Property Management a billion dollar business

March 31, 2010 Leave a comment

Agent on Rental Inspection

Property Management a billion dollar business

Property Managers and business owners from across the country who met in Sydney this week heard that property management is the unsung hero of the property industry. 

“We had 140 property managers in the room and between them we estimated the market value of the properties under management to be more than $2.6 billion dollars,” said First National Board member and Tasmanian State Chair Deanne Lamprey. 

“Each of our property managers are looking after millions of dollars worth of assets, they play a very important role in the real estate industry, economy and the community”.

First National Real Estate CEO, Ray Ellis, agreed.  

“All the data and analysis focus on the sales side of the property industry,” Mr Ellis said.

“When people work hard to put away money for an investment, they want to make sure that asset is looked after so they earn good returns and the value of their investment will continue to grow in the future.  

“In real estate, the people who look after those assets are property managers.

“With our housing stock in such short supply and vacancy rates tight across the country, effective property management is a vital part of our economy.

“Without good property management, the value of Australia’s housing stock would deteriorate in condition and then in value.”

Mark Millington, Principal from First National Real Estate Lakeshores said they were surprised by the value of assets under management. 

“It is very easy in a real estate business to focus on sales, but that side of the business is often very short term and easily affected by changes in interest rates, market sentiment and local developments,” Mark said. 

“Property Management is the business that tends to remain steady regardless of whether sales are up or down.  Looking after the assets of the community is important work that is often under valued.”

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Winning the War Online

March 29, 2010 Leave a comment

First National Lakeshores Web Site

First National Lakeshores Web Site

When Australia’s top real estate brands were announced in December last year, Sticky, an Australian media agency, analysed their in-bound marketing and gave some of the big brands a wake-up call, announcing that the best online marketers were not necessarily the biggest agencies. Story by Stewart Bunn.

Success in real estate has long moved past just being the best salesperson or property manager. Winners have launched into the realms of social media, online profile management and database marketing. While many still don’t fully grasp how websites such as Facebook, Twitter and LinkedIn help win listings, there’s widespread acceptance that social media websites facilitate a highly effective form of agency marketing, and, are way more dollar productive.

It’s not just agents and property managers embracing this important new medium either. Australia’s major networks are fiercely promoting the relevance of social media, taking every opportunity to train their agents on how to best exploit their online presence, capturing ever more consumer property searches and steering them to their websites.

This is not without good reason. The rise and rise of consumer blogging websites, where members of the general public discuss customer service in an un-moderated environment, delivers the potential to either destroy or underpin the success of each and every real estate business.

Within minutes of a customer service failure, your agency, its employees and its brand can all be ‘kicked to the kerb’ with devastating consequences.  And, if you don’t think one consumer’s rant has much potential to get noticed, think again. Google introduced ‘real-time search’ last year and appears to index and ‘crawl’ web-logs faster than other websites, so a single disgruntled customer might end up with better search engine results, placing their opinion of your business above the link to your own agency’s website. Fortunately, though, the destructive power of social media can be mitigated by making sure you have an active and positive presence in the same online sphere.

The traditional playing fields for the major Australian real estate brands are shifting rapidly and future success will have little to do with the consumer brand awareness that comes from sheer office numbers. As the relevance of newspaper marketing begins to fade, and it is, a mixture of Search Engine Optimisation (SEO), Online Profile Management, Inbound Marketing and Social Media is becoming vital to the dominance of this bloody, bloody battleground.

Somewhat of a paradigm shift is occurring as the whole industry gets its head around adjusting its emphasis from ‘Outbound Marketing’ – where you invest hard earned dollars trying to interrupt potential customers with your message – to ‘Inbound Marketing’ – where potential customers find you and decide whether they want to discover more. The major corporates may find this adjustment the most difficult of all.

Last December, Business Review Weekly (BRW) published their ‘Top Australian Agencies’ list, outlining the thirty most influential real estate brands nationally, but in no particular order. As if to emphasise the power of the internet and its ability to rapidly challenge accepted norms, Australian inbound marketing experts, Sticky, took this list and assessed the performance and ‘site stickiness’ of the top 30 brands’ websites, accidentally proving that biggest doesn’t always equate to industry best. The results showed which networks threaten to shake-up the industry, potentially changing the brand pecking order with their Inbound Marketing skills.

IPSOS, an international company whose sole focus is survey-based market research, found that Australia’s top three best known brands are, in order, LJ Hooker; Ray White and Elders. Sticky’s assessment, however, showed that the top three most successful inbound marketers are, in order, First National Real Estate, LJ Hooker and Century 21. So, if inbound marketing is the way of the future, these three may be headed for brand dominance.

So how is it that First National Real Estate, a cooperative that IPSOS research placed at number seven in terms of overall brand awareness, was able to beat six other major brands with a score of 96.2 out of 100?

According to Craig Wilson, Managing Director of Newcastle based Sticky, his organisation conducted its analysis based on six key criteria including On-page SEO, Off-page SEO, Keyword search results, Competitor scores, Social media and Traffic conversion. “Scores can vary from month to month depending on search terms” says Craig. “Our NLYZR assessment measures websites against up to 568 international search engines and then provides the best recommendations on how to improve search rankings.”

The company utilises constantly updated optimisation software, which assists Fortune 500 companies like Microsoft and Mastercard through to small enterprises across the USA and Australia. Sticky’s NLYZR adapts this set of search engine optimisation tools to meet their Inbound Marketing criteria and the company’s website allows real estate agents to submit their own website for free testing. Whilst NLYZR was initially created to meet Australian web marketing demands, the company has increasingly found itself using the technique for international projects too.

What, in practical terms, does First National Real Estate do differently though? The question was put to First National Real Estate’s National Online Services Manager, Suzi Cowperthwaite. At pains to point out the fluidity of results such as these, Suzi is reluctant to take credit, preferring to point to an overall long-term strategy of communicating with the network’s agents, educating and reinforcing the importance of web-based marketing as the future of the profession at every turn.

“First National made an unpopular decision to significantly change its eMarketing strategy five years ago” says Suzi. “While there was some opposition at first, the network determined that it would patiently take every opportunity to outline and communicate how the marketplace was changing and how the network’s brand awareness would be increased over time.”

Using a combination of template-based individual member websites, the network encouraged its membership to buy domain names related to their region of operation and also set about buying hundreds of domains itself.

“Ultimately, this is just one small part of an overall strategy that involves websites, promotions, consumer competitions, social media, Web 2.0, First National Television and other initiatives” says Suzi.

The real estate profession now stands at a crossroad, a juncture where leaders will work to re-educate their salespeople and property managers, re-orientating the promotion of their agencies and personal profiles, and finally letting go of the notion that self promotion is a one way street where the consumer is forced to listen to a carefully crafted message. The world has changed and the information age heralds the beginning of a new era for both the profession and its major networks, one in which those who connect and communicate with consumers on their terms not only survive, but prosper.

Stewart Bunn is First National Real Estate’s National Communications Manager. A licensed estate agent with 16 years experience in the real estate industry, Stewart has a diverse background that includes professional experience in product management, sales, marketing, strategy, executive management, team building and network communications.

Source: Sold Magazine – March 2010

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CAN RENTING BE BETTER THAN BUYING?

March 26, 2010 Leave a comment

Current market conditions, coupled with growing concerns over housing affordability, are causing uncertainty for home buyers who are wondering whether they should continue to rent or commit to buying their own home.

Mark Millington, Principal from First National Real Estate Lakeshores says it all comes down to what suits the individual’s personal and financial situation best.

“With property prices and interest rates continuing to increase, mortgage repayments are beginning to be beyond the reach of many young Australians,” Mark said.

“But they shouldn’t panic.  Renting offers great flexibility with the option to relocate from home to home and area to area as the need arises, which is not the case with buying a property.

“If finances get tight, or the home situation changes for any reason, it is far harder to just pick up and go if you own your own home.

“Renting is also often a cheaper alternative to buying, especially in the inner city areas particularly favoured by Gen Y-ers who want that urban lifestyle close to where they work.”

While the housing supply and demand equation will continue to put pressure on vacancy rates, the fact remains that monthly rental payments will usually be less than a mortgage repayment for a comparable property.

“One of the greatest advantages of renting is that maintenance costs, repairs, rates and insurance bills are the responsibility of the property owner, and not the renter,” Mark said.

Despite these many advantages of renting a property, there are some disadvantages which will make buying preferable.  The most obvious one being that when you rent, you can never really put your own personal stamp on the property or make it reflect your individual style and design preferences.

“There is also the inconvenience, and in some cases pressure, of knowing your landlord can inspect the property whenever he/she wishes (providing they give sufficient notice) invading your privacy and peace of mind,” Mark said.

“But the biggest disadvantage is that you will never pay the property off, as you do with your own home.  You will always have to pay rent and therefore the money is lost for good, without any chance of recuperating it in the sale of a property.”

Ultimately, this is where the biggest difference is between renting and buying.  An individual needs to consider which will make the greatest impact on their personal net wealth and cashflow over their lifetime. 

“Usually, this will be purchasing a home, but it will come down to making sure you buy well and that you buy right,” Mark said.

“This is where the advice and assistance of a real estate agent comes into its own.  We have the necessary knowledge, experience and skills to understand the market, its trends and its weaknesses and opportunities and it is what we pride ourselves on. Despite the end of the boost to the First Home Owners Grant, it’s important to remember that the First Home Owners Grant still exists as well as many additional state Government financial incentives.

“So home buyers need to learn to make the most of the services we have available, so that they can make the most of their finances over the long term. There are many creative ways in which home buyers are saving for that first purchase whilst renting and we can help explain the options available.”

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Does Australia Face a Property Bubble?

March 22, 2010 2 Comments

Heading for a property bubble

Does Australia face a property bubble

 

For sometime, elements of the media have suggested Australian housing values are over-inflated and face the risk of a speculative housing bubble bursting. This theme arises in some European and US based reports, where an incomplete understanding of the Australian property market’s unique dynamics is evident. Australian media is not devoid of such reports, although they are far less prevalent. 

Of course, there are reasons for concern. Many of the market’s indicators do underline the fact that things are getting hotter. Housing prices have been rising strongly this year, on the back of modest gains even last year. Auction clearance rates started strongly in 2010 and pre-auction sales are well up. The number of properties being sold has risen. Rents continue to rise, although slightly slower than expected, and vacancy rates are at their lowest point in the past twenty years. 

Balancing the rapidly heating market though is a sharp drop in home loan approvals. To an extent, this is an expected result of the removal of the First Home Owners Grant Boost. With many having rushed to beat the phase out in December, there’s a natural adjustment occurring. However, this is also partly attributable to tightened credit conditions. 

The set of fundamentals driving the Australian property market differ, though, from most international markets right now. Firstly, Australians are chiefly coastal dwellers. This is in total contrast to the European and United States property markets. We have a limited number of population centers and these attract the vast majority of our population, as a result of employment and lifestyle conditions. 

Our political structure of Federal and State governance leads to another unique factor. The Federal Government has determined a policy whereby levels of immigration are set at their highest since WWII, generating significant demand for housing. This collides with an environment of under supply and a demonstrated State Government incapability to plan for appropriate land release and building approval processes. 

Australia’s banks are more heavily regulated than those of other countries and the concept of ‘non-recourse’ lending that, in part, led to the sub-prime mortgage crisis in the United States, is simply not a feature of our marketplace. The economy has performed strongly and continues to do so as employment posts some of the strongest gains on record in recent times. 

Banks, however, remain reluctant to resume lending for apartment developments and this is another factor constraining supply. As predicted in First National Real Estate’s Property Outlook 2010, investors have noticed the opportunity for capital gain in such an environment and this is where the Reserve Bank of Australia (RBA) observes some risk of speculation creating a bubble. 

Research shows that basic variable interest rate movements of the past ten years have averaged 6.6 per cent. The last few RBA board meetings have all discussed the need for interest rates to return to ‘normal levels’ if the economy still shows signs of expansion. According to finance brokers Smartline, Australia is now only 0.60 per cent from the medium term average, as the chart above shows. RBA boss Glenn Stevens’ estimate is that it will take one or two 0.25 per cent increases in official interest rates to return to ‘normal’. 

New home sales made an encouraging start to 2010, with sales of newly constructed homes jumping 10.1 per cent in January. Sales of new apartments also rose, but only by 4.1 per cent, following a 14.5 per cent rise in December 2009. However, while sales were up in January, building approvals fell 7 per cent so supply remains the never-ending challenge critical to avoiding a bubble. 

One simple factor is clear. If State and Federal Governments cannot coordinate, at all levels, to solve land supply constraints, high levels of taxation on new housing, and, structural barriers, the strangulation of dwelling supply will leave the RBA with one option only to minimise the chance of a bubble bursting – suppressing demand by lifting rates further still.

Filed under Market Updates, Media Releases Tagged with , , ,

FIRST HOME BUYER NUMBERS ARRESTED

March 20, 2010 Leave a comment

First Home Buyers

Searching for First Home online

The number of first home buyers in the marketplace has dropped significantly, but according to Mark Millington from First National Real Estate Lakeshores, there is still plenty of opportunity for first home buyers to realise their dreams of home ownership.

“Since October last year, market share for first home buyers has decreased from 26 per cent to 22.1 per cent currently,” Mark Millington said.

“And the potential for escalating interest rates, which have now been on hold for three consecutive months, along with government taxes and high up-front costs may make things even harder for first time buyers to save for that ever-important, yet growing in size, deposit.”

Mark Millington does have some advice to offer first home buyers, whose confidence is waning as house prices are set to continue soaring growth throughout 2010.

“First home buyers need to be more financially savvy if they are going to get into the housing market in the coming twelve months,” Mark Millington said.

“They need to be able to make sound financial decisions, based on a level of certainty around interest rates.

“This is why we recommend they seek the services of a financial advisor who can assist them to establish a savings plan and budget to track their expenses and identify areas where they can cut back on their expenditure.”

Establishing a budget is about setting realistic timeframes, estimating income and expenses accurately and then tracking and monitoring spending to identify areas where belts can be tightened.

“There are also still in place a number of government assistance schemes, such as the First Home Saver Accounts and First Home Owners Grant which can also assist greatly,” Mark Millington said.

Other hints for first home buyers include keeping an eye on the market at all times, talking to good agents about where the bargains lay in a suburb, and shopping around for good mortgage deals.

“Look for mortgage deals where you are able to pay back more than the monthly repayments, which can often reduce the term or interest payable on the mortgage significantly,” Mark Millington said.

“Or, consider switching from a standard to a basic, or no frills, home loan which can potentially cut interest rates by around 0.4 per cent, but potentially may take away the flexibility to achieve other savings such as extra repayments.”

First home buyers need to reclaim their share of the property market and take advantage of the services and incentives currently on offer.

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SLOW AND STEADY TO WIN 2010 NSW PROPERTY RACE

March 19, 2010 Leave a comment

Property Outlook 2010Mark Millington from First National Lakeshores and First National Real Estate State Chair, expects the New South Wales property market to further strengthen over the first six months of 2010, with the potential for small increases in property prices and rentals on the back of moderate price growth over the last six months of 2009.

“House, unit and land prices in the state rose by up to 5 per cent in the last six months, due mainly to increased investor activity as a result of low interest rates and high rental yields,” Mr Millington said in First National Real Estate’s 2010 Property Outlook released this week.

“Unit and land prices rose as a result of lower levels of established homes being available for sale, forcing buyers into building new ones.

“This shortage of available homes will also drive rent increases of up to 5 per cent in the coming six months. 

“I expect prices to rise marginally over the next six months as the First Home Owners Grant Boost comes to an end and interest rates increase, and investors continuing to be drawn back to the market as the first home buyer market returns to more normal levels of activity.”

Around 1-5 per cent of the state’s sales activity in 2009 is attributable to investors and this is expected to increase by 5-10 per cent in the first half of 2010.

Mr Millington believes this ongoing trend is due to investors finding high rental yields and lower interest and vacancy rates too attractive to ignore.

“When compared directly by investors, an unstable stock market makes bricks and mortar seem a more secure option for their investment dollars,” Mr Millington said.

Sales are expected to rise as Generation X’ers continue to be lured to the state with planned new jobs and businesses.

Hot spots are considered to be the city and coastal areas where Mr Millington expects there will be consistent price growth because of lower supply of property for sale and increasing buyer demand.

Mr Millington considers the environment another major factor that could impact on the property market. 

“Up to 5 per cent of house hunters in New South Wales are looking for energy efficient features when looking to buy a new home,” Mr Millington said.

“The most popular energy efficiency features in the state are water tanks and solar hot water.”

Click here to view Property Outlook 2010.

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