The interconnected (real estate) world

On a visit to Brisbane last week, I heard two real estate experts deliver their take on the current state of the market in their home countries. Steve Goddard, is a National Association of Realtors representative from California, and 40 year veteran of the real estate industry. Richard Rawlings is one of the UK’s most popular real estate trainers and speakers.

What struck me was that while the swings were more pronounced in their regions than in Western Australia or Queensland, the experiences were remarkably similar.

In both the UK and US, from the peak of the boom to the trough, the real estate market suffered a 40% drop in activity and a 40-60% drop in prices. Activity was still well down and had been for four years, but in the New Year of 2012 activity had suddenly picked up.

Sam reported that the US market was “going well at the moment” but with 4mn sales per year in the last few years (compared to a peak of  7mn annually) realtors had been doing it very tough, with prices having fallen 59% in some places.
Over in the UK, Richard reported that overall “volume was down 50%, values down 10%” yet with national interest rates held at all time lows of 0.5% (which translated into mortgage rates of between 2.3-7%), it was “extremely difficult to get loans post the GFC“.

Interest rates had also dropped to “near zero” levels in the States too, yet had not really had much impact and could not go any lower. Richard pointed to the experiences in Japan who had lowered and lowered interest rates until almost zero and then had “no more medicine left in the cabinet“.

What had contributed to the improvements in the market in 2012? In both countries it was modest improvements in the economy, a feeling the worst was behind them (finally) with more certainty returning.

Back in Western Australia, we saw real estate transactions fall to their lowest levels on record in 2011, with 2012 already seeing a strong start with January 2012 reporting 28% rise in property sales as compared to the same month a year earlier. February 2012 saw a further 15% rise. Too soon to call recovery perhaps, but what struck me was how similar real estate markets from across the globe act, almost independently, but of course in a related manner. In our globally connected world, ‘separate’ real estate markets are swayed by similar events, news and consumer confidence these days. Interest rates move up and down matching each other around the world, we all listen to the same news about the Chinese economy, or Eurozone problems, or the latest Greek debt woes or US employment figures. We are, of course, one connected planet.

About the author

Charlie has spent more than 20 years in Perth’s tech and startup sector, firstly as a founder himself, through to exit, and more recently as a writer, advisor and investor. Originally from the UK, Charlie worked in Singapore before arriving in Perth in 1997 to do an MBA at UWA. Graduating as top student in 1999 he set up online real estate business, running it for 10 years before selling to REIWA, whereupon Charlie ran In 2013, he moved to Business News to lead their digital transformation as CEO, and then worked for the federal government’s Accelerating Commercialisation program, funding pre-revenue startups and innovative businesses. He now works in an advisory capacity for multiple tech and other businesses, is managing editor of Startup News and co-host of the Startup West podcast. He also writes a column for Business News on startups. Charlie sits on the advisory boards of WA Leaders, TEDxPerth, WAITTA, the Perth Symphony Orchestra, and the full board of Rise Network.

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