The Truth About Falling Auction Volumes 🗞️ Real Estate Market Wrap

•  00:00 - The truth about falling auction volumes
•  01:29 - Prestige prices are falling by 20%
•  01:45 - Why Sydney and Melbourne could recover first
•  02:24 - The real problem isn’t prices: it’s volumes
•  03:04 - Which real estate businesses are most vulnerable?
•  03:23 - When agents lose income, they can lose their identity
•  04:02 - The business lessons only a downturn can teach
•  04:35 - Cut the ego expenses: Cash is oxygen
•  05:09 - Why this market creates opportunities for skilled agents
•  05:40 - Forget buying at the bottom, focus on buying well
•  06:39 - Why cancer charities will shape my next chapter

Transcript

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SPEAKER_00 0:00

I'm getting sick and tired of people sugarcoating things, right? Auction volumes have dropped significantly, right? Sydney and Melbourne are the auction capitals of Australia, and many properties that would have privately gone to auction are now being sold by private treaty. Do I think auctions are dead? Absolutely not. I think to myself that right at this moment, auctions has been a system that has coped the shock to the permanent, you know, impact of the budget, but I don't think that's a permanent structural change. In fact, I'm already seeing auctions being booked in my diary for late September, October. But right now, volumes are down, and I've decided to take advantage of this period. Today I played uh uh I went to the gym, pickleball, I did the bay run twice, got some sun because for nearly 40 years I've been working six days a week. So, as I said earlier this week, sometimes the best gifts in life come badly wrapped. Tomorrow I'll give you the official clearance numbers from totality. But let me tell you what I'm seeing at a high level right now. At the lower price points all over Australia, there is still strong buyer activity. In fact, certain marketplaces are seeing a bit of price rises down that bottom end. The middle market has been impacted and the high end has been severely impacted. But everyone needs to take a chill pill before we start talking about a total collapse of Australian real estate because perspective matters, right? Get real. If a prestige property is down 20%, ask yourself, down 20% from what? In many cases, it's coming off a growth of 60 to 70% over the previous five or six years. Don't just look at how far something has fallen. Look at how far it climbed first. And I believe Sydney and Melbourne are well into this downturn. Contrary to what people are saying that it was just the budget, no way. Sydney and Melbourne started to weaken late last year as soon as the rates started going up. Don't get me wrong, the budget that was the uh steroids to it. But the other capital cities, the minor ones like Brisbane, Perth, Adelaide, they started to slow down after the budget. So I can see Sydney and Melbourne also being the first markets to eventually come out on the other side. So, but let's talk about real estate industry itself at the moment, because the biggest problem for many agents right now is not the price. It's not the price, it's the volume. Fewer transactions meaning less revenue. And that affects everyone. It affects everyone in the industry, the agents, the auctioneers, the buyer agents, the photographers, the stylists, the mortgage brokers, everyone connected to transactions. Even JB Hi-Fi during the week actually blamed the housing crisis to their poor results. We're starting to see liquidations as well. We saw another buyer's agency go into liquidation. I think buyer agencies heavily dependent on the ones that are heavily dependent on selling to investors. They're the ones that I think are particularly vulnerable, not the ones that selling to own occupiers. But I think most of the ones that are good businesses will survive. And there's another part of the downturn no one's talking about, the psychology. There are people in my industry, and we are the largest real estate coaching company in Australia. We have three coaches employed. No one coaches the people that we do and the quality of the people. And I've got to say to you, many of these real estate people in our industry, their whole identity is tied up into their GCI and them performing as an agent, their listings, their awards, their car, their office. And I have to say to you, their whole status is built around their life. When business suddenly slows down, they don't just lose revenue, they lose part of the identity that created around that revenue. And I'm genuinely feeling for them. But downturns teach us lessons that boom markets can never teach us. You learn the importance of diversification, right? Thank God that I'm not dependent on one stream of income. You learn the importance of saving for a rainy day. You you've got to learn that growth doesn't continue forever, and you've got to learn one of the most important rules in business. If you can't control revenue, you must learn to control expenses. And the first expenses I'd be suffocating right now, not just for real estate people or mortgage brokers, but everyone who's living in Australia right now that's feeling it, get rid of the ego expenses, the flashy stuff, whatever it is. Cars, the unnecessary overhead, the subscriptions that nobody's using, the staff structure built for yesterday's revenue. Listen, I'm not going into defense mode, but I've never seen anyone go broke making a profit. Because in a downturn, cash is oxygen, ego burns oxygen. And remember this leftover Trump's turnover, volume is vanity, profit is sanity. You can't go broke making a profit. Keep your fundamentals strong, keep your expenses under control. Keep cash available. Because the irony is, while some people are terrified of this market, I'm starting to get excited by it because I'm looking at my clients who are thinking to themselves, hey, I can stand out. Everyone can look good when you've got three buyers on one property because you can say if you don't want it, I'll sell it to them. But you can't do that now. Skill matters. And I'm in buying mode, these are great opportunities. Some of the numbers I'm seeing starting to look too beautiful to ignore. Do I know where the absolute bottom is? Absolutely not. And neither does anyone else. And I'm not interested in buying at the bottom, and no buyer should be. You should be interested in buying well. There's a massive difference. Because downturns can destroy people who are over-leveraged, overextended, and carrying ego expenses. But those same downturns can create amazing opportunities for people who kept their powder dry. Same market, two completely different experiences. And finally, something personal. I've got to say to you, this extra time's giving me a chance to put effort and energy into the things that matter, and one of those is I'm going to be an ambassador for my good friend Malcolm Quinn's charity event called the Other Chair. You're going to hear me talking a lot about that because as I enter the second half of my life, I've realized something. It's not about making an income for me anymore, it's making an impact. Cancer charities are going to be a very big part of what I'm doing in the future. I'm already an ambassador auctioneer for look good, feel good, and I have been for many years. This is a women's charity that makes sure that women look presentable when they're going through chemo. They do beautiful work supporting these females. Also, some guys, but it's a 90% charity. It's on women. I don't know what it is about me and women. I live in a house full of women. All my staff members are women, all my coaches are women. Anyway, going forward, you're going to see me putting a lot more time and energy in these. So look out for the other chair. Watch this space. Because markets go up, team, markets go down, income comes, income goes, but eventually you're going to reach a point in your life where you realize success isn't only about what you accumulate.