r O’Malley
Inside Real Estate
First published in 2017 by John Wiley & Sons Australia, Ltd
42 McDougall St, Milton Qld 4064
Office also in Melbourne
Typeset in 11/13.5 pt ITC New Baskerville Std
© Harris Partners 2017
The moral rights of the author have been asserted
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All rights reserved. Except as permitted under the Australian Copyright Act 1968 (for example, a fair dealing for the purposes of study, research, criticism or review), no part of this book may be reproduced, stored in a retrieval system, communicated or transmitted in any form or by any means without prior written permission. All inquiries should be made to the publisher at the address above.
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Disclaimer
The material in this publication is of the nature of general comment only, and does not represent professional advice. It is not intended to provide specific guidance for particular circumstances and it should not be relied on as the basis for any decision to take action or not take action on any matter which it covers. Readers should obtain professional advice where appropriate, before making any such decision. To the maximum extent permitted by law, the author and publisher disclaim all responsibility and liability to any person, arising directly or indirectly from any person taking or not taking action based on the information in this publication.
For William
May you live a long and happy life
ABOUT THE AUTHOR
Peter O'Malley has sold real estate in Sydney's inner west for nearly two decades. During that time, he pioneered the silent auction as a direct alternative to public auctions, an approach now adopted by many agents around Australia and New Zealand for the benefits it offers home sellers and the fairness to home buyers.
He is the bestselling author of Real Estate Uncovered, and is often sought by the media for comment on industry best practice and market conditions in the property market.
ACKNOWLEDGMENTS
To bring a book to completion is a real team effort over a lengthy period of time. While the author may be given credit for the work, the standard of Inside Real Estate was unquestionably raised by the many people that kindly offered insight and direction.
To that end, I am so grateful for the efforts of editors Jacqui Macarthur, Jane O'Connor, Jem Bates and Ken DeGaris for their respective advice and guidance at various stages of writing. Thank you.
Ivan Spanicek, Kerry Rowley, Arthur Kolovos, Gary Pittard, Michael Johnston, Patrick Bright and Tim Altass are all successful long term real estate players. Collectively they ensured the material was modern in identifying market trends yet timeless in outlining the principals of success in the property game.
Ethan Szerenga was a constant source of inspiration throughout the writing of the book. I look forward to reading Ethan's book on his chosen field one day.
The team at Harris Partners Real Estate constantly offered real time market feedback to ensure the consumer will learn of the many changes evolving in the marketplace. In the face of constant challenges, I am proud of the commitment that the Harris Partners team displays on a daily basis.
The silent auction process is now more widely accepted and acknowledged than it was when we released Real Estate Uncovered in 2013. For the many clients who took a chance and selected us to sell their property by silent auction, I would like to say thank you for your trust. When the wider industry is passionately wedded to the public auction process, believing there is a better way takes faith and courage.
For the many agents that supported Real Restate Uncovered, I hope that Inside Real Estate meets and exceeds expectations. The greatest asset a real estate agent can have is a knowledgeable client that ‘gets it'. Hopefully Inside Real Estate assists consumers and agents to separate the spin and find the real substance when transacting. If so, I am certain it will create a more harmonious relationship for both the agent and client.
The entire team at Wiley have been immensely supportive and professional. Their belief in the merits of Inside Real Estate is comforting.
Finally, I would like to thank my beautiful wife Clare and our three boys, Henry, Reggie and Billy, for their love and continual support.
INTRODUCTION
In poker there are two types of players: those who know the rules and those who can play the game. In the real estate market there are three kinds of participants: those who know the rules, those who can play the game and those who have no idea what they are doing. No matter which category you fit into, I hope Inside Real Estate will guide you toward a successful transaction.
The game is played differently according to market conditions. This is a subtle but vital factor that is often lost in mainstream commentary about the market. In 2013 I wrote Real Estate Uncovered to close the gap between consumers' poor experiences with the industry and most agents' objective of delivering a premium service. My goal with this new book is to teach consumers the keys to success in both rising and falling markets.
At the time of writing, the Australian property market is as diverse as the landscape it is built on. Perth is depressed; regional Western Australia is even worse. There are reports of properties in mining towns losing 80 per cent of their value. At the same time the Sydney and Melbourne housing markets are experiencing a boom of historic proportions.
During the mining boom, exactly the opposite occurred. Perth – and to a lesser extent, regional Queensland – flourished, while Sydney and Melbourne struggled against elevated interest rates that were used to contain the thriving national economy. The underlying message here is that both the economic cycle and market conditions play a vital role when transacting real estate. A lot of commentary simply looks to the recent past to predict what will happen in the near future. This is clearly a lazy and ill-advised forecasting model.
Because Brisbane boomed after Sydney and Melbourne in the early 2000s, everyone jumped to the conclusion that history would repeat itself. However, at the time of writing, the Brisbane market, particularly apartments, experienced nominal growth with interest rates at ultra-low levels. The city underperformed against less popular investment markets such as the Gold Coast and Hobart.
In a nutshell, the Hobart and Gold Coast markets have seen vibrant economic growth while Brisbane has struggled to transition away from overdependence on the mining sector. In mid 2016, research house Core Logic reported that one in six apartments were sold at a loss in Brisbane. Depending on your risk profile and purpose for buying, now is either the very best time or absolutely the worst time to buy an apartment in Brisbane.
Perhaps, as you read this book, some or all of these conditions have changed again. I hope you'll find plenty of valuable tips and insights here to help you respond appropriately whatever the environment.
As economies, cities and demographics evolve, so too do the challenges. The first baby boomers turned 70 years old in 2016. The next 10 years will see a massive transition of wealth, much of it in the real estate market. This will come at a time when digital disruption puts consumers in direct contact with one another without the express need for an estate agent.
Cashed-up baby boomers will compete with aspirational home buyers for real estate in desirable locations within our towns and cities. Baby boomers will also sell down their property investment holdings to fund retirement. These demographic and digital disruptions will change the complexion of the property market.
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