We might be almost a month into the year (where exactly has January gone?) but better late than never…here’s my Top Ten Predictions for the year of 2020…

• The Brisbane property market to experience small median price property gains in the order of 2-3% – Whilst the expectations have been strong for Brisbane for the past five years now, it must be said that any predictions of significant growth have failed to materialise. Large scale projects and significant Government spending, low interest rates and an increase in migration levels will be the catalyst for growth but low consumer confidence, pressure on small business, lower retail spending, pressure on tourism and a State Election later in the year will all take small effects that may stifle any significant growth. 

• The Unit and Townhouse market leading the charge with an increase of median prices in the order of 3-4% – This might seem like a huge number, but the truth is that the unit and townhouse market has suffered for such a long time in Brisbane. A 3-4% increase only represents a start to the recovery of where median prices have been a number of years ago. It will be a slow start but at least a step in the right direction. 

• Official Interest Rates to remain virtually unchanged for the year (perhaps one more 0.25% reduction before we commence 2021) – With property markets in Sydney and Melbourne experiencing some solid growth again, the pressure is on the RBA to keep property at affordable levels but there’s growing sentiment that we aren’t too far from a recession so this is the balancing act that the RBA must deal with. 

• A Further reduction in the number of real estate agents by 10% – This will mean that another 1000 real estate agents will leave the industry in the year 2020.Increasing pressure on business owners and tighter legislation on pay standards mean that agents need to outperform the industry average in order for them to remain a financially viable option for them to be employed. 

• New start-up enterprises emerging to take a slice of the discount market left behind by the demise of ‘Purple Bricks’ in Australia – What many people don’t realise is that real estate agents generally work very hard for their money and don’t make as much money as what you might think they do. Discount commissions, paying salespeople very low proportions of the commission and large-scale marketing budgets simply don’t mix but you’ll be surprised how many new ventures will form…albeit not at the same magnitude of marketing as ‘Purple Bricks’ outlaid. We’re already seeing commission rates of 1.5% being the norm in Sydney and Melbourne (mind you, their average sale price is more than 50% higher than what it is in Brisbane) but many agents out there charging 3% plus in Brisbane will be susceptible to under-cutting. 

• More Competition in Property Management – In case you haven’t seen them, there have been a number of new Property Management companies emerge in late 2019…organisations that are trying to replicate what ‘Purple Bricks’ achieved…but with rentals. Offering ‘capped’ monthly fees and slick online systems, there’s no doubt that they’ll take a slice of the market…but whether they can fulfil their ability to effectively manage their clients’ properties with low overheads remains to be seen. My tip – they’ll grow in 2020 but like many that have come before them, investors will realise that having a local Property Manager that is ‘hands on’ is crucial to protecting your investment. We won’t see their demise in 2020 but by 2021 there will be stagnation and regression…or perhaps a sell out altogether. 

• More Real Estate Principles/ Business Owners selling their ‘rent rolls’ in order to survive – The average rental property has an asset value of $3000 – $4000 and when times are tough it’s easy to sell off your rent roll in order to pay the bills. With more pressure on management fees, there will be plenty that might not weather the storm of what lies ahead in terms of discount operators moving in…and just like the real estate market, more rent rolls for sale with fewer buyers will mean that the average rent roll will likely lose value compared to what they were worth in 2019. 

• An increased focus on Combustible cladded materials used in unit complexes and high-rise apartments – As I reported two weeks ago, the ban on materials has just widened to include ‘PVC-Timber’ products and these have been widely used for several years now. The cost of this rectification work will be enormous and many Body Corporate sinking funds won’t be able to afford to pay for the mandatory changes…and many unit owners won’t be able to afford the special levies. Furthermore, many developers might not be able to afford the costs of the rectifications if they are still liable (which they will be in many cases) and this might mean that the relevant Government bodies (the ‘QBCC’ in Queensland) will need to front the cash and this won’t be a process that will happen quickly as the QBCC can take years to approve work done on a single home let alone work of this magnitude so this topic won’t go away in a hurry. 

• More Competition from Real Estate ‘Interceptors’ – You may have seen marketing from businesses such as ‘Open Agent’ and ‘Local Agent Finder’. Their strategy is to market themselves, help a prospective seller choose the best three agents in an area and offer the lead to the agents whilst taking a slice of the commission off the top. It’s a business model that has earned the ire of many in the real estate industry, but some agents are happy to accept their leads. With ever-changing business models and significant growth in the sector, we’ll see more of these sort of companies jump out of the ground and look to take a slice of the market, thus placing even more pressure on the viability of many real estate agents and agencies to survive. 

• The mighty Parramatta Eels to break their 34 year premiership drought – As many of you will know, long-time Eels tragic’s like myself have suffered much humiliation and torture since Mick Cronin and Ray Price were carried off the Sydney cricket ground in 1986 after the first ever try-less Grand Final. We’ve been close before but no close enough. With premierships in recent years to the Sharks and Rabbitohs, the Eels hold the indignity of being in the longest premiership drought of any club in the NRL so surely, it’s their time this year. We’ve recruited reasonably well and retained our core group of players that took us to the finals last year. Many experts are predicting that this could be our year but for many years now, we seem to have an awful season as soon as it looks like we might be building to something big. When no-one rates us a chance, we seem to go OK. My prediction is that we’ll shake this trend and win the title, but the Roosters’ seemingly bottomless salary cap remains our biggest obstacle. I have my fingers and toes crossed already.

My goal is to beat my mark of 6 out of 10 that I achieved last year.

I’ll check in with you mid-year and see how I’m tracking.

Until next week…Happy Listing and Happy Selling.