With the benefit of a half a day in the country and extensive research prior to his visit Stefan has put together his perspective of the top 5 trends for the real estate industry in NZ for the next year. He is presenting these in more detail at his 2 speaking engagements whilst he enjoys his brief time in NZ.
The tug of war has started… again!
The evolving and changing real estate business model
With an industry amounting to a transaction value of north of $35 billion, it is always going to see innovation and challenge.
The changing business model trend is particularly topical in NZ. The past year has played witness to a number of challenging developments, the majority of which have been focussed on the costs of service. We watched the very public rise and fall of The Joneses but away from the headlines business models charging 1% commission instead of the standard 3-4% have established a foothold in some areas. Other models will continue to appear and evolve.
The DNA of a new breed of Real Estate Agents
This trend is so timely. Within the last year the market has changed so dramatically and sales are much harder to make so success will rely heavily on an agent’s skill set.
“Agents are no longer order takers and are looking to acquire skills to build their business” – Bill Shue, President, RealtyU a large US based agency.
What degree of additional education will be needed to better understand the needs of the consumers of the future? The new recommendations contained within the new tabled Real Estate Agents Bill includes a requirement for continued professional development so education providers and the Real Estate Institute (REINZ) will be already developing strategies for agents to regularly upskill.
Clash of the Titans
Power brokers flex their muscles
As to whether we will see more polarisation of the market to the major groups and franchises is not an easy question to answer.
Almost two-thirds of all NZ real estate offices are part of franchise or marketing groups compared to Australia where less than half of all offices are.
The flexing of muscle in the USA has shown that the big doesn’t always win. Power struggles have been won by smaller players showing innovation, internet strategies, growth, good profile and consumer awareness. As is often stated, real estate is a local business and innovative local firms can become the power brokers for areas or sectors of the market.
The new digital currency
Information is key and online is the arena in which real estate now operates.
The past couple of years have seen enormous changes in the online real estate marketing – to quote the report “web traffic has replaced walk in traffic”.
Buyers are thirsty for information on all properties and are finding it all on specialist real estate websites with comprehensive portfolios of photographs, video and mapping.
The growth of the web has put the ‘print media spend’ by real estate companies under review and now the state of the market is forcing cost cutting so the newspaper marketing budget is likely to be the biggest victim.
The real estate industry and newspapers were in a co-dependent relationship for so many years that separation will be hard.
Sami Inkinen, the founder of USA online search engine www.trulia.com has described the reluctance of real estate to divorce newspaper in a much less favourable way.
“I can’t find a single large real estate brokerage firm in 2007 that says print advertising really works but I can easily name dozens who still spend the majority of their ad budgets on newspapers. It’s like a chain smoker battling lung cancer, while still smoking two packs a day.”
The evolution of online communities & networks
The web has started to transform the real estate industry but the most significant part of its evolution is yet to come.
The web was first used by buyers and sellers for browsing, then for searching.
The most important trend for New Zealand real estate over the next 12 months will be buyers, sellers and agents using the web for sharing.
Real estate is a universal topic of conversation at any time with anyone which makes it a perfect platform for online social interaction.
For the real estate industry the trend is towards agent blogs – they provide an open forum for agents to discuss the market, their community, raise topical issues for debate, demonstrate their expertise and create meaningful dialogue with potential clients.
Most importantly blogs and social networking sites such as Facebook and LinkedIn provide the professional capabilities and services of an agent to be represented in an open and honest manner.
This will become a credible and comprehensive way for buyers and sellers to get a sense of the agent’s ability, integrity and honesty – a better way to choose an agent than by throwing a dart at the newspaper!
The challenge within this trend is the fact that the majority of real estate agents are from the baby-boomer generation not the internet generation.
Technology is set to be a disruptive influence on this industry:
– will we see changes happen this year? – unlikely;
– will these changes be far reaching? – absolutely;
– will the changes benefit those that embrace this new open networking environment on the web? – absolutely;
– will the consumer be the beneficiary through greater service and value ? – without any doubt.