictions for Victoria:
Lisa Pentland, General Manager of Sales and Service at PropertyMe observed the increase in mergers and acquisitions throughout 2019 and predicts that this trend will continue throughout 2020.
“2019 was a tough sales year for most. It saw a number of proactive business leaders review their opportunities to decrease costs and increase scale, efficiencies and recurring income. However, those who used the opportunity will reap the rewards this year, giving them a distinct competitive advantage,” Pentland said.
Pentland believes that “Industry laggers will feel increased financial pressure, struggling to remain profitable with outdated infrastructure and practices.”
Coupled with increasing compliance requirements and customer expectations, many businesses will be forced to make some tough decisions:
The result is the growing emergence of two distinct business types:
Thanks for reading this blog on real estate predictions. You might also be interested in The Future of the Real Estate Industry, The Unrealised Opportunity Hidden in Your Business and 10 Essential Property Management Software Features.
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