Wednesday 01 Aug 2018
Are you quietly revelling in 2018’s property market which has turned in favour of the buyer? Seeing quite significant price drops on properties that last year you couldn’t afford? The times they are a changing!
But one has to ask themselves, what happened to the market and who is to blame?
In January 2016, new laws were introduced by the Office of Fair Trading in an effort to stop agents “underquoting” as properties continued to sell for prices far beyond their advertised price guides. In its Underquoting Guidelines for Residential Property publication, the Office of Fair Trading states that, “Potential buyers can spend money and time investigating properties based on the advertised or stated value. There can be significant consumer detriment if that value was not a reasonable estimate of its selling price”. After almost 2.5 years, there have actually been very few fines issued to NSW agents for underquoting. So one has to ask, “Was it just a sign of the times and were agents really to blame”?
In a market where the bank will upsize loans like a fast food joint to every Tom, Dick and Harry, there are bound to be (and it has been proven), buyers who will spend to their maximum, even if it means they are paying far more for a property than it is truly worth. Like kids in a candy shop, we saw buyers turn up to auctions and bid to very high amounts, some without previous inspection or having the contract of sale checked by their legal advisor. The money was on tap, and it was flowing uncontrollably. At the fall of the hammer, some started to question, “Did I pay too much”?
So whilst agents copped a bad wrap for alleged underquoting and investigations into this practice commenced, the banks flew under the radar. What’s now been revealed is the banks poor lending practices fuelled the property market to a point where further investigation was required and a Royal Commission into the banking industry was launched (that’s not the only reason, just part of it). The result of its findings were significant and have forced banks to tighten their lackadaisical lending practices dramatically, and the property market has seen a major correction in all capital cities across the country.
The headlines have turned from agents alleged underquoting to predatory banking practices, something that should have been sighted well before the property market became so out of control. And one has to ask, “how does an agent control the property market or is it the banks who should have copped the blame”?
Either way, agents have to deal with all market conditions including corrections and no matter what the cause. And right now, in a dramatic turnaround, price guides have suddenly become more realistic, with many properties selling within or even below their advertised guides.
The good news for buyers is that they can now likely secure a property within the advertised guide price and agents can take a sigh of relief that they won’t be accused of underquoting.
More information on the 2018 property market and the Royal Commission into the Banking Industry can be found via the links: