30 Oct 71% say government should do more to help FHB’s – Matt McCann
Despite the fact that some property sellers believe the government should offer more support to first home buyers, they say they would be willing to offer them discounts of up to 10%. That is according to a report from Local Agent Finder. Would you do it? We question that report with Matt McCann.
Kevin: Boy, there’s a lot to talk about in the report I’m going to tell you about now. It’s the Real Estate Sentiment Report, that has been issued by or commissioned by Local Agent Finder. The survey suggested that Australians are extremely sympathetic to the plight of first homebuyers, as 71% of people believing the government’s not doing enough to help this group.
Kevin: We’ll talk more about that, and some of the sentiments that came out of the survey, but joining me to talk about this, Matt McCann, from Local Agent Finder. Matt, thanks for your time.
Matt: Yeah, no problem, Kevin.
Kevin: I’d have to really question, because a little bit further in the report, two out of three people were willing to offer discounts to genuine first homebuyers. You wonder if that’s, would really happen. It’s a lovely sentiment, isn’t it?
Matt: It is. It is a lovely sentiment, and I think, when you think about the report itself, it’s 1,000 Australians. There’s a lot of people in here, who … and you know, so 71% of them think the government isn’t doing enough for this group of people.
Matt: I think what we’re seeing here in the responses is, the reaction to high house prices. What you’re seeing is mums and dads, who have got kids that want to own their own home one day, grandparents looking at their kids trying to get onto the property ladder, and buy … suggesting that, in the report, that they would be prepared to offer a discount. Two out of three of them were prepared to offer a discount.
Matt: Now, I think what we’re seeing is that, generationally, wealth’s been created through property, for those two generations, and they see it as being very hard to get a foot in for their kids and their grandkids. So I think what you’re seeing is a fair bit of sentiment in this.
Matt: Most of us will realise that, actually, when it comes to grinding through the process of a sale, we’re all looking to maximise the return we get out of our property sale.
Kevin: Yeah. Of course. Of course, yeah. A couple of other interesting points, too, sentiment from sellers looking to sell sooner, rather than later, or as soon as possible. Which, I guess, is a reflection of just a little bit of uncertainty in the market, as to whether it’s going to continue to grow, or whether it’ll actually come back a bit, Matt.
Matt: Yeah. Look, I think what that’s telling us is that, actually, people believe that the market’s going to stay either reasonably square, or drop slightly over the coming, and particularly, two years of what people are talking about, in that answer. What that says to us is that you can have a look at some of the, if you will, the headwinds on property value.
Matt: Well, obviously, we’ve gone through a process of limiting the nature and extent that foreign buyers can come into a market, and acquire property, and certainly, the costs that have been added to that through state and federal government regulations have been considerable. Certainly, around lending criteria, is another big one, and we’re seeing the impact of the Royal Commission here, where, the banks are being asked pretty tough questions about the way in which they’ve assessed the eligibility for a loan.
Matt: And we know that property financing drives property pricing, so those two things are connected. So, if you put that together, and then, and just have a look at what that means for a potential person who may well have been in a property for eight, 10 years, it might well be a time to realise some of that capital, that they’ve amassed with strong growth in property values over the last, really, five to 10 years.
Kevin: I want to pick up on another point that came out of the survey, as well, and that is to do with downsizers, or retirees: 78% said that they think the government should be doing more. It’s interesting. I did an interview the other day with someone who pointed out to me that the size of the downsizer market is absolutely huge. It’s like a tidal wave coming through.
Kevin: A lot of agents don’t realise that they’ve actually listed a property that suits the downsizer market perfectly. The number we came up with was about 54,000 properties in the last 12 months. It is a huge market, Matt, isn’t it?
Matt: It is. It could be a bigger market, in terms of releasing family-sized properties to the market available for people to, obviously, to buy.
Matt: Part of the problem is that, again, a lot of people’s wealth is tied up in that single asset that’s there, is their family home, and as they get towards retirement age, the inability to contribute, or maintain at least the capital gains tax break that you get from property, as opposed to other types of investments, means that people hang onto their properties longer, perhaps, than they really should for the utility that it gives them in where they live.
Matt: We all know the story of Grandma and Grandpa are living in a four-bedroom house, in a great suburb, but can’t really afford to sell the house, and keep the same sort of standard of living that they do now, because that would affect other government entitlements, or retirement products that are out there.
Matt: The government, in the last year, in the budget, did bring in a contribution. But it was capped at about $300,000. So I think there’s an area there, that the government could do more, in terms of being able to encourage, or at least, provide the tax for break, so that we’ve got many more family sized homes on the market.
Matt: And hopefully, over the time, over time, that will mean that bigger family house will become a little bit cheaper.
Kevin: Yeah, well, I do think, too, that developers are really responding to this growing market, and this need to offer more lifestyle villages. I think we’ve always heard of, if you’re going to go into retirement, you’re going into a village, and it means you’re an old person, and they’re not all that good.
Kevin: But the lifestyle villages they’re building now are really very attractive, Matt.
Matt: Well, they are. There’s a combination of, both, lifestyle villages, and some of the, what I’d call premium bigger apartments. We’re certainly seeing a lot of that in Melbourne, and to a lesser extent, in Sydney, where the two- and three-, and the three- and four-bedroom apartments, that, previously … you might have been the exception, are starting to became the rule, in terms of how people are thinking about development.
Matt: And so, going from the four-bedroom house, or a bigger house, down to a three-bedroom … but a really good-sized apartment, with good amenities, and good access to public transport, and city views, even, become a really appealing proposition for someone who’s downsizing.
Kevin: Let’s talk very quickly, just in closing, if we could, about advertising real estate agents and how they list property. I noticed that, in there, there was a large number of respondents, who said that they would like the agents to pay for the advertising. Just a couple of points on that. I think this has always been a debate amongst agents, and sellers, for quite some time.
Kevin: But if the agent actually pays for the advertising, the seller loses control of where the advertising is placed.
Matt: Well, I think there’s a yes and no in this one. I mean, I think, when we think about it, it’s sort of, at First Principals, we say, “There’s a whole lot of cost involved in selling, and do I go and put my property onto the market, and take the risk?” And that cold be anywhere between three and $20,000, depending on how much advertising you wanted to spend, to test out the value of my house.
Matt: And so, what we say, there’s a whole pile of agents out there, who are saying, “We want more listings,” and I think that’s where the pressure comes, is that they’re looking for listings in a market that has traditionally … we’re at the bottom end of the number of listings and transactions for the 10-year averages, over the number of properties.
Matt: So if they’re looking to bring more on, then the idea of doing that is to take some of the risk away for a potential vendor, who might be interested in testing the market, but doesn’t want to be interested in necessarily writing the check, particularly where, in an area where they think that property will have great demand.
Matt: It also probably weighs a little bit of the risk/reward, that you give the agent, from the vendor’s point of view, a bit of skin in the game. You know they’re committed to getting a good campaign and a good outcome from that. But having said that, it does move where an agent will choose to put those advertising dollars, and that’s probably got some implications for a couple of sectors in the market.
Matt: Is the agent going to be tougher on where the dollars should go, then a vendor who’s happy, he’s really on a path through?
Kevin: Yeah, and I think the other point, too, is that sellers have got to be aware of the fact that the agents can actually put a lot of pressure on them to sell, just to recover the cost of the advertising, as opposed to getting them the highest possible price. Another point I wanted to make, too, if I could, Matt, and that is, on commission levels.
Kevin: We think that agents make a lot of money. In Australia, the average commission’s about 2.6%, compared to, if you’re selling a property … well, agent commissions are, in the US, they’re around 6%, split between buyers and sellers. So, I mean, Australia is recognised as being one of the leaders, when it comes to marketing property, and I do think that a lot of that’s come out of the fact that sellers have invested in the originality of how their property’s going to be marketed.
Kevin: So I would hate to see that change, Matt.
Matt: Yeah, look, I think, from where we sit, the thing that you really want to understand about the nature of how you market a property are best explained by an expert. And our research will tell us that, actually, where most people will go for that expertise, in terms of how to market a property, is actually the real estate agent market.
Matt: You know, the family and friends aspects, and the other … the reliable third parties that you know have gone through the process, aren’t as good, and consumers say this, aren’t as good as the real estates agents themselves. So there’s an expertise, there, that you need to access. I think that’s an … that’s important, that we recognise that that is the skill that you, obviously, you’re talking about, but the skill that a very good agent can recognise for you.
Matt: The question for a lot of people is, “How do I find that agent?” And obviously, that’s where the information that we have about agents allows vendors to go look at who’s got a good track record, look at who’s well-reviewed, and then, connect up with that agent.
Matt: I think, though, there is an element of, “Do I have to pay for all of this type of advertising?” I think that’s the part, where, I think, there’s probably, might be a dual role to play. Do I need two portals? Do I need to do print? Do I need to do some of the things that, a little bit on autopilot, sometimes, to some of the agents.
Matt: I think a good exchange in that, between you and your agent, will demonstrate the value of each of those channels. But, ultimately, we say, “Listen to the experts, listen to the real estate agents, about what you should do to market your property.”
Kevin: Good thinking, and great research, too, and I appreciate you giving us some time talk it through, Matt. Matt McCann is from Local Agent Finder. Thanks for your time, Matt, great talking to you.
Matt: No problem, Kevin. Cheers.