Digital disruption remaking business models

Analysis by Geoff Grover, local real estate expert for Cooluum Beach and Mount Coolum - www.geoffgrover.com.au The interface between buyers, sellers and agents has changed significantly with the tide of digital change via increased use of hand held devices for consumers and cloud based software for business enabling agents to work from any location, re-making old business models. Additionally, consumers today are more interested in the qualities of the agent they may be working with rather than any agent on duty from a “name” franchise. Trust, relationship and performance are key factors as evidenced by websites such as www.ratemyagent.com.au today rating individual agent performance by suburb —check out Mount Coolum where Geoff is the leading volume seller. Structurally, the requirement for a bricks and mortar office has diminished considerably, as it has for retail outlets in all industries. A natural progression is the phenomenal growth in recent times of online agencies who have developed business models with extensive online back up support for agents who can now offer a 24/7 flexible service operating to suit their skills and experiences. Geoff is a well known, high achieving agent widely known as the Mount Coolum Real Estate expert and an IT marketing expert—www.geoffgrover.com.au He now joins @Realty Pty, Ltd,, the fastest growing national online agency, currently with over 100 agents nationally based under the one banner and virtual office networking together, working with Geoff for you - www.atrealty.com.au. The re-making of real estate business models is upon us—individual franchise offices working as separate silos now face the online challenge the major retail stores are finally facing up to. The combination is “Buyer Reach” maximised.

How a real estate agent without a computer uses Facebook and Twitter

A humourous take on social media by Geoff Grover, Coolum Beach and Mount Coolum local real estate expert. Does make you wonder though about the relevance of social media used in this context.

Melbourne and Sydney markets not representative of the Australian property market

Comments by Geoff Grover, Coolum Beach and Mount Coolum real estate property expert based on the Sunshine Coast – www.geoffgrover.com.au – 4TH August 2015 The Australian newspaper recent analysis got it right with several articles about the Melbourne and Sydney markets being in no way representative of the Australian market, let alone other Capital Cities. Prices are indeed ridiculous, and rental gross returns are now a low 3% after a long period of 5% plus, and remember this is gross. Never mind, they are going for capital gains. Trouble is, Melbourne and Sydney are unique in that demand is being driven by exceptional economic growth. Perth has its well recorded history, Adelaide is an absolute basket case and Brisbane has lost all its migrant allure with lack of jobs. Recent article on my website details. A looming problem is oversupply of apartments in particular with so many coming onto the market. Again my website provides articles as to why you should not buy off the plan from well respected market commentators. Putting it all together, troubles loom in these hot spots.

Putting property prices in perspective

Putting property prices in perspective Geoff Grover - Property Talk - March 2015 Local real expert for Coolum Beach and Mount Coolum. Do we have a hot residential market with rising prices? The national commentary relates to inner city Sydney and Melbourne. but this is far from representative of the nation as a whole with Perth, Adelaide and Hobart very quiet. Roundup: * Investment yields in the capital city top ends simply are not adding up anymore, as reported in the Australian March 7-8 9 (p32) by James Kirby. * Despite the prospect of even lower home loan mortgage rates, the national auction clearance rates remain subdued according to national leading auctioneer Jason Andrew 9th March Newsletter. * Brisbane City Council suburbs - despite the hype, 2010 to 2014 shows sales numbers up 26.5%, prices 7.8% * Previous hot spots in coal centres Gladstone and Mackay have collapsed . * The Sunshine Coast Central Region on the other hand has from 2010 to 2014 seen house sales numbers grow by 40%, but with only a 2% median price growth. Totally different factors apply in each of these markets delivering a variety of results, although the over arching economic environment cannot be ignored. Andrew reminds everybody that the fundamental economic drivers behind falling interest rates should not be underestimated. There are no guarantees that future interest rate cuts will have a positive effect on the property market. Even the Reserve Bank Governor has expressed concerns about the effectiveness of this financial lever. Andrew further points to some sellers reaching ahead of the market with their price expectations in anticipation of future price gains. The editor also reports some fanciful list prices on the local scene, simply not supported by any sales history. It is even more important in this market to base price expectations on a like for like model, ie, an exhaustive review of what the particular local market has achieved. Your local area expert is best positioned to provide this data and develop a strategic market plan that will maximise a sellers price, but remember, all sales only come about via a win-win situation.

The Sunshine Coast loses its allure for migrants

The Australian - Sunshine State loses its allure for migrants March 28th 2015 by Geoff Grover, Local Coolum Beach and Mount Coolum real estate expert. Migration inflow has dropped to its lowest level for 30 years according to a report from the University of Qld. The report suggests these huge volume movement days arew done, as Brisban eis now amuch more congested city now than historic levels in the 80`s and 90`s and there is maturity in the Qld economy being reached relative to other parts of Australia. The end of the construction phase for major resource projects has been a factor over the past three years as th eemployment opportunites have declined significantly. Refer Geoff Grover`s Newsroom tab in www.geoffgrover.com.au for the full report

Thinking of Selling Property

THINKING OF SELLING PROPERTY? by Geoff Grover, Mount Coolum and Coolum Beach realestate expert July 2015 “The tide of digital change remakes business models” is the heading of a recent article in the Australian and we have seen this very publicly with major retail outlets and online selling– what is not so visible is the changing face of real estate. We are now seeing a change by consumers in preference from the real estate company`s corner store brand to the personal brand, ie, knowing about the actual agent they will be working with – surveys show that consumers appear to be brand agnostic as it relates to real estate companies due to technology and the internet. A recent study showed what is most important when someone picks an agent to work with. Over 50% of the respondents said they look for an agent who is honest, trustworthy, has a good reputation and is a local area expert Only 3% said they care about the brand the agent is associated with.

Consequential to this trend is the amazing growth of online agencies and personal agent branding as the new business model. Equipped with a back office operation including a creative marketing section and subscribing to all industry major portals, this underpins experienced agents marketing efforts delivering strong results to their clients as: * they are freed from the shackles of office rules as to how they must operate. They can shape strategies and marketing to suit the property and the vendor, not be constrained to, for instance, insisting auctions, expensive For Sale signs, charging for internet listings and expensive press advertising regardless of the target demographic. * @realty have under the one banner over 100 agents nationally based working with Geoff to the benefit of his client, not a small boutique agency or a series of individual franchised agencies working as separate silos – Buyer Reach is maximised. Food for thought for all property owners looking at putting their property on the market. To identify local area property experts, websites such as www.ratemyagent.com.au have surfaced - check out Mount Coolum to see how Geoff rates.

Geoff Grover – Licensed Real Estate Agent

Lies, damned lies and statistics

Lies, damned lies and statistics by Geoff Grover, Coolum Beach and Mount Coolum real estate expert - July 2015 The full quote popularised by Mark Twain is “There are three kinds of lies—lies, damned lies and statistics” There is a lot of truth in this old saying as numbers can be manipulated to suit any argument. Property prices are a classic. We get breathless announcements as to how the market moved so much last week and extrapolating this to make a major pronouncement on trends. In truth, trends can only be identified by a long term view. You will always have short term movements up and down in everything that is measured, just ask any trader of the stock market! Let us look at house sales by year from 2010 to 2015 YTD. We have had an increase from 2012 of 23.2%, but from 2010 only 7.7%, ie, 1.54% average per year, which is less than inflation! This is solid, but no price boom. What is very relevant is the numbers sold, increasing each year. The property cycle used by the serious commentators predicts that price growth always follows volume growth, a simple outcome of supply versus demand. Increase from 2012 is 10.2%, from 2011 nothing, from 2010 0.86%.per annum. Year to year figures are affected bysegmentation, ie more high end sales than last year, so the long term view & like for like analysis is essential.

The Art of Price Positioning

How do you price a property for sale to achieve the best result, or do you not market at a price? The no price proponents, eg by auction, say it is best to let the market decide by getting buyers feedback In certain areas of Australia, notably Melbourne and Sydney, auctioning is the dominant form of marketing, not so accepted elsewhere. The press promote auctions aggressively because it is a press dominant process, relying much more on heavy, widespread newspaper advertising $`s in a short time frame rather than the balance of appropriate press and internet exposure designed for the property, ie strategic management which may be local press only. Qld, for instance, despite the apparent dominance in the press of auctioning due to the major agencies championing it, has far more properties sold by private treaty rather than at auction. In areas where there is a lack of wide auction acceptance, market feedback on likely sell prices can be skewed by savvy bargain hunters who give rock bottom price feedback to agents. The “Make an offer” or similar & “Offers over $x” listings are invariably the result of a vendor not liking the probable sale range price advised by the agent on appraising. These approaches are often suggested by agents on the premise they will attract much higher prices than the appraisal, all to win the listing. This is usually wrong on all counts. *Many buyers will simply not enquire as they fear they will be wasting their time, or * Buyers will sense a bargain with this sort of language and hit a low price. Very rarely do offers over list price marketing result in much more than at best ,a small price above the list price, usually lower. Then we have the very high list prices, on the assumption you can always come down, but you can`t go up. Totally unrealistic. The problem here is that buyers know that & do not come, you have nobody to negotiate. The upshot: * an effective auction is significantly more expensive than private treaty with heavy dominance on mass press advertising. *Selling on a no price basis, eg “Make an offer” limits the opportunity to sell at the right price with fewer buyers inspecting ,with bargain price offers a likely outcome * High list prices attract very few buyers The lesson to be learnt is to work with the experienced & highly knowledgeable local area expert to market at the proven price range using their marketing expertise & contact with local buyers if sellers wish to sell in a realistic time frame & at maximum market value. Many don`t - the average house sale result for P/C 4573 for the 12 months to July 2013 is on the market for 168 days with discount off original list price of 9.4% !!! Surely this tells a tale!! Geoff Grover - Property Talk - November 2013

Confidence & the housing market

There is a lot of speculation about the housing market in the daily press at the moment, with a lot of talk re “price bubbles’ and the market taking off. For a more detailed review, attention needs to paid to leading key performance indicators (KPI`s) rather than current or last week`s auction clearance rates to allow a realistic assessment of trends. One of these is measures of consumer confidence, where we have a database over an extended time frame that enables comparisons with earlier periods where the outcomes are known. Michael Matusik in his Matusik Missive dated October 15th 2013 discusses the Westpac Melbourne Institute Consumer Confidence Index and reports as follows: Confidence The theory was that confidence would lift after the federal election, but the Westpac Melbourne Institute Consumer Confidence Index actually fell by about 2 per cent during October. The index now sits at 108.3 – which actually means little to most of us – but if I put it another way, 100 means that half the community are optimistic & half are pessimistic. So, a 108.3 reading means that slightly more see the glass half full rather than half empty. But not a lot more of us are seeing the sunny side of the street. Another surprise was the fall in the ‘whether now is a good time to buy a dwelling index’. This score fell 10 per cent from 140 index points to 135, with the biggest falls in NSW (down 23 per cent) & Queensland (down 11 per cent). There were similar falls in April this year, following media speculation about interest rates moving upwards. October’s decline comes on the back of talk about a housing bubble; declining affordability & pending market correction. But as we pointed out both here & here – in our opinion at least – no such bubble conditions (yet) exist. If we are not careful, we will talk ourselves out of a good thing. The Westpac Melbourne Institute Good Time to Buy a Dwelling Index is a near prefect bellwether as to the future direction of the housing market. If this current slide in confidence continues, expect the recent gains made in housing prices & sales to plateau & maybe even fall in about six months’ time. Acknowledgement – extract from the Matusik Missive, October 15th, 2013

Massive plans horrify residents - Coolum Domain October 11th 2013

Residents and community groups are preparing for a battle over plans for a major development at Yaroomba that involves taking building heights to a maximum of 12 storeys. This is something that Coolum Beach real estate interested parties have long fought against. Check the Newsroom and Blog tab at http://www.geoffgrover.com.au

Is the price right?

We are obviously through the worst of the housing price downturn and in general the number of properties nationally for sale are at very low levels , leading the major press to be filled with reports of a house price bubble, significant price growth, etc. These comments focus on capital city movement in the main, and bear limited relevance to regional centres. The astronomical price growth in capital cities was mainly led by the “gentrification” of inner city areas as the urban landscape changed. Poor working class suburbs became much sought after. Re article on this on my website. So direct comparison with capital city price movements is somewhat tenuous as regional property prices are subject to different factors. What is a major factor in our area is the price segmentation that has led to a disproportionate number of upmarket properties being listed in the belief “the price is right”, the market has changed, everything is selling A detailed analysis of Mt. Coolum & Yaroomba reveals that in 2012 and 2013 YTD, 66% of all house sales were under $500,000 Yet houses for sale today in these suburbs at these prices are at 19% & 15% as reflected in the table - by far the bulk are the expensive properties with much fewer interested buyers. House Sales - Jan to July 2013 Under $500k Over $500k No. % No. % Mt Coolum 25 68% 12 27% Yaroomba 12 67% 6 33% Housing stock for sale as listed on realestate.com.au shows as at 24th September Houses for sale Under $500k Over $500k No. % No. % Mt Coolum 5 19% 22 81% Yaroomba 2 15% 14 87% In reality we still have a wide choice for the upmarket properties, strong competition but a desperate shortage of the popular price points. Negotiation strategies for both groups then become quite different. The under $500,000 sellers & buyers need an agent who understands local area values, establishes prices accordingly & negotiates firmly around this - agent skill sets become the predominant factor as this leads to a win-win scenario for all, the seller achieves the price, buyer does not miss out.

Gentrification

We are obviously through the worst of the housing price downturn and in general the number of properties nationally for sale are at very low levels , leading the major press to be filled with reports of a house price bubble, significant price growth, etc. These comments focus on capital city movement in the main, and bear limited relevance to regional centres. The astronomical price growth in capital cities was mainly led by the “gentrification” of inner city areas as the urban landscape changed. Poor working class suburbs became much sought after. Re article on this on my website. So direct comparison with capital city price movements is somewhat tenuous as regional property prices are subject to different factors. GENTRIFICATION as appearing in the Matusik Missive – September 18th 2013 By Dr. Alan Davies Transport and Urban Development Consultant Gentrification is one of the most significant changes to occur in Australian cities over the last 50 years. It wasn’t caused by deliberate urban policy though but resulted from a complex set of deeper forces Previously, I argued that urban policy-makers didn’t single-handedly create Melbourne’s much envied laneway culture (How did Melbourne’s ‘laneway culture’ come about?). Their contribution was important but it was primarily about facilitating and attenuating underlying economic and social forces. There’s a more general point here. Most of the big changes in cities aren’t shaped by planners but by structural pressures and trends. Much of the challenge facing urban policy-makers is to understand these pressures and guide and attenuate how they work geographically. Consider the gentrification of the inner city that started in earnest from around the 1970s in Australia and led directly to today’s stratospheric property prices. It’s instructive to think about what caused gentrification because it shows the idea that we can confidently plan urban futures over long time periods is largely a conceit. (Fn 1) Could anyone in the 1950s or 1960s have confidently predicted the extent of gentrification of the inner areas of Australian cities? It’s hard enough to identify some of the key forces that produced the inner city revival, but the idea that policy-makers knew where it would go – or deliberately planned today’s outcome – seems very unlikely. In the 1950s the inner suburbs of Melbourne and Sydney (defined as 5 km radius from the CBD) were relatively dense mixed-use working class suburbs with terraces, pubs and factories. Housing was relatively cheap and attracted migrants who in turn generated demand for “exotic” services like cafes. Around this time the departure of manufacturing for the suburbs began in earnest. It was driven by a number of factors, including new ‘horizontal production’ methods, reductions in the cost of truck transport and increasing traffic congestion in the inner city. With cheaper cars, construction of better roads and new areas opened up for housing, much of the inner city blue collar workforce followed manufacturing to the suburbs. So did the many migrants who aspired to live in larger detached houses. The exodus of industry was crucial for gentrification – it made the inner city a much more pleasant place to live. The rapid expansion in higher education in the 60s and 70s introduced many staff and students to the lifestyle possibilities of the inner city. Rents and house prices were competitive with the suburbs, at least in the early decades of gentrification. Later, declining household size – itself the product of upstream changes in factors such as fertility – meant small inner city dwellings provided more space per person, especially for the expanding cohort of professionals who worked in the CBD. They married later, had fewer children and hence required less space. Most terraces could in any event be renovated to function better and even extended to some degree. Gentrifiers were initially drawn to the inner city by the diversity of jobs it offered and later by the CBD’s increasing specialisation in high-paying Government, corporate and producer services jobs. This shift in employment geography was a consequence of higher level economic changes brought on by the transition from a goods to a services and knowledge-based economy. Increasing female workforce participation helped to make the then-fringe suburbs, which were progressively becoming more distant from the centre, less attractive to this group and conversely made the accessible inner city, which also had the highest density of public transport routes, correspondingly more attractive. The high residential density of the centre also complemented the lifestyle of these smaller, richer and better educated households. Old buildings that formerly supported industry and a much larger population provided venues for restaurants and other lifestyle services. These are some of the forces that came into play at different times but worked synergistically to produce gentrification. While it might seem easy to understand the broad outline of these changes in retrospect, it is hard even with the benefit of hindsight to unpick exactly how the events unfolded, what relative contribution each factor made, or how it might have worked out if some of these factors had been different or even absent. It is harder still to sort out cause and effect at the geographic level of individual suburbs. Perhaps a small difference in one factor could have produced a wildly different outcome. Those difficulties however are trifling compared to how hard it is to identify all the relevant factors – with appropriate weightings and timings – that will shape Australian cities over the next 50 years and predict how they will combine and what outcome they will produce. As I’ve observed before (Can outer suburbs be more adaptable for future generations?), the idea that we can go one better and deliberately create or plan some idealised future based on today’s values is ambitious to say the least. Of course some decisions have to be made today in the expectation their effects will be long-lived, e.g. transport infrastructure, but we should nevertheless focus on maximising the ability of our cities to adapt to new and unforeseen circumstances. We should mostly shy away from the small stuff – including physical design – and focus on the big picture stuff like having flexible and efficient institutions and processes. We should focus on removing impediments and frictions to adaptability, such as hefty stamp duty on property transactions. Prices should reflect real costs rather than implicit subsidies. The cost of negative externalities should be internalised e.g. by road pricing. Our institutions should be open and accountable. We should be aiming to have an urban system that can absorb and adapt to change. But we should be wary about privileging today’s technical understandings and political views; because there’s a good chance they’ll be wrong. This article first appeared in The Urbanist, and is reprinted with the kind permission of Dr. Alan Davies, who is a principal of Melbourne-based economic and planning consultancy, Pollard Davies Consultants …..