The Domain website has published graphs and analysis on the volume of property sales in Australia. The graph for Australia-wide sales gives a strong indication that we are at the bottom of the roller coaster. Domain’s economist provides the following commentary:
Australian property sales are close to record lows
An estimated 98,000 properties were sold in the three months to March 2019. This was 17 per cent below the same period in 2018 and well below the peak of 163,700 sold in the three months to July 2003 (see graph). Property sales are 35 per cent below the most recent peak in mid-2015, which occurred when price growth was in double digits. Data for recent months are adjusted to account for under-reporting of recent sales and are, therefore, estimates.
In the year to March 2019, 442,000 properties were sold.
Property sales are currently around the lows seen in 1998, 2008 (during the Global Financial Crisis) and briefly in 2011.
View the graphs here:
The great real-estate agent disrupter, Purplebricks is exiting Australia
It is always sad when a new-model business fails, unless of course that business is designed to take away your livelihood, in which case it is party time. Real estate agents of the ‘traditional’ type have been celebrating since learning about the demise of Purplebricks in Australia.
Hugely successful in the UK, where did it go wrong for Purplebricks in Australia? Here is our take:
- High risk strategy: The company gambled on a big play rather than incremental gain in market share. After spending millions on advertising and set up costs, it had to capture a minimum market share to be viable.
- Trust: New players in a market have to build trust. Sure, Purplebricks was big overseas but trust is not automatic in a new market.
- Competing on price: call it fixed fee or any other name, the company was price cutting and did not provide a convincing-enough explanation of how it was able to do this while getting the best result for its vendors.
- Timing: the worst possible timing during a property sales downturn. This factor compounded the company’s risky gamble on picking up a minimum viable market share.
[Image above: Purplebricks promoting its price-cutting]
This is not the end of disruption for real estate agents. Another smaller, home-grown operator is still in the game. One year ago, this is how its CEO explained the market for selling property.