Raine & Horne held a summit of its top residential offices and Franchisees at Tranquil Park Maleny in Queensland on Sunday and Monday the 26th and 27th of October. Sixteen Franchisees and five staff were in attendance and the debate and participation was lively and constructive.  The aim of the Summit was to discuss the current real estate property market in Queensland and to review the most important issues that face a real estate agent and Raine & Horne as a group.

Paul Newall, Raine & Horne Financial Services, gave a very good and uptodate presentation on the state of the economy and gave a very positive forecast for the medium term. Paul relied on a range of statistics and quoted the ANZ Bank Chief Economist heavily.  Paul also reviewed the current state of the banks and their lending policies at present including the failure rate of buyer loans where the real estate office do not have some control.  Paul cited six loans that have been retrieved in the last month and the over $300,000 that has been paid back to paricipating offices.

Kevin Turner helped to set the scene with a presentation on the various stages of a business and some strategies to wedge complacency and decline into that all important dynamic growth phase.

Day one saw the group identify all the challenges and areas that could be addressed.  The process was collective and ended up with 67 challenges on the list.  Over night that list was distilled into 50 issues.  Day two, Monday, saw the list readdressed and validated.  Further amalgamation or groupings occured and a final priortised list of around 20 challenges were addressed.  Of the list 5 top groups were identified and basic strategy developed.  The five issues were around Profile and marketing, Organisational and office culture, Website development, Management training and group buying power.

The general consensus was that the market will improve over the next twelve months and this is the time to gain market share.  The methods to do this should be in a special management training program as well the Executive Series at Marcoola on the 16th - 18th of November 2008 additionally greater emphasis on the value of the brand and compliance with the values of the group. Communication within the group was discussed as was the need to push the referral base potential of this market.  Robert Bevan will be the keynote speaker at Marcoola and will be addressing many benchmarks that relate to the current market and how to survive the worst.  It was agreed that even though there was light at the end of the tunnel, there is still a lot of tunnel to go. 

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Even though there are signs that the Australian property market is improving, there is starting to appear grossly conflicting forecasts from reasonably reputable sources.

Last night the ABC 7.30 report included an excellent review of the current thinking titled “House price uncertainty for Australians”. It is worth clicking on the link and select the story from the right hand window.

The Australian Property Monitors (APM) spokesperson stated that they anticipated a blanket fall in house prices across the nation of up to 10%. The Housing Industry Association (HIA) is forecasting that properties will remain flat for a period with no appreciable drop in prices.  The HIA estimate is based on the current housing demand of about 190,000 properties and the current building program of 150,000 houses/units under construction for the year.  This is a gap of 40,000 and is driving up rents in most markets with vacancy rates of less than 1% in some areas.  Additionally the current migrant intake is the largest for many years.

A representative for Reed Construction Data referred to the huge number of construction deferrals which are up 543% in the last quarter and heavily impacts on NSW and Qld.  Developers currently need 75% presale on unit developments before commencement, which is difficult in the current market.

Another issue that has not been taken into account within the current demographic and demand analysis is the number of vacant residential properties. The last census identified 830,000 vacant properties across Australia.  Michael Matusik is quoted and covers this in an article by Bob Wilson on hotspotting.  It will be interesting to see if Government can incentivate the owners of this significant resource to bring them onto the market for sale or rent. 

Paul Newall of Raine and Horne Financial Services (RHFS) has completed a review of the current market using information and forecast from the banks and lending institution.  Paul’s information points to a flat market for the next six months and then a gradual increase in sales volumes culminating in the mother of all property booms over the following three years.  Time will tell!!!

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On Monday night I attended the launch of the REIQ book “Deeds, Dreams and Dedication”.  The book was written by Gary McKay and celebrates the 90th anniversary of the REIQ. Gary is a well known author with many titles including “All Guts and Glory” and “Delta Four”.

The MC for the evening at Customs House was REIQ CEO Dan Molloy.  Chairman Peter McGrath introduced the Governor, Penny Wensley, who launched the book in fine style.  Her Excellency had obviously read the book and quoted from many of the anecdotes and the more humorous stories throughout the book.

The author spoke about the enjoyment he got from researching the REIQ and writing the many stories.  The REIQ Journals were a great source of information.  Many REIQ life members attended and it was good to catch up with early Raine & Horne colleagues including Ken Jackson.  Previous CEO Don McKenzie was there and received a thanks for commencing the project some years ago.

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PRESS RELEASE 14-10-2008 

The CEO of Raine & Horne Queensland Stephen Sharry said `We are delighted with the inclusion of further assistance for first home buyers in the federal governments financial strategy announced today, especially in light of the fact that the benefit will be available immediately”.

This announcement by the Government will further strengthen the market, with Queensland poised to gain even more, following the relief offered earlier this year with the increase in the stamp duty threshold to $500,000.
 The Queensland real estate property sales market has steadied somewhat in recent months and this is seen as further fuel to increase the popularity of the state as being one of Australia’s most affordable areas in which to buy property and raise a family” Mr Sharry added.
The review of the First Home Owners Grant will see the original benefit for established homes doubled from $7,000 to $14,000 and tripled if the buyer proceeds with a newly constructed home. Newly constructed properties must however meet certain energy efficiency and sustainability standards.

Mr Sharry concluded “Our group welcomes this move to help young families into a home and the lowering of interest rates this week also, will see those with a mortgage better placed to be able to service their repayments”
    

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As one of the judges of the Realestate.com.au agent of the year award for 2008, I attended the presentation function in Melbourne last night. The REA Manager of emerging Business, Shaun DiGregorio, introduced the winners of each state and outlined why they won the award.  The final Agent of The Year  winner was Martin Ollard from Black & Young Real Estate Burleigh Heads in Queensland. Martin and his wife Debra  were very pleased with the prize of a $10,000 trip to the National Associaton of Realtors convention in Orlando Florida in November of this year.

What was interesting about this years award (the third year of the award), was the increasing professionalism of the winners. Martin was nominated by a client who was looking for a property on the Gold Coast with specific requirements. Martin went out and knocked on every door in the area required and could not find a property that totally matched the clients needs.  He then reviewed what was for sale, found a property with a good location and then developed a strategy to demolish and build exactly to the clients specifications.  This included preliminary estimates from a builder.  The clients loved the proposal and bought the property.  This does show hard working professionalism to fulfill the needs of the buyer and the seller.

This award has increased in popularity each year and is unique in that the customer has to take the time to register and write the details.  Many agents actively solicit responses from their customers for this competition, however for the customer to take the time is a whole other issue. Martin should now leverage heavily off this award, as should any award winner, to gain improved profile.  Well done Martin.

Shaun DiGregorio (REA) Martin Ollard (REA agent of the year)

State Nominees REA agent of the year award.

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The Federal Government has kept its election promises and rewarded the working families that largely delivered them out of the wilderness and into government. The centrepiece of the budget, tax cuts, was set last year as part of the election. Wheres it can be said that the budget overall is an “honest effort” on the part of Swan, it probably misses a huge opportunity to be tougher however Swan has delivered a real “crowd pleaser” and used the surplus politically strategically. Some of the income testing add-backs in FBT, negative gearing and salary sacrifices which come into effect in 2009 and will have little impact on the investment property market.  The budget commits $2.2 billion to help home buyers and property investors in some way.

Promises to tackle the housing affordability crisis have been partly addressed. The effective increase in income to a family on a combined family of $70,000, with children, will be around 4%.  This will improve one component of the affordability index for this market segment.

The new National Rental Affordability Scheme will receive $623 million, which the government estimates will create up to 50,000 new rental properties. This is an ambitious statement which will see the accountants and investment advisors looking at the detail and working their excel spreadsheets until late in the night to come up with a financial model for investors that may assist to attract some back into the market.

In an attempt to lower the cost of building new homes, $512 million has been allocated over five years for the Housing Affordability Fund. Depending on how, when and where this is directed it may help to reduce housing costs which are increasing with inflation and impacted on by the labour shortage. 

A “First Home Saver Accounts” will be established with an allocation of $1.2 billion over four years to assist first home buyers. This is a real winner as it will assist with a culture change particularly amongst the young who will be educated to save rather than spend.

There will also be funding of $100 million over the next four years for the construction of 600 new homes for homeless people across the nation.

On a personal note with Real Estate professionals, the increase in luxury vehicle tax will certainly boost the second hand luxury car market and question carefully which new car to buy next.

It is difficult to see how the budget is going to control inflation over the medium term.  The world is paying Australia a windfall for our coal and iron ore, largely by China, which will see an estimated additional $60 billion received. This has also been recognised with Queensland gaining an increase in export infrastructure funding. The receipt of this  will impact on spending and the labour market.  Comments that unemployment will increase are also hard to understand as everything points to the opposite and indeed inflation generating pressure on the labour market may result in further increases in wages. 

Overall the budget has exceeded expectations with a balance of benefits and spending cuts that will have a short-term impact on inflation which should keep interest rate rises at bay for a period.  Assistance for home buyers has been minimal however at least recognised and when combined with tax cuts should assist part of the community to enter the housing market. The main issue is that the budget will produce some optimism and in these uncertain times a positive outlook along with good fiscal and monetary policy management is what is needed. 

The four budget papers include an enormous amount of detail. I will provide further comment after it is assessed further.

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At the Raine & Horne Queensland Chairmans Awards function at the Gold Coast International Hotel last night, Tony Atkinson announced his retirement from the role as Chairman of Raine & Horne Queensland.  In attendance with Tony was wife Cynthia and 2oo guests. 

Long time franchisee, Dennis Wey, made the announcement and spoke about Tonys commitment to people and the industry. Tony announced that Raine & Horne Holdings had purchased the master franchise and that Angus Raine, great grandson of the founder of Raine & Horne, will take over the Chairmans role.  Queensland CEO Stephen Sharry will continue in his role.

Tony Atkinson has had over 41 years in the industry, 26 years with Raine & Horne, the brand he introduced and established into Queensland.  The opening function speech 26 years ago was given by Frank Moore, now Sir Frank Moore.  Sir Frank was in Hong Kong however recorded a video message for the group.  He outlined how Tonys vision for the Expo site helped get the project across the line and subsequently Expo was held establishing Brisbane on the world stage.

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Google just released the SDK for its new mobile phone platform, Android. Here’s a short video that demonstrates some of the features:

Joel Burslem from Inman commented: “Still looks a little rough around the edges - the UI feels a little unpolished; but this thing definitely looks promising for real estate technology developers. I especially liked the integration with Google Maps and StreetView. One could envision a mobile real estate search tool that could pull up listings, display them on a map and give you a virtual preview of the neighborhood, and then give you instant directions on how to get there.”

One thing’s for sure, with the iPhone SDK coming in February as well, the next frontier for Real Estate 2.0 is surely going to be mobile.

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In a recent post Peter Ricci included the following graphic comparison of the top real estate portals.  The figures come out of Nielsens and only compare the top sites however they give a very good comparison of the major portals and their position in each state.

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OVERSEAS INVESTORS

Interesting article by Tony Koch in the Courier Mail on Thursday stating that over $1b in Queensland property has been purchased by Overseas Investors in the last year.

Buyers from Britain led the purchase pack last year, spending $252 million, followed by New Zealand ($141.9 million), Japan ($86.1 million), The Netherlands ($75.5 million) and the US ($54.8million).

Indicates that the Realestate.com.au drive internationally will help to market Australian property abroad as will the new Raine & Horne offices in the UK and Dubai.

http://www.news.com.au/business/story/0,23636,22567106-37037,00.html

INTEREST RATES BLUES

This week presented a bit of a mixed bag with the NAB monthly business survey showing conditions slipped again with the worst result since February 2007. The results could be based on increasing inflation, some global turbulence, tightening wages market and the upcoming election. Pundits are placing the liklehood of an interest rate increase by the end of 2007 at 45%.

theage.com.au/news/business/rate-rise-market-woes-batter-conditions/ 2007/10/09/1191695908896.html

ADELAIDE UP, SOUTH AUSTRALIA DOWN

Where Adelaide has achieved an 11.5% increase, overall South Australia have recorded a slump of 3% in the quarterly median house price and the Real Estate Institute of South Australia has blamed drought conditions as contributing.

The Adelaide increase of 11.5% is nearly double the 6% increase of the previous year.

http://www.news.com.au/adelaidenow/story/0,22606,22538552-5006301,00.html

http://abc.net.au/news/stories/2007/10/10/2055398.htm?section=business

CONSUMERS OWN WORST ENEMY

For the 11th time in the past year consumer spending increased in August. Household goods showed consumers were buying more electrical goods like DVD players, plasma screen televisions and gaming machines.

Food spending jumped by one per cent in August, on a seasonally-adjusted basis, while spending on household goods was up by 2.4 per cent. But department store sales were down by 4.2 per cent.

If both property owners and those that aspire to own property do not curb spending and start saving, inflation will increase, interest rates will be increased and the dream of property ownership will move further away.

theage.com.au/news/Business/Consumers-spend-more-despite-rate-rise/ 2007/10/03/1191091164490.html

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