Dr Nicola Powell On Reading Buyer Behaviour In The Data

You know how much we love to dig into property data and make sense of it? Well, if you enjoy it as much as we do, then you're in for a treat today.

Search data is fascinating as it gives us a glimpse into the behaviour of property buyers in real time and price data can give us a snapshot of what sellers are thinking.

And this behaviour shows how buyers and sellers are responding to changes in the economy and they don't always neatly line up with what you'd expect from reading the headlines.

The biggest risk to prices is if we see an influx, a lot of listings at the same time that are distressed or they're urgent, because that's when we start to see big price discounts being offered because they need to offload their property.

Welcome to The Elephant in the Room. This is the podcast where we love to talk about the big things in property that never usually get talked about. I'm Veronica Morgan, real estate agent, buyer's agent, co-host of Foxtel's Location Location Location Australia and author of Auction Ready.

And I'm Chris Bates, mortgage broker. Before we get started, I need to let you know that nothing we say on here can be taken as personal advice. We always recommend you engage the services of a professional.

Don't forget that you can access the transcript for this episode on the website as well as download our free full forecast report. Which experts can you trust to get it right?

When we interviewed the editor of Domain a few weeks back, we gained some great intel about how Australians are changing their search criteria for property. And when we asked questions about how the data is collected, she suggested we talk to Nicola Powell. And so today we are.

Dr. Nicola Powell is a senior research analyst for Domain Group. She's a leading force behind Domain's data reports and a well-known property expert featured regularly on broadcast and in print media, as well as Domain's media channels. Nicola's analysis drives the agenda for the nation's property conversation and today for ours.

She's known for her succinct, easily understood commentary style and in-depth analysis of market trends. Perfect for us here on The Elephant. Thank you so much for joining us today, Nicola. Thanks for having me.

Hi, Nicola. Great to have you on here. I just read an article literally overnight around some price discounting that you've just released. Can you give us a bit more insight in terms of what your research has just found and what's happening out there?

Yeah, so the price edit piece is really a different way to cut data. We're always trying to look into, as you say, search behaviors, what's happening in terms of the sale market and having a look at it through a different lens. And we often hear about discounting.

So discounting that sold price versus what that original asking price is. But there is an element of lag in this because obviously some of that sales data doesn't come in because it's government sales collected. So it takes some time.

What we've done is we've actually looked at live listings, so live sale listings each month and how many of those listings have had their asking prices revised downwards.

The great thing about this piece of data is it really is a leading indicator of price growth, and it really gives us an on-the-ground lens of sentiment, what's happening each month, and allows us to kind of see where the property market is going.

This is really interesting because we've always thought of price data or price discounting as, you know, as you say, the sale price versus the original asking price. But you're basically saying you're measuring it as it happens because obviously the discount happens before it's sold, right?

Absolutely. I mean, you see a home coming onto the market with an asking price. You know, if that home isn't shifted within, you know, three week period, perhaps then you go back to look at what that asking price is.

And I think, you know, during this period of time where we're seeing prices fall. We are seeing more listings being discounted because I think when you continue to see the change in the market, we see it through that price edit data.

And what was fascinating is when we saw obviously COVID-19 initially hit Australia, what we saw was almost an instant bounce in discounting over kind of March and April. And that was unanimous across all of our capital cities.

I think the level of price edits was different across the capitals, but it showed that really no capital city was immune from the impacts of COVID-19.

But I think what we have started to see is even though those price edits remain elevated, over July, most of our capital cities have fallen from the peaks that have been seen in recent months.

So I'm looking at the data on the report and we'll put a link in the show notes. I think it's a really interesting piece. And it's just coincidental that we have you coming on the following day.

But you've got that it was around roughly, say, 5% of listings were, you know, across all the capital cities were dropping their prices through 2018 and 2019. And then they all jumped up to, say, 10 to rough up to 15%. in this last sort of three to six months.

When you did this report, did you backdate that and actually look at live listings for the last couple of years? Or was that the sole price that you did that on?

No, so we backdated this because obviously we capture data all the time and that data is stored. So it's a capture of a point in time. So, yeah, it was backdated and, you know, it's comparing like with like across each of those markets.

Yeah, good.

Yeah, it's nothing about the solds. It's purely about the asking. And this data set, I think we've got about three years worth. So it was really interesting. We captured a bit of that downturn, 2017-2019 downturn,

Sydney and Melbourne. And when you do say correlation between price movements in Sydney and price edits, they are correlated. So it really gives us that idea of where prices are going to go in the

That is very interesting, actually, the leading indicator and the fact that that correlates. Because I wonder whether, you know, obviously it seems to be the asking price is really a reflection of optimism of vendors and the sale price is really a reflection of the optimism of buyers, right?

So where they diverge, that's showing that there's not a lot of confidence in the market, right?

from buyers but where they sort of meet is where buyers are extremely confident vendors typically tend to be quite confident in that their property is worth more than everybody else's anyway um so at what point does it sort of because i would imagine that every peak and and trough of the market is is somewhat like you say there's a leading indicator it's quite fascinating because there's always a point at where vendors just slightly push themselves outside the reach of where buyers are prepared to stretch themselves or where affordability allows and

So is that sort of, does it really show that prices are falling or just that vendors have been overconfident?

Look, I think you make some really good points there. I think we always see a level of price edits occurring in the market because I think finding that sweet spot for pricing can be challenging if the market is rapidly rising or if it's falling. So we always get some level of discounting.

But what is very clear is during periods of weakness, that level of price edits does bounce. I think when you compare it to, say, July of last year,

You know, when you think about what was happening in July of last year, the trough of the market had been hit in Sydney and Melbourne, and we were starting to see the recovery and price lows. You know, we saw a turnaround in clearance rates.

But even at that point in time when we'd already hit the trough and we were starting to grow in terms of price... there was still a 5% level of price edits occurring in Sydney and in Melbourne, 3%.

So there's always this level of discounting where you, as you said, Veronica, you know, you've got those sellers that are kind of missing the mark. They've kind of, you know, overshooting what a buyer is wanting to pay or kind of that market expectation.

But I think when you continue to see prices fall and that weakness month on month, it does, it's very telling in the data and it's very telling in this kind of data capture.

It's interesting also because, of course, with auction campaigns, there's no asking price, right? But obviously in the back end of domain, agents have to put in a range so that basically the property will turn up in the right searches. Yeah. is that in some way captured here?

Because I would think that that sort of, that goes the opposite way, doesn't it, where they're underpriced. So the level of property that would be passed in and therefore put on at a price after auction goes up too.

And I would imagine that the pricing might vary according to the information that's been captured by the agent from buyers through that campaign. But so how does that sort of come out or wash out in this data? The fact that you've got higher or lower levels of passed in property?

Yeah. So it's like with discounting price, it is the same. Auctions are hard to capture because obviously that price range. And I mean, even though, you know, in Victoria, you have to disclose a price that is within, I think it's the 10% range from memory.

And legally you have to, an agent has to input that. But I think in terms of capture, we perhaps don't capture as much of the auction data as we would perhaps like. I think discounting in particular is solely on private treaty sales, asking versus sold.

And I think, you know, this would be much more of a greater reflection on sales by private treaty. And, you know, we have to remember that. I mean, we talk a lot about auctions and the auction market. Roughly only 30% of sales are sold by auction. The rest are private treaty.

And that stat really is for Sydney, Melbourne and Canberra. Everywhere else, it's highly dominated even more so by private treaty sales. So it's a bigger capture of the overall market. And the reason why we like talking about auctions is it does, again, give us another different type of lens on market sentiment.

But the problem is with that is it's a geographical thing, right? So inner Sydney and inner Melbourne in particular are much more heavily skewed towards auction than the outer areas.

That's, you know, and I find that just, you know, that just the sheer majority of property does because where my office is in Sydney, for instance, that It's very rare that we come across a private treaty property, a private treaty listing. So in a way, though, that becomes a problem, doesn't it?

Because the outer areas will perform differently to inner areas anyway, right?

Yeah, absolutely. I think there is one thing when you look at the data is that we always talk kind of macro, that big city picture. It gives us a broad understanding, but its devil is in the detail. It's all about the areas, the regions and the suburbs.

And we capture, we dived into the areas across our capital, across Australia actually, and also the suburbs to allow us to see how they are performing differently and

And even say, I mean, we release an auction report card each month to dive into Sydney, Melbourne and Canberra, which are our auction centric property markets. And we dive into those different areas because, as you say, Veronica, you know, you hit the nail on the head.

We do tend to see more inner urban areas are dominated by auction, the auction market more so than compared to the outer areas of our cities.

You did another article a few months ago around distress selling where you said you couldn't really see any signs of distress selling in the market. That was like three months ago. Have you seen that there has been an increase in what you can see as distress?

So we are due to redo this. We're actually redoing this analysis in a couple of weeks. But I mean, we are tracking it. And really, there has been no real uplift in distressed or urgent selling.

And I think this is definitely an important metric for us to continue to track because I don't think the risk at the moment is too great because we've obviously got measures in place to help people through this very economically challenging time. You know, you've got the ability to pause mortgages.

We've got JobKeeper, JobSeeker. So it's helping homeowners financially. I think the risk comes once the ability to pause your mortgage stops.

And that's going to be the key period of time to see if we see any uplift in distressed selling, because the biggest risk to prices is if we see an influx, a lot of listings at the same time that are distressed or they're urgent, because that's when we start to see big price discounts being offered because they need to offload their property.

And obviously that in itself, if we've got lots of listings at the same time, really is troublesome when it comes to kind of prices and really shows that there could be weakness. At the moment, we haven't seen any material uplift.

You know, there are pockets of areas in Australia that have a higher level of distressed selling, but I think they always kind of tend to have in recent times. But as an impact of COVID at the moment, there's really little evidence to suggest an increase.

But there are some areas where there's a lot of stock. In some areas, there might be 12 months worth of stock on the market at the moment. I mean, have you done any analysis, I guess, where you can see that that level is actually starting to rise in specific geographies, geographical areas?

In terms of the listings, you mean?

They've had a number of years of elevated unit developments and increased supply. And that has really weighed heavily on unit prices overall for Greater Brisbane, but more so in that city, inner city area. I think at this period of time, we're starting, obviously, to see that shrinking.

And that's been happening for a while because obviously we've seen developments, approvals decline, development starts decline in Brisbane CBD. But yeah, it is a great example of an area that if you were a vendor trying to sell during that period of heightened supply, it would be very challenging.

And I think that's an example of some of those areas where there are always going to be areas that have a greater chance of having a distressed sale. Yeah, yeah.

What's some of the data that you love to use when you're looking at kind of property and what access points do you think that people should be using when they're trying to understand property better?

Look, I think my favourite one, and we've spoken about it in depth, is the price edits one because this is a new, unique data set that we've produced this year. And it's just a different way of capturing. It's an on-the-ground lens.

You know, I think there's a variety of things that I personally look at. It's thinking about, you know, around that sentiment, consumer sentiment as well, you know, feeling of, you know, how people feel about the time to buy a dwelling. And I think... you know, the most recent index that was produced.

We obviously saw consumer sentiment tank. When you look at, I really like to look at the question of around, is it a good time to buy a dwelling? And that declined over the months in the most recent August release. And it actually is now well below that decade average.

But again, you know, I've said it before, it's a devil in the detail. When you have a look at how the different states are performing, you know, there's different outcomes for different states. And actually that decline was driven by Queensland.

There was a very steep decline in Queensland around that time to buy a dwelling, but all other states, all the major states showed an increase.

It is interesting, isn't it, that, you know, like you say, the devil's in the detail, that these sort of top line numbers and statistics can be trotted out and that's usually what makes the headlines.

But underneath that you go, well, because on the ground we often say, hang on a minute, we will get clients saying to us, but the market's falling. Haven't you read the, you know, the front page?

But why is it that that property is competitive and it looks like there's going to be eight people registered for auction and I have to consider, you know, what my top dollar is going to be. Can't I get a bargain? And I'm like, well, yeah.

If you hang around looking for a bargain when you're looking at a great property, you still know you're not going to buy anything.

You know, but and so then you watch seven other people register for it and maybe three or four of those compete quite heavily for property. And it's like it flies in the face of supposedly what the what consumer sentiment is.

Yeah, and I think, you know, that is almost an issue of how, you know, Australia as a whole communicates this micro level of data. And I think, you know, for any buyer or seller out there, they really are just honed in on the area that they are buying or selling in.

And that's where it's very important that, you know, we can push out kind of big pieces of research looking, comparing our capital cities. We also do a drill down into the regions and we do do suburbs. but you can't represent every single suburb in a single local.

And I think that's the challenge that we have. So it's kind of how do we make that data accessible? And, you know, if I was a buyer, you know, I am a buyer, I have been a buyer, you know, I've actually recently bought a property.

And when I was on that journey, I look at data every day. But the thing that I did, the research that I did was I was looking at the listings. How quickly were they transacting? What was the prices asking prices? What was the sold prices being achieved?

How many of those are being sold by auction? to help me understand my micro area that I was transacting in.

That's such gold that you say that because, you know, quite a lot. Yeah, we will talk to our clients about, and we have to take that as a snapshot, I think, and absolutely publicize, publish.

You said that, you know, he's a data scientist that has access to all the macro and right through to micro, given that you've got such an interesting data set. And we'll talk about that shortly. But, you know, you've got access to everything.

And yet you drill down to the micro when you're making an individual decision. This is what we're always saying to our clients. It's all well and good to understand what's happening in the Australian property market. Rabbity is around that term.

But fundamentally, you can overanalyze and get completely overwhelmed with data, which sort of leads me to a question. And maybe it's a bit cheeky, but what is the point of all this macro data in the property market in Australia?

Look, I think it gives us, it's that big picture lens. And we have to have that big picture view of overall what's happening. So for example, so say if I was looking to sell my house, I'd be looking at the big picture. What was happening in Australia economically?

What was happening for prices for my city overall? Now, if you're a seller, you know, your ideal is you want to sell at the peak of the market to get as much as you can. You know, that's very hard to pinpoint. But it would help me.

I'd look at that big picture to help me decide when I was going to list my home for sale. And then I would drill down into the micro because I think there are so many sub markets. I mean, we talk about it a lot at Domain.

There are so many sub markets in Australia. There are so many micro markets. We're seeing it at the minute in terms of the impacts of COVID, those areas that are holding up well, those areas that are being impacted more so.

Even the rental markets are showing that disruption to a different level. And so micro is very important, I think, for your everyday buyer and seller.

Obviously, there's been a big home builder initiative that the government has released. Have you seen the way that people search and the type of property that people want and are looking at has responded to that government stimulus and changed their behaviour?

Yeah, I think the home builder one is an interesting one. You know, in our latest price report, we saw one of the areas that was still growing in price in Sydney was actually in the northwest. And obviously we know that that area has been a huge kind of development area.

So, you know, you wonder whether, will that continue because of that? When you say growing, what do you mean? In terms of price, price growth. We're still recording an increase in price over the June quarter. which kind of bucked the trend of the majority of the other areas in Sydney.

Now, you know, when you look at, say, where can you buy, you know, a blank canvas, a block of land in Sydney, you know, there's very few places that you can do that. You know, Northwest is probably one of them.

And also buying a Devs, you know, you're pushed to some of these more outer areas. So, yeah, I'm expecting... We will probably see an increase as months tick on in those search behaviours in those more outer areas.

That's sort of interesting because, of course, when you've got an area that's sort of newly redeveloped, the new stock tends to sell, assuming it's sort of roughly the same size as the old stock, it will sell for a higher price, right?

So it's hard to, I guess, how do you sort of pull that apart to say, well, there's actual price growth versus price growth by virtue of the type of stock that's been sold that's brand new and being sold at a premium?

Yeah, absolutely. So that actually goes back to the other question that you were asking, you know, why do we do the big picture? The big picture is great because it allows us to give a really robust price.

So we use a method called a stratified median and that's groups, properties or suburbs based upon their historical performance in terms of prices and They're bucketed into kind of different levels of pricing.

So it allows us to give a really robust, it takes away, what I'm saying is it takes away any of that noise that you were saying, you know, about developments achieving bigger prices. Again, when you get down to that micro level, yeah, it is challenging and you have to compare like with like.

And that's why when, if you're a buyer or seller, it's really important to do that research on you know, what's being transacted within your area. But I think, you know, we use a medium price. And when you get down to that region level, it's still a fairly large capture of data set.

So it helps to take away some of that noise. But yeah, you're right. You tend to see developments do achieve a steeper price.

And the median does rely on a lot of transactions to sort of make it somewhat reliable, doesn't it? Because, you know, it's like if you're in an area such as, say, Balmain where my office is and you've got little tiny workers' cottages and then you've got, you know, harbourfront homes.

And if you get a lot of harbourfront homes that sell, it makes it look like everything's going on with your price and prices could actually be falling and that happens. So, you know.

Yeah, and that's where, you know, we from our data perspective, we have to take, you know, we take great care in things like that, because, you know, you have to be careful that it's not a reflection of the types and type and quality of stock being transacted.

And that's why obviously the more sales you have, the better it is. And when it comes to say, you know, looking at suburbs, it's why you have to have a much greater capture of data. So, you know, suburbs generally, most statistical bodies use a 12-month capture of data.

Compare that to the 12 months prior. So in that sense, you know, there is a bit of a lag when you get down to that micro level of prices because capturing such a vast amount of transactions is

One that transacted maybe in January versus one that transacted in December and the market may have moved.

So that's, again, another argument why that bigger picture is actually really important to continue to track and monitor to give you that idea of what's happening then more so at the granular level, which is harder to pick up.

Yeah, absolutely. Yeah.

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With domain, obviously, your business is listing. Have you seen a dramatic drop across the cities and do you feel that a lot of properties are selling off market or do you have access to that sort of data?

So not to the off-market data, but I think one of the things that we saw was a pullback in listings. As COVID hit, we saw a pullback in listings in the weeks that followed that lockdown one.

Now, that in itself really has helped to shield prices from large falls because I think those that didn't have to transact during lockdown one just paused and waited.

But what was quite remarkable was the rebound in listings once we saw restrictions ease and sentiment increased. Now, Melbourne, Victoria is going through that second wave, obviously, because of that stage four lockdown. Listings have pulled back again.

But, you know, my view on this is that it is a good thing, I think, for the market in terms of helping to shield prices from really significant falls.

And obviously, that's good for the overall economy as well, because, you know, nobody wants homeowners losing a significant amount and the value of their home is obviously detrimental to the overall economy and, you know, our own kind of household spending and

the wealth effect is that what you mean yeah yeah well also I think you know what we have seen or what that does show is that people don't have to sell if they can actually take their property off the market or pause it then they're not under pressure so I guess that's one thing it shows but the other thing that that I've noticed certainly in our area and anecdotally I've sort of had this same conversation with a number of agents both buyers and sellers is

that really stock started sort of drying up, certainly in Sydney back in 2016, and it's never really picked up at any point. And so we're sort of off a fairly low base anyway when we say stock listings are down.

But I wondered, does Domain actually compare listings data, your listings data to transaction data to actually then try to work out what the true picture is in terms of stock levels? Yeah.

So you're talking around kind of the turnover of stock, what we're seeing?

Yeah, because there is an anecdotally, I've got agents saying to me, oh yeah, you know, 20 to 30% is transacting off market. And I sort of at first disputed that, but over time I've seen that that has, I think it is true.

And it's coming from enough agents that I think that that is the case. And I think too that So COVID has obviously given people, a vendor or potential seller, a reason to put their property on the market or off the market, if that makes sense, on the market, off market.

Because, you know, they're not paying for advertising. They're not actually overexposing their property. They dip the toe in the market. If it sells, they're very happy. But it is sort of hiding the fact that there are listings out there. It's just not being advertised anymore.

And it's hiding the fact that if you're getting transactions and prices are holding up, that there's actually more of robust market than people are thinking.

So that's why I wonder if you're comparing those two figures to say, well, how, you know, because there's always saying, well, the reason that prices are holding up is because listings are low. But I've actually done some of my own analysis on this.

And it's look, it's minimal in terms of I've just randomly chosen some areas and some property types. But in many cases, transactions have been holding up or potentially even increasing through COVID. So, you know, over that period. So that's why I wonder whether, you know, you're overlaying that at any point.

Yeah, so we do look at turnover. The thing with, you know, the sales transaction, particularly if we're starting to now kind of you know, see off market transactions. The thing with sale transactions, it takes a while for obviously that data to be collected.

So we don't, we won't have a full picture lens until kind of all those government, you know, the government data is then collated and collected. So, yeah, we do look at that turnover.

And I think, you know, what we, there are definitely some areas that, and I agree with you, there are definitely some areas where I think turnover is, you know, kind of listings versus the transactions have actually, you know, it has increased, but there are other areas where it's kind of declining.

I mean, you know, my lens on, say, Sydney, it looks like turnover has slowed down a little, but that's again the picture. And when you drill down to the different areas, there'll be different stories that are unravelling across them.

Do you think that obviously Melbourne's in lockdown, so you can imagine that listings are going to go through another drop like they did in the first lockdown. Do you think that the mindset shift in Sydney of the fear of a second lockdown is already starting to play out with less listings?

You know, you've mentioned, Veronica, talking to agents, that agents are now starting to find the buyers. The sellers are starting to want to sit on their hands again.

Yeah. Yeah, I mean, so, you know, whether listings will fall in this second lockdown, is that what you mean?

Oh, just the fear of a second lockdown. Like, you know, obviously Sydney's on a knife edge, really. You know, we're just holding on to, you know, another couple of outbreaks or one bad day and, you know, the fear will kick off again. You know, in that environment, you don't want to gamble.

You don't want to put your property on the market and then a lockdown to happen when it's on the market or you sell and then a lockdown happens and then you can't buy. So just that fear of a potential lockdown, it potentially stops people listing their property.

But I don't know if you've been able to see that listings are starting to pick up and then that fear is stopping people listing.

Yeah, it is the case. So we have already started to see new listings in Greater Melbourne, you know, are easing. We had seen them rebound pretty strongly from that first lockdown.

But, yeah, I think it's likely that we will continue to see listings shrink. But I think, yeah, I think it is, you know, that kind of fear of unknown. And I think, you know, there's always going to be transactions in the market because we all need a roof over our heads.

And some people are going to be in that position where they need to transact. So listings are still going to be there. Transactions are still going to occur. But, you know, this second lockdown, we're already starting to see a pullback and I do anticipate that to continue.

But I would say one of the things that has been quite interesting recently in the response of lockdown two compared to lockdown one has been the uptake of virtual auctions.

Now during lockdown one, Sydney had more virtual auctions than Melbourne and Melbourne has more auctions than Sydney consistently historically. But this second lockdown, what we've seen is there's been a much greater uptake of virtual auctions in Melbourne.

And I think maybe it's the fact that transacting in that virtual environment, people are becoming more familiar with. Agents are obviously more experienced in it.

So, you know, we've seen those online auction success rates actually be quite strong in recent weeks compared to that lockdown one period.

And that is really interesting. We interviewed Damien Cooley a couple of months back, actually, and specifically to ask him about how that transition from, you know, on site or in rooms to online went.

And he was basically saying that, you know, it was a lot of resistance, a lot of withdrawn listings, a lot of agents didn't like it, vendors didn't like it. And even auctioneers had to learn new skills because they're actually performing to a video camera, not to... Not to a live crowd.

But so he was sort of saying that he couldn't see a future really where online replaces on site, but he could see sort of a more of a hybrid thing happening. But it is. And he also did say that there's a geographic slash demographic gap.

skew towards, you know, away from the older generation less likely. And I guess that stands to reason to want to play on a digital platform versus millennials.

But it is interesting to hear that I guess maybe as people have got a bit used to it or they've got used to COVID and restrictions and thinking, well, we could be in this for a long time. I guess they're sort of just saying, well, okay, well, Let me deal with it.

I mean, would that be a fair thing to say that people are just deciding that, look, this is the only option now?

Yeah, I think that is. I mean, I think in lockdown one, what we saw, and it's exactly what Damien had said, is this massive spike in auctions withdrawn, bounced to record highs historically. And, you know, we've got a few decades of data, auction data.

So, you know, the response was unanimous. It was very clear that vendors really didn't want to sell in that auction environment and Now, as lockdown two was announced, we did see again a bounce in withdrawn.

So there is still a segment of those sellers that aren't comfortable with that virtual environment, but the withdrawn bounce was nowhere near what we saw in lockdown one. And we've seen some great outcomes for virtual auctions. And I think, you know, I do think people are becoming more comfortable.

I think it helps to perhaps break down some barriers and When you look towards, say, markets such as Southeast Queensland, where you have a lot of migration from Sydney, from Melbourne, I think, you know, it's never going to take away the, you know, inspection in person.

But I do think there is a place for virtual auctions. Maybe, you know, in the future, it will be a hybrid of an on-site, but it's also then, you know, virtual as well for those who are purchasing interstate to actually be part of that auction.

and actually, you know, have that transparency rather than having to be on site to bid, particularly if you've already inspected the property.

It's quite interesting. Last week I actually participated in an online auction for art and we went and had a look at the pieces beforehand. It's a little bit similar. I hadn't actually thought about the parallel to right now.

And there was an auctioneer and I swear we were watching for four hours basically because there were a few pieces that we were just sitting in. He would have still been going. He must have been absolutely shattered.

But he was basically doing a live performance to their staff, you know, and people were bidding online.

And I'd be curious, maybe I need to follow up with him to see how were the results compared to what they would have expected in the previous format, which is a whole bunch of people sitting in rooms with their paddles.

Yeah, and I know the exact auction house that you're talking about because it was on Sunday. And I have been present at one of those auctions in person when they used to be in person. So I think that would be a great comparison to make.

I actually wonder whether for them, auctioning virtually has helped to open, allowing people to dial in just for that particular auction. And I expect that they've probably achieved greater outcomes would be my guess.

I have to follow them up. You've quite an interesting one, that one. I'm curious, you mentioned earlier that, you know, you've got access to all this data that's basically being stored. You know, it must be fascinating for a data scientist, just like, you know, getting a candy store.

What are you, you know, what are you most excited about when you look at this, you know, what you have or what you can do with it? I mean, are you able to tell us what your next project is?

Yeah, so we've got a number of things in the pipeline. So one of the things is that we're really diving into kind of search behaviours in Victoria. You know, how have they changed during COVID? Because, you know, we saw kind of search interactions during lockdown one increase.

You know, we saw the activity and that interest in property increase. So we're really trying to understand, so what are property searchers looking for? on their journey, you know, and into that kind of micro area in terms of that price point, in terms of what they're looking for to really kind of understand.

One of the other pieces, and we're launching this piece next week, is around kind of keyword searches as well. Keyword searches have been remarkable. home office has seen an extraordinary increase in searches.

So that's being released next week. And also we would be relooking at our distress selling.

And also kind of, you know, for me, I want to dive into what we can expect post COVID and look at some of those markets that have seen, you know, a strong rebound in listings, what happened to prices, you know, what did that mean for our buyers and sellers? Yeah.

I was going to ask you that exact question because we spoke to Alice a few weeks ago around the search data and keywords. And I thought that was very fascinating how a home office and, you know, fourth bedroom and just behavioral change a big shift to say six months ago. Right.

What I guess I'm a bit fascinated in is understanding where the wealth or where the property buyers or what their buyer preferences are going to change.

post COVID in terms of location, you know, there was a pressure to live around the inner city because you had to commute five days, but you know, how much, how many buyers shift, you know, their suburb, you know, who instead of looking at the inner West and now going to look at the, you know, South, you know, North of Wollongong, or they're going to look at the blue mountains, et cetera.

Have you got any sort of insights where you've started to see, you know, people that would have looked at say the inner ring of, but now they've changed their behaviour and they were searching lots in, say, the inner west, but now they're searching lots in Central Coast, for example.

Yeah, so I do think that the pandemic has forcibly obviously introduced remote work, and I almost feel like it's supercharged a trend that would have happened in, say, 10 years' time, this working remotely. It's here.

I think for many, it will be here to stay, even if it means that you're in, as you say, in the office three days. And when you think about purchasing a home, traditionally our workplace or our childcare or schooling has really been an important factor of where we purchase.

And I do wonder whether we are starting to see a change and the workplace is going to be a less important factor. I think regional areas could be the winners from this. And as you say, kind of living on that urban fringe, I think

Anybody that has perhaps been in an urban apartment during a lockdown will be yearning for that kind of outdoor space, a larger space, and you have to go to the urban fringe to be able to afford that.

In terms of areas, so when you look at, say, search behavior in the first quarter of this year, so kind of Before COVID. And then compare it to the June quarter. So really kind of looking at when the pandemic hit.

What's unanimous about where we were seeing people search? We did see a rebound in both searches towards regionals and towards capitals. But in New South Wales, for example, we saw regional areas increase in searches by 8%.

And when you then drill down into the, you know, that more micro lens where we saw the biggest increase in searches. Now, when you look at kind of pre and post COVID, you have to be careful with this data set because you then get seasonal areas.

So ski areas that you would expect to be, you know, things like area of perisher. You would expect to see that quarterly increase. But when you have a look at, say, the annual changes, it's very interesting that, say, in the top 30, most of those areas are regional.

Bridie Island in Queensland was one, Albany in WA, Harvey Bay in Queensland, Peterborough in South Australia. There were lots of WA areas as well, which I think is telling in terms of

Perhaps where we could see potential growth, there's been lots of conversation around the rebound in WA. I found it interesting that the search behaviour is showing a lot of rebound in WA areas.

But I think there's lots of regional areas, Sandy Point in Victoria, very few, Launceston in Tasmania, very few city areas actually.

you don't know if they're active, they're just dreaming. You know, like you actually don't, you know, lots of people just, you know, just sit on the internet and look at property every night and they've got, they've just got an interest. They might own a property in that area.

So they're just constantly watching that market. And is there any way that you can kind of cut your searches and say, we've got a thousand people searching, you know, in this suburb, but 500, we know that they're just living in the area and they're just checking prices.

300 are dreaming, 200 are actually buyers.

Yeah, absolutely. So that's actually a project we're working on and we call them high intent buyers. So it's being able to determine, you know, whether that person or, you know, that property searcher is really that high intent. And that's kind of through what they actually do, how they interact with the site.

Yeah, exactly. Yeah. You know, whether they're looking at the contact details of the agent or whether they're dreaming and just kind of, you know, viewing the video and the images, for example.

Interesting. And the WA, what I'm interested in there is when you say a sort of a resurgence, is that from people outside WA looking at WA or is it people within Perth looking at regional areas in WA?

Look, this is so all searches, so it hasn't cut by kind of where the location has come from. But I think, you know, WA has been a really interesting one because I think, you know, a little bit of a turnaround in resources is going to benefit areas like WA.

We're seeing a rebound in some of those regional towns, particularly attached to mining areas. You know, you've got record high kind of gold prices, high prices for iron ore. And I think for some mining sectors, it has actually meant that they can increase employment base, which obviously, obviously puts increased housing.

And I think as well, COVID has also thrown perhaps another curveball. I mean, you know, with our inability to travel freely, I think for those fly in, fly out workers, you know, What it may mean now is actually they live in these regional towns rather than flying in and flying out.

So their family then locates with them. So I wonder whether, you know, we're actually going to see a different trend of how these fly in, fly out workers live to be able to have that kind of, you know, work life balance.

So all those people that invested in mining towns, they might actually finally get payday.

Oh, yes. I mean, some of these money accounts really have struggled, really, really have struggled. The falls have been substantial.

But even for Perth, you know, multi-year downturn, there's been glimmers of a recovery. I mean, price trough was hit last year. I think COVID has... thrown another curveball. So I think, you know, any kind of resurgence may have been delayed by COVID.

But I mean, I think WA in itself or Perth is definitely holding up much better than some of their other capital cities.

Interesting. Yeah, because I've got a couple of buyers agents I'm talking to over there. So I think that would be one to come up. So I'll organise that.

Just with that search data, in terms of actually privacy, I know like some websites, like for example, Kogan and other websites, they'll say we've got a new someone buying a laptop and they're in, I don't know, Brighton, Victoria, let's say. A domain actually looking at the IP address

and kind of able to track that we're getting a lot of people searching in this area that live in this area or they're in that area at the moment and they're looking for lots of property in this area.

So you can see that sort of people wanting to upgrade a lot in their area or you can see people in one suburb wanting to move to another suburb a lot. Like is Daymain looking at that sort of data?

Yeah. So, yeah, we look at where searches are coming from and where they're going to. So, yeah, we can slice and dice the data in so many different ways.

So I'm interested sort of the flip side of where buyers are or where people are searching, i.e. looking for bigger places and looking for more space, which is interesting.

seems to be a bit of a byproduct of being locked up in your homes what about the smaller apartments what is happening with demand or interest in one bedroom apartments or even two bedroom apartments yeah so i mean it's not something that i've dived into in depth in terms of comparing that kind of bedroom number um

What I think is interesting about, you know, apartments is, you know, we do when you look at, say, the disruption that COVID has made, the biggest disruption has been in the rental market and the biggest disruption in terms of bedroom number. has been one-bedroom apartments.

Now, I think, you know, and that obviously will have flow-on effects on the sales market and demand for one-bedrooms. We do see a lot of investors buying apartments, buying those smaller apartments off the plan, new devs to lease rent out.

And I think, you know, in terms of rental price falls, one and two bedrooms have seen the greatest impact. That, again, has been located in our inner city areas of Sydney, Melbourne and Brisbane. You know, the disruption to price has been quite great.

I think from memory, it was around 5% drop over three months, which is a very large revision. And that's because, you know, we're seeing, as we've just spoken about, I think our behaviours change, what we want change.

Obviously, for the rental market, it's being impacted by fewer students, foreign students living in those one bedders, which are, you know, have a high concentration in those CBD areas. So I think, you know, we could eventually see that have that flow and effect, I think, for the sales market as well.

The unit markets are definitely struggling because, you know, typically investors have bought them because, you know, home buyers, it only serves, you know,

fits a certain demographic you know whether singles or divorcees or um etc so you know maybe 80 or 90 percent of one bedroom apartments are investors and the investors aren't buying and um you know and they're selling because they're more likely to sell when times get tough rather than a home buyer because you know the home buyer still needs to live somewhere right so um it's going to be interesting to see what plays out there have you got a property dumbo for us

I certainly do. So this is somebody that I know very well. So they may hate me for telling this story. No names, no names. No names.

But so they purchased a property and the property, a warning flag for me is if a property has been transacted a lot of times in a very short space of time. This fit into that category.

Now, the open homes were only at nighttime in the evening, you know, when the sun was down. And they thought this was their first home and they thought nothing of it. And they obviously fell in love with the home.

until they moved into it and they realised that the home had no natural light, which is very important. So that was the reason why it had been transacted lots of times. And that was the reason why that they only had open homes in the evening.

And they then went on to sell it pretty quick too.

Oh, God. Did they financially kind of get away with it not too bad in terms of a similar sale price?

No, they came out lower. But I think for them they just couldn't live there anymore because, you know, of the lack of light coming into them.

Losing their tan.

Yep.

You don't think about it because you fall in love with a home and you go at 2 o'clock and that's when just the sun hits the back deck and, yeah, and you think that it's always going to be like that. I just, yeah, it's such a funny thing, isn't it?

And then even when you're trying to book a private inspection, the agents are very careful. I imagine, Veronica, you see that they direct you, oh, sorry, I can't do 9am, we'll have to do 2 o'clock. And it's like, well, that's the same time as I saw it last time. It's...

I think that happens as well.

Yeah, it's so important to view at different times of the day. You know, I even think, you know, you forget, you know, if you live in, say, really near to a school, you forget how busy school drop-off and pick-ups are. It's crazy.

And, you know, I'm not sure I'd want to live that close, you know, within a school drop-off zone because it is a very crazy period. I'm in it every day dropping my own kids off. I wouldn't want to live near a school drop-off zone.

Oh, I'd drive you nuts. You'd be stuck in traffic every day trying to get in and out of your own driveway. You know, it would drive you absolutely bonkers. Another one is beach suburbs.

You know, a lot of in summers there's massive influx of people and you can never get a parking spot anywhere. You can't even run up the road and get some milk because you can't park. And, you know, so everyone says, oh, I want to live close to the beach.

And it's like, that's cool. Just make sure you've got a double garage and make sure that you don't have friends over in summer. Yeah.

Yeah. It's funny because then all the rat runs happen as well at certain times. Oh, it's a beautiful, quiet street. You know, there's never usually traffic. Everyone goes down the main road and then...

The locals go down the back road.

The locals go down the back roads, which around New Veronica and Balmain happen a lot, right? They all just cut through those few streets that everyone drives down. So... Yeah, it's a, it's a very good Dumbo to be honest, because you know, there's lots of learnings there.

I think that transacting of the same property lots, um, and that data is easy to find. Like you can just one search and you can say that it's sold four times in the last five years.

Um, and I, uh, probably a tip I think you do Veronica, I imagine with, with clients is you'll probably then call those agents that sold it over that last four years. And cause if they're not selling it again, um,

Sometimes they, you know, want to do the, say the dirty things on their other agents listings, right?

And so, you know, I've done that before and, you know, real estate agents told me about properties that might have building issues or, you know, there's problems with selling that property because of X, Y, Z reasons.

And when you've had one of those properties is really tough to sell, you don't want it back.

And when you've sold it to somebody like that, you go, Oh my God, I hope they don't come back to me when they want to sell it because you'd know how bloody soul destroying it is selling it.

And, and this is the thing that I remind people, agents are very good at getting commitment from buyers and agents don't care. It's not their job to worry whether it's the right property for you. They've just got a job to do.

And that is to sell that thing for the people that made the mistake before you.

And IP data or, you know, whatever sorts you want to use can actually show you how long it was on the market back in 2012. And, you know, it was on the market for 162 days. Like that's already showing you a big warning, right?

It took a long time to sell and it sold four times in the last five years. It's not a hot property, right? So I think it's very good to look at those kind of past sales in a bit of detail when you're building a property.

Thank you so much for joining us, Nicola. We'll put the link in the show notes for that Price Edits most recent article anyway.

And the insights into the sorts of data you've got, what you're looking at doing with it, I think we'll all be watching to see some of this post-COVID and remembering that we're not post-COVID at the moment, but you're looking at the world post-COVID. That will be very interesting to see.

So we'll look forward to reading all about that. It's been a pleasure.

Thanks so much for having me on.

Thank you, Nicola. Really appreciate it.

We want to make you a better elephant rider. And this week's elephant rider training is...

I just want to share with you a little hack, actually, that we use now.

Well, actually, we don't use in our business because we have access to databases, but we recommend people in Home Buyer Academy actually do this because you can access sold data and sold property prices quite easily in both domain online and also on realestate.com.au. Both of them have sold tabs.

So when you search to buy, a lot of people, when they're researching a market, they just go and look at what's on the market for sale. They don't actually think to look at what has sold and what did it sell for.

Now, obviously, when you've got a lot of price not disclosed in there, which does happen certainly when the market's a bit transitional, you won't know for sure. You might have to pick up the phone or go out there to open houses and just get chatting with agents to pick up that data.

there's a lot of information that you can gather and you can look at floor plans and photos, you can do drive-bys past those properties, really to get a sense of what's happening with prices in that area.

So certainly Nicola actually gave some great tips for the important things that she looked at when she was looking at buying. And I think that they're really valuable because looking at the micro market is so important.

But looking at that sold section, so many people have never, ever dabbled in there, never played in there. So if you haven't, take a time to have a Thank you.

Oh, I agree. But I also think that it's a little bit deceiving. I mean, I had a client, a new client yesterday, they're buying in Melbourne, they want to start to do some research prior to, you know, with the lockdown finishes, then they can actually have a bit more knowledge of the market.

And the problem with the sole type, yes, you can look at the floor plan, and that helps. But, you know, it's nowhere near as good as actually going through the property and, you know, experiencing it, because I think the Looking at the photos of the property, they always show their best light.

They don't hide the imperfections and the things that you don't know about the property. So just be a little bit careful kind of doing your price research on the sold tab just because...

Yeah, you might, yeah, either under quote what you actually think the property is worth because, you know, a similar property that's nowhere near as good as selling for, you know, a smaller price. So just be careful with it. But I agree 100%.

Don't look at the buy tab if you want to know what's happening in the market. Look at the sold tab because it's a much better realistic understanding of the prices.

Actually, when it comes to price research, we've got a free mini course on Homebuyer Academy, which is homebuyeracademy.com.au forward slash free course because it does take you through that whole process and absolutely agree that as a starting point, look at that sold data because that also will give you an indication of whether you can get, whether you can afford to get what you think you're going to get in the area.

Whereas what happens, the buyers look at what's on the market. If it's in an auction area, it's being sold.

quote it a bit less than they're expecting and you sort of you rush out there with wish wishful thinking so it's good for a reality check but you will actually start by inspecting properties you will actually start gathering up that knowledge so it's really good resource um for those properties you haven't inspected um but uh but yeah they're nothing beats actually getting putting together and there is a spreadsheet actually in that um in that mini course um

as well that you can use to actually start collating all the data. And I absolutely agree that you should get out there and look at as many properties as possible before you actually buy.

I agree around the price. I had a client yesterday as well and the budget's super tight because of the savings that the person's got. And what they want to achieve is in these areas.

And I did a quick search and looked on the sold tab and there was nothing selling anywhere near the price that he had to spend in those areas. And so it was very quickly that sold tab just said, look, it's not going to happen, right? Yeah. And that saves potentially three months.

Whereas you looked at the listings, actually, there was actually listings in his budget. And so, you know, and because it was so tight on budget, there was no flex there. You know, he just could save three, six months going to these listings and then keep shooting over his budget.

Well, and also the cost of building a pest inspection, the strata reports and getting the contract reviewed. And this is where a lot of buyers get so frustrated with the whole process. And they've got to take their part in, they've got to take responsibility for their bit. And that is researching. Yeah.

yeah opportunity cost of prices but even that you know i've had clients who have just given up on the whole buy process it's just all too difficult um and uh you know things change sometimes like a you know client unfortunately sent me an email yesterday and um his wife's lost a job and you know they've been very active buyers um but now that she's lost a job they can't buy until she gets another job and so

You've got to sometimes not take it for granted that you can always just buy and just keep waiting because they had missed out on a few properties and now they are out of the market. And it's just, yes, you could get another job tomorrow and they'll be all okay, but it's who knows.

And so you've just always got to be, just be careful that you're not wasting time.

Yeah, that's horrible.

Please join us for our next episode where we do a deep dive into what Australians are spending our, or their, money on. We are interviewing Simon Bly, CEO of Illion. Now, Illion have amazing access to data about the ways in which we're spending money and also our credit files.

And also, we're going to share the spotlight on the amount of people that have actually taken advantage of early access to super and what they've been spending that on. So tune in. Very interesting conversation. Please join us.

If you're looking to buy your dream home or an investment property in Sydney's inner west, eastern suburbs or North Shore, my team and I can help you buy without regrets. Reach out via my website, gooddeeds.com.au.

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And remember, don't be a dumbo.