From a Low Tide to a King Tide

It’s fascinating to compare our sales results from last month with our results of 12 months ago. The contrast in market conditions will never be more stark, yet we also are reminded that what is important to our customers remains unchanged.

In April 2020 we wrote $2.54 billion in sales and April 2021 we wrote $6.88 billion. We have gone from some form of lockdown across all markets, to all markets now operating at full speed. Very few potential vendors were interested in going to market this time last year, yet over the last month we listed over 9,000 properties for sale. The average number of registered bidders at our auctions have from 3 to over 5, even the number of auctions conducted rose from 397 to 2,001.

The market has swelled from a low tide to a king tide.

We promised our customers a year ago that we would do everything we could for our them to create competition to deliver the best results possible despite the obstacles we faced. There are now very few obstacles, yet the importance of doing everything possible to get the absolute best result for our customers remains . With so many buyers and with prices well up, its not hard to achieve ‘a result’: but is it the absolute best result available in the market today? The best result can only be assured when a full marketing and negotiation process is exhausted, and when our members never assume what buyers in a competitive process might be prepared to pay.

Last April, the customer experience we provided our buyers was critical, and we were engaged with a small buyer pool and seeking to give them confidence in the market. We are now dealing with many more buyers: the numbers through our open homes has grown 5 times to be now over 111,000 people per month. Whilst it has become harder to service so many, it remains our duty to understand their frustration and remain engaged with them to help them achieve their ambitions.

It is difficult to know what to make of our April results. It was a very strong result compared to past years, and in fact our second best month ever despite it being a short month and it included the Easter break. However it was 20 per cent weaker than our March results.

Are there any signs of the market activity starting to soften? While it is dangerous to generalise across markets, we have seen a slight change in buyer activity. Our metrics for home loan pre-approvals, open home attendees, and active auction bidders have all fallen from the incredible highs of February and March 2021. And when we look at the ratio of the number of new listings to the number of sales per month, we dropped from 92 per cent to 80 per cent.

But all of our metrics remain very strong on a historical basis, and when we consider that the expectations of our vendors have risen during this time, the results show a market with continued momentum.

We produce a weekly document called Competition Creators to give our customers a chance to drill down into each market to understand what’s driving them. It provides proof points to demonstrate our sellers who proceeded to take their property to sell under the hammer are rewarded with a sale price 12 per cent higher than the best offer prior last week.

Our partners at The Loan Market Group, are continuing to post staggering numbers with $2.4 billion in credit applications in April and $2.1 billion in approved home loans. Did you know that six out of 10 home loan customers in Australia now source their funding through a loan broker? The Loan Market team reports that turnaround times for home loan applications are starting to stretch and causing stress for buyers seeking to get approvals in place to be able to purchase with confidence and compete against cash-buyers. Their recommendation is to contact your loan broker to start your home loan application process as early as you can.

Dan White
Managing Director
Ray White Group