Ever wondered why some property investors always seem to make smart moves while others struggle? The secret lies in understanding property cycles—the fundamental rhythms that dictate real estate markets.
Michael Burgio and Stevan Bubalo take listeners on a fascinating journey through the four distinct phases of property cycles: downturn, stabilisation, upturn, and boom. Rather than abstract theory, they deliver practical insights about recognising each phase and leveraging its unique advantages.
Counterintuitively, downturns offer golden opportunities for upgrading properties. The mathematics is compelling—lose $100,000 selling your apartment in a down market, but save $250,000 on the larger home you're purchasing. Meanwhile, stabilisation phases provide precious breathing room for thoughtful decision-making without the pressure of rapidly moving prices.
Their analysis of current market conditions reveals we're likely entering an upturn phase, with increasing buyer numbers at inspections and quicker sales reflecting growing confidence. For property owners contemplating their next move, this timing insight proves particularly valuable.
The hosts share fascinating anecdotes from their frontline experience, including heartbreaking stories of sellers who misjudged cycles and found themselves priced out of the market they hoped to re-enter. They also reveal insider techniques for identifying market shifts before they become obvious—monitoring luxury car listings, tracking expired property listings, and reading media sentiment.
Whether you're a first-home buyer, investor, or looking to upgrade, this episode equips you with the cycle-reading skills usually reserved for seasoned property professionals. Listen now to gain the critical market intelligence that could save you thousands on your next property transaction.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:03):
Good afternoon everybody.
Welcome to Monday Night News.
It's a Monday, I know that forsure.
I've got myself, michael Berger, my colleagues Devon Bublo, and
tonight we're going to betalking about the property
cycles.
We've got downturns, downturns,stabilizations, upturns and
(00:27):
boom.
Sorry, I just dropped a drink,a little hair everywhere,
passing it on.
Speaker 2 (00:34):
That's a terrible start.
No, we're right on track.
So good to be back with you,michael, on this Monday night.
And tonight's topic, somethingwe thought might be of interest
to everybody and that's not justspruiking real estate, but
let's talk about the cycles thatyou're going to find in the
world of real estate.
And where are we?
In what cycle are we?
Speaker 1 (00:53):
And let's just go from there we're just talking
about the macro cycle.
So there's micro cycles whereeveryone talks about selling in
spring and month to month.
We want to go a little bitbroader and a little bit more
holistic when it comes to cyclesover years.
Speaker 2 (01:11):
So, yeah, look, as Australians, we absolutely love
real estate, northern beaches,most people, michael, you and I
could attest that everyone likesto make fun of being around a
real estate agent.
But wherever we go we go to aparty.
Everyone wants to talk aboutthe market, a real estate agent.
But wherever we go we go to aparty.
Everyone wants to talk abouthow's the market, what's going
on ins and outs.
So, look, we've basically comeout to identify that the
(01:33):
property cycles, or the market,is actually split into four
individual phases and each phasecomes with pros and cons and
probably more so to do withresidential real estate,
commercial, probably a littlebit more factored by economical
circumstances, but we're goingto talk more residential today.
So what are the four phases inreal estate?
(01:54):
Number one is when that marketstarts coming down.
That's called, obviously, thedownturn phase, stabilization,
it levels out, then we'll startto see an upturn and, um, then
it's generally followed by aboom period.
So, um, let's get into it,michael.
We'll talk about kind of what,what phases, what they, what
they detail, and then,essentially, when we've seen
(02:16):
them.
Speaker 1 (02:16):
It's a little tricky because a lot of the time you
don't know what phase you're inat the time.
A lot of it's looking back,historically going.
It's almost like it's we shares.
It's very tough to sell at thetop and buy at the bottom and
top analyst always says youdon't know you're at the top
until it starts going down andyou don't know you're at the
(02:37):
bottom until it starts goingback up.
Yes, so it's very easy to lookum, and you always have the
people who, well, I've got oneclient, we drive past this one
house and he goes oh, I couldhave bought that for X amount
this many years ago.
So it's, I suppose, justbecause you're in a downturn or
(02:58):
a stabilisation period.
There are pros and cons tobuying or selling and, believe
it or not, sometimes it may begood to sell in a downturn
market and maybe we'll startwith that.
Yeah, um, some pros and cons ona downturn market.
So maybe, first of all, what isa pretty self-explanatory.
Speaker 2 (03:18):
It's a period um in which property prices are
generally falling or coming downI won't use the term falling
because I don't really fall far,but they definitely do cycle up
and down and it's typically thedownward cycle.
And there's a number of factorsthat can really come into play
for these periods.
Obviously economic factors, umrates, things like that.
That's typically what seems todrive our, our markets um
(03:41):
economic slowdown.
You know the g, gfc, that typeof stuff.
It's typically got to do morearound the access to money,
things like that.
So that's a good point.
Speaker 1 (03:51):
Our interest rate.
So a government decision canimpact the market and it's
probably very easy.
Just in the last couple ofyears, if you look at, we'll get
into where covert and what thatcycle was.
But just in the last two yearswhere you saw interest rates go
from 1.7 percent to six, sevenpercent, we saw that market go
(04:14):
down.
Yeah, but pros and cons ofbuying or selling in a downturn
a big pro if you're upsizing.
This is almost like a markettime to do it yeah, this is a
cycle that you want to be doinga deal and the reason is and the
simple numbers.
Let's say you're selling yourmillion dollar two-bedroom
(04:34):
apartment.
Let's say an upturn market itwas 1.2, now it's a million.
You may think that's terrible,but you've got to look at what
you're going to buy now.
Let's say you're upsizing to atwo million dollar house and in
an up market that is 2.2.
But in a down market that is1.8, 1.9.
So even though you're sellingfor 100 or 200 grand less, you
(04:59):
could be buying.
I need to make the downturn abit more drastic.
Let's say 2.5, now it's 2million.
You're saving 500 000.
Yes, you sell for 100 grandless, but overall you're in a
better position?
Speaker 2 (05:12):
I don't see.
You'll take 10, just say it'sdown 10.
You lose 10.
You're down 100 grand 100 000.
Sorry the one you're buying twoand a half.
Yeah, it's down 250 000.
Speaker 1 (05:22):
So you're actually in the green 150 000 um upsizing
in that down cycle I supposethat downturn market's a bit
tougher if you're the oneselling that house you want to
upsize in the down marketdownsides if you can avoid it.
Speaker 2 (05:37):
Um, what are the signals?
What are some of the things tolook out for and how to identify
what a downsizing market, uh,might look like is typically
your homes are going to sit.
What a downsizing market mightlook like is typically your
homes are going to sit on themarket longer.
They go market.
They go market will push out.
A Northern Beaches propertywill generally sell within two
to four weeks.
In a downturn market it couldbe eight weeks, sometimes even
12 weeks.
Speaker 1 (05:58):
You could see a property out there, I think, a
trend for agents.
We look at expired listings.
So typically when an ownersigns of agreement it's 90 days
with an agent.
So it's um, because even in agood market some listings can go
a little bit longer.
So but the downturn it's really90 days plus I, I reckon.
(06:21):
So if you start seeingproperties be with one agent,
not sell, go to another agent,that's probably your easiest
indicator to see, and it's notjust one property You're talking
.
If a suburb may, let's say,chroma, 10 houses selling a
month, if you're noticing 10%,30% of them are taking a couple
(06:44):
agents to sell, that's probablya key factor for you to look out
.
Speaker 2 (06:48):
Yeah, definitely, definitely.
The other thing also isdiscounting, so it's not that
common, but agents willgenerally have a guide price.
You see that price coming down.
It's typically an indicator of,and not for one property but
across the majority of thesuburb.
You will see.
Speaker 1 (07:04):
Cause there are bad agents out there who sell low
pricing in good times.
Absolutely, there's a few downthe street.
Speaker 2 (07:13):
So that's your downturn market and I think, as
an indicator for Sydney anddefinitely the Northern Beaches,
that was 2022, 2023, even lastyear, 2023.
Probably the main one, I wouldthink.
Um, just as interest rates keptpushing up and up and up, and
uncertainty and an unclearmessage from from um the federal
(07:33):
reserve bank as to where rateswere going, really, really
pushed that market down.
So that was a downturn market.
Speaker 1 (07:39):
The next cycle stabilization.
What is that?
Speaker 2 (07:43):
stabilization.
Well, it's, it's pretty easy aswell.
It is a level playing field.
It's typically the market isn'tshowing price, isn't showing
indicators of trending downwardsanymore, but it hasn't seen or
is not seeing a rapid increaseor any kind of increase really
in um, in property pricing and,like you said, michael, there's
there's pros and cons to both aswell um I think a good pro
(08:06):
would be um, buying and sellingis a big decision for families.
Speaker 1 (08:11):
They think about it a long time.
There's a lot of emotion,there's a lot of decisions out
there and what can be very bad.
And agents always say you wantto buy and sell in the same
market.
And a big reason for that isthere's nothing worse than,
let's say, in an upmarket marketyou're selling your million
(08:31):
dollar apartment to buy thathouse for two million dollars,
but the market's going up somuch that you wait six months
and the property you were goingto buy is now worth 2.5 and you
can't afford it.
And then you look back at whatyou've sold now.
Now that's 1.2, 1.3 to buy backin.
That can be very heartbreakingand we see a lot of people end
(08:54):
up just not buying and stay inthe rental market.
When I remember hearing thisforest story in Worrywood, it
was before COVID.
This guy, finance, thought themarket was going to tank because
of COVID.
They sold their townhouse for,let's say, it was 1.5.
As we all know, the market wentup 50% and they were priced at
(09:17):
they couldn't do anything andthat's heartbreaking to hear.
So that's where a stable market, as much as it doesn't have all
the media attention of a greatmarket booming, it can be um
desirable for when you you'vegot a bit more time to make your
decision, you can do that duediligence yeah and it's just you
feel safer, you can make youknow again just the pressure of
(09:40):
the whole property propertysituation it's not on you.
Speaker 2 (09:43):
in the indicator of the stabilization period is that
you're seeing propertiestransacting, typically probably
within a four to six or eightweek period, but you'll notice
that the advertised price andthe sale prices are relatively
similar to where they are.
Um, there's still agents thatunder quote, but the majority of
them will be selling close towhat the advertised price is um
(10:03):
with those.
So stabilization period sorryto give you an idea is I would
say say we've just seen one,we're coming out of one Even
today is I think we're on thefringe of the upturned
stabilisation phase.
As agents we're tracking thenumber of buyers coming through,
open homes and so when we'reseeing a consistent number of
(10:25):
potential buyers coming through,not a huge increase, that's
telling us it's a stable marketas well.
We can week out.
Speaker 1 (10:30):
But I think you're spot on with the key.
It's also very hard for ownersto get the information with
pricing.
But if you have a goodrelationship with an agent, they
have access to software wherethey can.
Rp data will capture the listprice.
So the agent started at $1.8and it sells for $, for 1.9 or
(10:50):
1.8, and it's downturned thatlist for 1.8, then it's 1.716.
A lot of that data is notnecessarily as easy to get
publicly and realestatecom canbe quite misleading with, as you
said, agents under quoting tomake it look good.
But any decent agent should beable to get you some of this
data as well.
Yep, now the next phase upturn.
(11:12):
The upturn phase.
Let me guess Things are goingup.
Speaker 2 (11:14):
Things are going up.
So it's not that it'scompletely out of control, but
prices are moving up.
It's typically got to do withconfidence and again our
market's driven more so byaccess to money.
But we're seeing the messagesin the media already Interest
rates starting to come down,talk of future interest rate
drops as well, and these areboosting buyer confidence and
(11:40):
we're starting to see obviouslya very, very busy weekend across
the apartment market.
This Saturday, I think mycolleague Glenn our colleague
Glenn had three apartments open,over 40 buyers through those
three apartments on Saturday,which is a huge increase from
maybe three or four weeks agoand we're probably seeing, you
know, half of those numbers.
The upturn phase is a good timeto buy as well, so you're kind
of getting into it just as themarket's picking up.
(12:01):
If you're looking at buying,it's still a relatively I won't
say safe, but it's a little biteasier of a path to navigate.
Speaker 1 (12:09):
But better buying if you're downsizing, because when
we're using that analogy beforeyour $2 million house, you can
get a $2.2 million price.
So you're up $200,000 comparedto the $1 million maybe $1.5
million, but keep in mind morecompetition.
So this is when you're in thedownturn where you may be the
(12:29):
only offer maker.
You've got a little bit moretime with that transaction,
getting contracts to check.
So probably more so in the nextphase, which we'll get to.
But you see a lot more buyerspushing for an exchange on a
cool-off period just to lock upthe property.
But this is also when theagents can be like another
(12:50):
buyer's got a contract.
So I think to notice speed youhave to execute once you see the
property, you hear it.
I saw it on Saturday and it'salready sold.
Speaker 2 (13:02):
It's on Monday or it's sold on Monday.
The other thing I was going tosay is that typically an upward
cycle, as much as there'scompetition for buyers, as more
buyers are entering themarketplace, typically you'll
see an increase of listings.
So owners that have decided notto sell because prices were
coming back and now thinkinglook, this is the time for me to
get on the market, sell andlook to change my property
position.
So, um, with the upturn, notonly are there more buyers
(13:24):
circling the market, you shouldsee an increase in the number of
properties for sale.
So there's.
Speaker 1 (13:29):
There's definitely these pros and cons for each of
the markets, like the as much asbooming, if you're buying, it
may not, um, sound good becauseyou're potentially paying more,
but you also have more stock tochoose from.
And then, as much as everyonesays, oh, they want to buy when
the market's going down.
Yeah, it's very tough and youtouched on it before media
(13:50):
sentiment each market plays abig role.
I know, I see this a lot inresidential compared to
commercial, where an articlecould, or a news, uh, uh, the
presenters online are talkingabout um, interest rates
dropping, great market, a greatreal estate market, things,
things are going up.
You will hear the nextconversation with a buyer or a
(14:12):
seller how about the market?
How good, did you see this?
Did you see that?
And everyone's just got thatextra jump in their step when it
comes to auctions, bidding ormaking offers.
And then, on the reverse, whenthings are negative, like it's
highly emotive's, um, highlyemotive, I think would be the
word yeah, um, the way you can.
Speaker 2 (14:33):
I was gonna say also that, as a consumer, like
michael said, we as agents areon the front line, so we've got
our fingers on the pulse.
We can see these changes comingthrough.
If you're a consumer, you're abuyer in the market, you don't
have access or you don't know agood agent, um, have a look at
the properties you're looking atand then see how quick they're
turning over, but also payattention to how many other
people are attending the openhomes that you might be
(14:54):
attending.
If the volume's high and theturnover's quick, we're in an
upward cycle.
Speaker 1 (14:58):
There's a lot you can see without having any
knowledge of knowing any agents.
You can see for yourself.
You can see if there's a lot ofpeople at the open homes.
You can see if properties.
Properties are up and likerealestatecom, I believe, they
tell you when something's listedand so, like you can see how
quickly properties are sellingto give you a bit of an idea.
But let's get on to the nextone.
The fun one phases in propertymarket.
Speaker 2 (15:21):
The boom, the boom boom.
When did we see a boom sort ofboom straight after, covert.
Whenever I think there's goingto be a drop, like you just
mentioned, mich Michael, withthe gentleman in Worrywood, and
a boom cycle is basically, frommy experience, is the upturn
phase, but it combines a largervolume of buyers.
But then it also starts puttingin the fear of missing out with
(15:44):
buyers and essentially, yeah,the buyers fuel their own market
to this degree and it takes offand it can go, it can move
really rapidly.
Speaker 1 (15:52):
Essentially, you see a property on saturday, it's
sold on saturday, yeah, this iswhen, I think, just taking a
step back also we saw the latestboom was influenced by the
government slashing interestrates.
Yes, so that's a like you wantto.
People always want to look forindicators.
How can you get in before theboom or when you should act?
(16:12):
A lot of it is based.
These macro cycles are heavilyimpacted by global affairs and
national policies.
So we saw the virus COVID andeveryone thought the market was
going to go down.
And then the governmentimpacted the market by let
slashing interest rates fromfour percent to 1.5 percent and
(16:36):
then you saw the market shoot up.
It's um, it's crazy how andthis is where it's very
important which government's inin power, and also, you may not
be into politics or anythinglike that, but it's good to sort
of just keep an ear out of whatare they doing and how could
that impact the market.
(16:56):
So we're in a boom.
What, uh, let's say what aresome pros for buyers for?
Speaker 2 (17:03):
buyers.
You can buy a property quick.
That's a pro.
There's more choice, morechoice more choice.
Yep out there, um.
I think if you're anexperienced buyer and you know
how to transact quickly, it'sgoing to put you in an advantage
, um, over buyers who might havejust entered that property
cycle so having your financeapproved, the confidence
definitely.
Speaker 1 (17:23):
This is when the the saying is like I'm not, we've
got all, like we're buying it,all cash we can make.
Make the offer today, sign thecontract no cooling off and
execute.
Speaker 2 (17:35):
That's not very important in a downturn because
there may only be one buyer, butin the booming you're competing
with multiple buyers probablyfour or five offers on every
property that you're looking at,and you're right, michael, and
it's those buyers, I think, thathave experienced the upturn.
Um, I've also experienced theprocess of how to put in an
offer, moving quickly, thingslike that.
Now, dare I say, um, we have a,we have a saying, and it
(17:57):
probably applies everywhere.
What is it?
In good times, bad habits form.
In bad times, good habits formwhen the market's really good.
There's a lot of people thatdecide to join the real estate
industry and you know their,their experience or, um, their
luxury car purchases go up.
Speaker 1 (18:14):
I used to track that, actually the pricing, when the
end of the you know the checkthe property listings.
I was checking the luxury carlistings.
So during the good times therewas very little.
Everything selling quick.
They'll say only 10 Audi, r8sor Porsche, and then in a
downturn you see all thesethings go up.
Speaker 2 (18:36):
So it would indicate the number of luxury cars for
sale, that's a good point.
Speaker 1 (18:41):
So, yeah, in a boom time the agents won't call you
back on monday.
In the down time they'recalling you back on saturday
they're calling you back.
A good agent will call you allthe time.
But that's the importance ofbeing proactive.
A lot of the time the agentsdon't have to work too hard to
sell the property in the boomand its buyers basically
throwing themselves.
It's like being the pretty girlat the dance everyone just
(19:02):
throwing.
Speaker 2 (19:02):
We will know but, we've seen in movies, guys just
throw themselves at the prettygirl yeah so, but the boom cycle
as well and this is the messageI'd like to say to people is
the best time to buy a propertyor sell a property is when you
need to buy or when you need tosell a property and people say
buyers will say, oh, I don'twant to pay, I don't want to buy
in the boom, or I overpaid fora property.
(19:24):
You're only overpaid for aproperty when you sell the
property and didn't turn aprofit.
You know if you're going tohold that home or that apartment
or that commercial space foryou know seven years or 10 years
you're going to be coming outahead and I've seen buyers
believe it or not.
Just as an example, I'll havean apartment for sale at a
million dollars.
The market's super hot.
(19:44):
It goes to 1.1.
They turn around they say, look, I'm, I'm sick of competing
with everyone, I'll just pay 1.2, buy the thing.
Okay, it's.
It's significantly over marketthe price they've paid.
In two, three years theproperty's worth 1.2.
Yeah, and they've secured it.
You know, a few years earlier Ihaven't, haven't really
capitalized on three yearsgrowth.
They're going to hold it foranother 10 years and they're
going to double their moneyanyway.
Speaker 1 (20:05):
We have a great graph where it's like the last 40
years of history in pricing andit's literally every 10 years
the property market hasbasically doubled.
So if you overpay, just wait afew years.
But also there's nothing wrongwith overpaying if you've loved
the property and you're sick ofit, absolutely.
Speaker 2 (20:26):
If you're going to live there, it's the home that
suits your family and you'regoing to get in there, and it's
close to the school you wantyour kids to go to, or your kids
go to what's it matter?
Speaker 1 (20:32):
Are you going to?
Speaker 2 (20:32):
sell it in 20 years.
Speaker 1 (20:39):
Also, I remember when I was looking for my apartment
I probably shouldn't havebecause then I just paid it
because I was like it doesn'tmatter, I just wanted to secure
it.
Speaker 2 (20:47):
And we're not saying look, don't go beyond your means
, Obviously be smart and you'vegot limits to work to, but I
haven't seen property turn bad.
Like my colleague Glenn says,it's not fruit, it doesn't go
bad.
Speaker 1 (21:00):
What are some negatives during real estate?
Speaker 2 (21:02):
in the boom Look, it moves quick.
It's incredibly frustrating asa buyer in that boom period
where you know, as agents, eventhey say, oh, you're the agent,
you're doing this on purpose.
It is just such a large volumeof buyer activity that we're
managing that.
It is incredibly stressful fora lot of buyers.
It's a lot of work on the agentside that you don't see in the
background as well, managing allthese buyers and trying to
(21:25):
communicate with everyone to thebest, to the best capacity.
Speaker 1 (21:28):
But the bottom line is it moves really, really quick
so it's important to buy in thesame market, because you could
be needing to buy something,definitely if you're selling and
buying.
Speaker 2 (21:36):
You want to do it in the same market.
Typically, what follows theboom is the downturn.
Yes, so the buyer frustrationreaches to a point where buyers
like you know what, I'm sick ofthis not going to buy anymore,
and then a large portion of themarket drops out.
The government might uh, youknow, embrace right, yeah, try
to settle the market, and thenyou see that downward cycle
again so to spot the boom, wouldyou say.
Speaker 1 (21:58):
That's when you start hearing oh, this sold for half
a million at auction.
This is when you see sold in 24hours.
Speaker 2 (22:04):
Yeah, this is when you see like what else well, the
indicators to me is how quicklyproperties are selling.
Speaker 1 (22:10):
Yeah, so, on the market, off the market, on the
market off the market and maybemore off-market deals, because
agents that don't have moremarkets yeah, I know, in the
downturn nearly everything hasto go to market, do all the
marketing to find the buyer.
But in the in a boom or a goodtime like a lot of time you have
a property, you get 40 peoplethrough the opener, you got 10
offers.
(22:31):
You can sell another couple ofproperties without any marketing
.
That's right.
So that's probably in theupturn and boom a little bit
more important to try and get onthe agent's database even a lot
of um, seasoned clients of ourseasoned buyers.
We see them create a secondemail address just for real
estate.
Yeah, because they know theimportance of judging yeah,
(22:52):
absolutely, absolutely.
Speaker 2 (22:53):
Mine's called stevan bulo property dot one seven,
seven, five, six, six, three,one, something like that.
No, it's kidding, um, butthey're kind of the four phases
to look out for.
Where are we at the moment?
Personally, I feel as thoughwe've come out of the
stabilisation, we're in theupturn phase, and the reason I
say that is on the front line,we've seen a good increase in
the number of buyers circulatingin the marketplace.
(23:15):
We've seen relatively interestrates the positive message with
interest rates we're seeingoffers coming in on the majority
of properties relativelyquickly in the residential
market, and these are allindicators that there's a slight
upturn.
In my opinion, I think rateswill play the biggest factor
(23:36):
right now because obviously weall feel better, but you know,
unless we can spend more, wecan't pay more.
So I think we're in the upwardtrend now and I think a lot of
people also that had thoughts ofselling realize how hard it was
to get a loan and are keepingproperty longer.
So there's there's not as manylistings on the marketplace
either.
So all those factors indicateto me that we're starting to see
the market move a little easier.
(23:57):
Good, I think that covers it.
I think so.
I think so, guys, like always,if we can help you michael
Bergio, stevan Bublo.
We're at NoVoke PropertiesAnytime.
Reach out Love to answer anyquestions you've got.
Speaker 1 (24:07):
Thank you very much.
Cheers, bye, bye.
Good afternoon everybody.
Welcome to Monday Night News.
It's a Monday, I know that forsure.
I've got myself, michael Berger, my colleagues Devon Bublo, and
tonight we're going to betalking about the property
cycles.
We've got downturns, downturns,stabilizations, upturns and
(00:27):
boom.
Sorry, I just dropped a drink,a little hair everywhere,
passing it on.
Speaker 2 (00:34):
That's a terrible start.
No, we're right on track.
So good to be back with you,michael, on this Monday night.
And tonight's topic, somethingwe thought might be of interest
to everybody and that's not justspruiking real estate, but
let's talk about the cycles thatyou're going to find in the
world of real estate.
And where are we?
In what cycle are we?
Speaker 1 (00:53):
And let's just go from there we're just talking
about the macro cycle.
So there's micro cycles whereeveryone talks about selling in
spring and month to month.
We want to go a little bitbroader and a little bit more
holistic when it comes to cyclesover years.
Speaker 2 (01:11):
So, yeah, look, as Australians, we absolutely love
real estate, northern beaches,most people, michael, you and I
could attest that everyone likesto make fun of being around a
real estate agent.
But wherever we go we go to aparty.
Everyone wants to talk aboutthe market, a real estate agent.
But wherever we go we go to aparty.
Everyone wants to talk abouthow's the market, what's going
on ins and outs.
So, look, we've basically comeout to identify that the
(01:33):
property cycles, or the market,is actually split into four
individual phases and each phasecomes with pros and cons and
probably more so to do withresidential real estate,
commercial, probably a littlebit more factored by economical
circumstances, but we're goingto talk more residential today.
So what are the four phases inreal estate?
(01:54):
Number one is when that marketstarts coming down.
That's called, obviously, thedownturn phase, stabilization,
it levels out, then we'll startto see an upturn and, um, then
it's generally followed by aboom period.
So, um, let's get into it,michael.
We'll talk about kind of what,what phases, what they, what
they detail, and then,essentially, when we've seen
(02:16):
them.
Speaker 1 (02:16):
It's a little tricky because a lot of the time you
don't know what phase you're inat the time.
A lot of it's looking back,historically going.
It's almost like it's we shares.
It's very tough to sell at thetop and buy at the bottom and
top analyst always says youdon't know you're at the top
until it starts going down andyou don't know you're at the
(02:37):
bottom until it starts goingback up.
Yes, so it's very easy to lookum, and you always have the
people who, well, I've got oneclient, we drive past this one
house and he goes oh, I couldhave bought that for X amount
this many years ago.
So it's, I suppose, justbecause you're in a downturn or
(02:58):
a stabilisation period.
There are pros and cons tobuying or selling and, believe
it or not, sometimes it may begood to sell in a downturn
market and maybe we'll startwith that.
Yeah, um, some pros and cons ona downturn market.
So maybe, first of all, what isa pretty self-explanatory.
Speaker 2 (03:18):
It's a period um in which property prices are
generally falling or coming downI won't use the term falling
because I don't really fall far,but they definitely do cycle up
and down and it's typically thedownward cycle.
And there's a number of factorsthat can really come into play
for these periods.
Obviously economic factors, umrates, things like that.
That's typically what seems todrive our, our markets um
(03:41):
economic slowdown.
You know the g, gfc, that typeof stuff.
It's typically got to do morearound the access to money,
things like that.
So that's a good point.
Speaker 1 (03:51):
Our interest rate.
So a government decision canimpact the market and it's
probably very easy.
Just in the last couple ofyears, if you look at, we'll get
into where covert and what thatcycle was.
But just in the last two yearswhere you saw interest rates go
from 1.7 percent to six, sevenpercent, we saw that market go
(04:14):
down.
Yeah, but pros and cons ofbuying or selling in a downturn
a big pro if you're upsizing.
This is almost like a markettime to do it yeah, this is a
cycle that you want to be doinga deal and the reason is and the
simple numbers.
Let's say you're selling yourmillion dollar two-bedroom
(04:34):
apartment.
Let's say an upturn market itwas 1.2, now it's a million.
You may think that's terrible,but you've got to look at what
you're going to buy now.
Let's say you're upsizing to atwo million dollar house and in
an up market that is 2.2.
But in a down market that is1.8, 1.9.
So even though you're sellingfor 100 or 200 grand less, you
(04:59):
could be buying.
I need to make the downturn abit more drastic.
Let's say 2.5, now it's 2million.
You're saving 500 000.
Yes, you sell for 100 grandless, but overall you're in a
better position?
Speaker 2 (05:12):
I don't see.
You'll take 10, just say it'sdown 10.
You lose 10.
You're down 100 grand 100 000.
Sorry the one you're buying twoand a half.
Yeah, it's down 250 000.
Speaker 1 (05:22):
So you're actually in the green 150 000 um upsizing
in that down cycle I supposethat downturn market's a bit
tougher if you're the oneselling that house you want to
upsize in the down marketdownsides if you can avoid it.
Speaker 2 (05:37):
Um, what are the signals?
What are some of the things tolook out for and how to identify
what a downsizing market, uh,might look like is typically
your homes are going to sit.
What a downsizing market mightlook like is typically your
homes are going to sit on themarket longer.
They go market.
They go market will push out.
A Northern Beaches propertywill generally sell within two
to four weeks.
In a downturn market it couldbe eight weeks, sometimes even
12 weeks.
Speaker 1 (05:58):
You could see a property out there, I think, a
trend for agents.
We look at expired listings.
So typically when an ownersigns of agreement it's 90 days
with an agent.
So it's um, because even in agood market some listings can go
a little bit longer.
So but the downturn it's really90 days plus I, I reckon.
(06:21):
So if you start seeingproperties be with one agent,
not sell, go to another agent,that's probably your easiest
indicator to see, and it's notjust one property You're talking
.
If a suburb may, let's say,chroma, 10 houses selling a
month, if you're noticing 10%,30% of them are taking a couple
(06:44):
agents to sell, that's probablya key factor for you to look out
.
Speaker 2 (06:48):
Yeah, definitely, definitely.
The other thing also isdiscounting, so it's not that
common, but agents willgenerally have a guide price.
You see that price coming down.
It's typically an indicator of,and not for one property but
across the majority of thesuburb.
You will see.
Speaker 1 (07:04):
Cause there are bad agents out there who sell low
pricing in good times.
Absolutely, there's a few downthe street.
Speaker 2 (07:13):
So that's your downturn market and I think, as
an indicator for Sydney anddefinitely the Northern Beaches,
that was 2022, 2023, even lastyear, 2023.
Probably the main one, I wouldthink.
Um, just as interest rates keptpushing up and up and up, and
uncertainty and an unclearmessage from from um the federal
(07:33):
reserve bank as to where rateswere going, really, really
pushed that market down.
So that was a downturn market.
Speaker 1 (07:39):
The next cycle stabilization.
What is that?
Speaker 2 (07:43):
stabilization.
Well, it's, it's pretty easy aswell.
It is a level playing field.
It's typically the market isn'tshowing price, isn't showing
indicators of trending downwardsanymore, but it hasn't seen or
is not seeing a rapid increaseor any kind of increase really
in um, in property pricing and,like you said, michael, there's
there's pros and cons to both aswell um I think a good pro
(08:06):
would be um, buying and sellingis a big decision for families.
Speaker 1 (08:11):
They think about it a long time.
There's a lot of emotion,there's a lot of decisions out
there and what can be very bad.
And agents always say you wantto buy and sell in the same
market.
And a big reason for that isthere's nothing worse than,
let's say, in an upmarket marketyou're selling your million
(08:31):
dollar apartment to buy thathouse for two million dollars,
but the market's going up somuch that you wait six months
and the property you were goingto buy is now worth 2.5 and you
can't afford it.
And then you look back at whatyou've sold now.
Now that's 1.2, 1.3 to buy backin.
That can be very heartbreakingand we see a lot of people end
(08:54):
up just not buying and stay inthe rental market.
When I remember hearing thisforest story in Worrywood, it
was before COVID.
This guy, finance, thought themarket was going to tank because
of COVID.
They sold their townhouse for,let's say, it was 1.5.
As we all know, the market wentup 50% and they were priced at
(09:17):
they couldn't do anything andthat's heartbreaking to hear.
So that's where a stable market, as much as it doesn't have all
the media attention of a greatmarket booming, it can be um
desirable for when you you'vegot a bit more time to make your
decision, you can do that duediligence yeah and it's just you
feel safer, you can make youknow again just the pressure of
(09:40):
the whole property propertysituation it's not on you.
Speaker 2 (09:43):
in the indicator of the stabilization period is that
you're seeing propertiestransacting, typically probably
within a four to six or eightweek period, but you'll notice
that the advertised price andthe sale prices are relatively
similar to where they are.
Um, there's still agents thatunder quote, but the majority of
them will be selling close towhat the advertised price is um
(10:03):
with those.
So stabilization period sorryto give you an idea is I would
say say we've just seen one,we're coming out of one Even
today is I think we're on thefringe of the upturned
stabilisation phase.
As agents we're tracking thenumber of buyers coming through,
open homes and so when we'reseeing a consistent number of
(10:25):
potential buyers coming through,not a huge increase, that's
telling us it's a stable marketas well.
We can week out.
Speaker 1 (10:30):
But I think you're spot on with the key.
It's also very hard for ownersto get the information with
pricing.
But if you have a goodrelationship with an agent, they
have access to software wherethey can.
Rp data will capture the listprice.
So the agent started at $1.8and it sells for $, for 1.9 or
(10:50):
1.8, and it's downturned thatlist for 1.8, then it's 1.716.
A lot of that data is notnecessarily as easy to get
publicly and realestatecom canbe quite misleading with, as you
said, agents under quoting tomake it look good.
But any decent agent should beable to get you some of this
data as well.
Yep, now the next phase upturn.
(11:12):
The upturn phase.
Let me guess Things are goingup.
Speaker 2 (11:14):
Things are going up.
So it's not that it'scompletely out of control, but
prices are moving up.
It's typically got to do withconfidence and again our
market's driven more so byaccess to money.
But we're seeing the messagesin the media already Interest
rates starting to come down,talk of future interest rate
drops as well, and these areboosting buyer confidence and
(11:40):
we're starting to see obviouslya very, very busy weekend across
the apartment market.
This Saturday, I think mycolleague Glenn our colleague
Glenn had three apartments open,over 40 buyers through those
three apartments on Saturday,which is a huge increase from
maybe three or four weeks agoand we're probably seeing, you
know, half of those numbers.
The upturn phase is a good timeto buy as well, so you're kind
of getting into it just as themarket's picking up.
(12:01):
If you're looking at buying,it's still a relatively I won't
say safe, but it's a little biteasier of a path to navigate.
Speaker 1 (12:09):
But better buying if you're downsizing, because when
we're using that analogy beforeyour $2 million house, you can
get a $2.2 million price.
So you're up $200,000 comparedto the $1 million maybe $1.5
million, but keep in mind morecompetition.
So this is when you're in thedownturn where you may be the
(12:29):
only offer maker.
You've got a little bit moretime with that transaction,
getting contracts to check.
So probably more so in the nextphase, which we'll get to.
But you see a lot more buyerspushing for an exchange on a
cool-off period just to lock upthe property.
But this is also when theagents can be like another
(12:50):
buyer's got a contract.
So I think to notice speed youhave to execute once you see the
property, you hear it.
I saw it on Saturday and it'salready sold.
Speaker 2 (13:02):
It's on Monday or it's sold on Monday.
The other thing I was going tosay is that typically an upward
cycle, as much as there'scompetition for buyers, as more
buyers are entering themarketplace, typically you'll
see an increase of listings.
So owners that have decided notto sell because prices were
coming back and now thinkinglook, this is the time for me to
get on the market, sell andlook to change my property
position.
So, um, with the upturn, notonly are there more buyers
(13:24):
circling the market, you shouldsee an increase in the number of
properties for sale.
So there's.
Speaker 1 (13:29):
There's definitely these pros and cons for each of
the markets, like the as much asbooming, if you're buying, it
may not, um, sound good becauseyou're potentially paying more,
but you also have more stock tochoose from.
And then, as much as everyonesays, oh, they want to buy when
the market's going down.
Yeah, it's very tough and youtouched on it before media
(13:50):
sentiment each market plays abig role.
I know, I see this a lot inresidential compared to
commercial, where an articlecould, or a news, uh, uh, the
presenters online are talkingabout um, interest rates
dropping, great market, a greatreal estate market, things,
things are going up.
You will hear the nextconversation with a buyer or a
(14:12):
seller how about the market?
How good, did you see this?
Did you see that?
And everyone's just got thatextra jump in their step when it
comes to auctions, bidding ormaking offers.
And then, on the reverse, whenthings are negative, like it's
highly emotive's, um, highlyemotive, I think would be the
word yeah, um, the way you can.
Speaker 2 (14:33):
I was gonna say also that, as a consumer, like
michael said, we as agents areon the front line, so we've got
our fingers on the pulse.
We can see these changes comingthrough.
If you're a consumer, you're abuyer in the market, you don't
have access or you don't know agood agent, um, have a look at
the properties you're looking atand then see how quick they're
turning over, but also payattention to how many other
people are attending the openhomes that you might be
(14:54):
attending.
If the volume's high and theturnover's quick, we're in an
upward cycle.
Speaker 1 (14:58):
There's a lot you can see without having any
knowledge of knowing any agents.
You can see for yourself.
You can see if there's a lot ofpeople at the open homes.
You can see if properties.
Properties are up and likerealestatecom, I believe, they
tell you when something's listedand so, like you can see how
quickly properties are sellingto give you a bit of an idea.
But let's get on to the nextone.
The fun one phases in propertymarket.
Speaker 2 (15:21):
The boom, the boom boom.
When did we see a boom sort ofboom straight after, covert.
Whenever I think there's goingto be a drop, like you just
mentioned, mich Michael, withthe gentleman in Worrywood, and
a boom cycle is basically, frommy experience, is the upturn
phase, but it combines a largervolume of buyers.
But then it also starts puttingin the fear of missing out with
(15:44):
buyers and essentially, yeah,the buyers fuel their own market
to this degree and it takes offand it can go, it can move
really rapidly.
Speaker 1 (15:52):
Essentially, you see a property on saturday, it's
sold on saturday, yeah, this iswhen, I think, just taking a
step back also we saw the latestboom was influenced by the
government slashing interestrates.
Yes, so that's a like you wantto.
People always want to look forindicators.
How can you get in before theboom or when you should act?
(16:12):
A lot of it is based.
These macro cycles are heavilyimpacted by global affairs and
national policies.
So we saw the virus COVID andeveryone thought the market was
going to go down.
And then the governmentimpacted the market by let
slashing interest rates fromfour percent to 1.5 percent and
(16:36):
then you saw the market shoot up.
It's um, it's crazy how andthis is where it's very
important which government's inin power, and also, you may not
be into politics or anythinglike that, but it's good to sort
of just keep an ear out of whatare they doing and how could
that impact the market.
(16:56):
So we're in a boom.
What, uh, let's say what aresome pros for buyers for?
Speaker 2 (17:03):
buyers.
You can buy a property quick.
That's a pro.
There's more choice, morechoice more choice.
Yep out there, um.
I think if you're anexperienced buyer and you know
how to transact quickly, it'sgoing to put you in an advantage
, um, over buyers who might havejust entered that property
cycle so having your financeapproved, the confidence
definitely.
Speaker 1 (17:23):
This is when the the saying is like I'm not, we've
got all, like we're buying it,all cash we can make.
Make the offer today, sign thecontract no cooling off and
execute.
Speaker 2 (17:35):
That's not very important in a downturn because
there may only be one buyer, butin the booming you're competing
with multiple buyers probablyfour or five offers on every
property that you're looking at,and you're right, michael, and
it's those buyers, I think, thathave experienced the upturn.
Um, I've also experienced theprocess of how to put in an
offer, moving quickly, thingslike that.
Now, dare I say, um, we have a,we have a saying, and it
(17:57):
probably applies everywhere.
What is it?
In good times, bad habits form.
In bad times, good habits formwhen the market's really good.
There's a lot of people thatdecide to join the real estate
industry and you know their,their experience or, um, their
luxury car purchases go up.
Speaker 1 (18:14):
I used to track that, actually the pricing, when the
end of the you know the checkthe property listings.
I was checking the luxury carlistings.
So during the good times therewas very little.
Everything selling quick.
They'll say only 10 Audi, r8sor Porsche, and then in a
downturn you see all thesethings go up.
Speaker 2 (18:36):
So it would indicate the number of luxury cars for
sale, that's a good point.
Speaker 1 (18:41):
So, yeah, in a boom time the agents won't call you
back on monday.
In the down time they'recalling you back on saturday
they're calling you back.
A good agent will call you allthe time.
But that's the importance ofbeing proactive.
A lot of the time the agentsdon't have to work too hard to
sell the property in the boomand its buyers basically
throwing themselves.
It's like being the pretty girlat the dance everyone just
(19:02):
throwing.
Speaker 2 (19:02):
We will know but, we've seen in movies, guys just
throw themselves at the prettygirl yeah so, but the boom cycle
as well and this is the messageI'd like to say to people is
the best time to buy a propertyor sell a property is when you
need to buy or when you need tosell a property and people say
buyers will say, oh, I don'twant to pay, I don't want to buy
in the boom, or I overpaid fora property.
(19:24):
You're only overpaid for aproperty when you sell the
property and didn't turn aprofit.
You know if you're going tohold that home or that apartment
or that commercial space foryou know seven years or 10 years
you're going to be coming outahead and I've seen buyers
believe it or not.
Just as an example, I'll havean apartment for sale at a
million dollars.
The market's super hot.
(19:44):
It goes to 1.1.
They turn around they say, look, I'm, I'm sick of competing
with everyone, I'll just pay 1.2, buy the thing.
Okay, it's.
It's significantly over marketthe price they've paid.
In two, three years theproperty's worth 1.2.
Yeah, and they've secured it.
You know, a few years earlier Ihaven't, haven't really
capitalized on three yearsgrowth.
They're going to hold it foranother 10 years and they're
going to double their moneyanyway.
Speaker 1 (20:05):
We have a great graph where it's like the last 40
years of history in pricing andit's literally every 10 years
the property market hasbasically doubled.
So if you overpay, just wait afew years.
But also there's nothing wrongwith overpaying if you've loved
the property and you're sick ofit, absolutely.
Speaker 2 (20:26):
If you're going to live there, it's the home that
suits your family and you'regoing to get in there, and it's
close to the school you wantyour kids to go to, or your kids
go to what's it matter?
Speaker 1 (20:32):
Are you going to?
Speaker 2 (20:32):
sell it in 20 years.
Speaker 1 (20:39):
Also, I remember when I was looking for my apartment
I probably shouldn't havebecause then I just paid it
because I was like it doesn'tmatter, I just wanted to secure
it.
Speaker 2 (20:47):
And we're not saying look, don't go beyond your means
, Obviously be smart and you'vegot limits to work to, but I
haven't seen property turn bad.
Like my colleague Glenn says,it's not fruit, it doesn't go
bad.
Speaker 1 (21:00):
What are some negatives during real estate?
Speaker 2 (21:02):
in the boom Look, it moves quick.
It's incredibly frustrating asa buyer in that boom period
where you know, as agents, eventhey say, oh, you're the agent,
you're doing this on purpose.
It is just such a large volumeof buyer activity that we're
managing that.
It is incredibly stressful fora lot of buyers.
It's a lot of work on the agentside that you don't see in the
background as well, managing allthese buyers and trying to
(21:25):
communicate with everyone to thebest, to the best capacity.
Speaker 1 (21:28):
But the bottom line is it moves really, really quick
so it's important to buy in thesame market, because you could
be needing to buy something,definitely if you're selling and
buying.
Speaker 2 (21:36):
You want to do it in the same market.
Typically, what follows theboom is the downturn.
Yes, so the buyer frustrationreaches to a point where buyers
like you know what, I'm sick ofthis not going to buy anymore,
and then a large portion of themarket drops out.
The government might uh, youknow, embrace right, yeah, try
to settle the market, and thenyou see that downward cycle
again so to spot the boom, wouldyou say.
Speaker 1 (21:58):
That's when you start hearing oh, this sold for half
a million at auction.
This is when you see sold in 24hours.
Speaker 2 (22:04):
Yeah, this is when you see like what else well, the
indicators to me is how quicklyproperties are selling.
Speaker 1 (22:10):
Yeah, so, on the market, off the market, on the
market off the market and maybemore off-market deals, because
agents that don't have moremarkets yeah, I know, in the
downturn nearly everything hasto go to market, do all the
marketing to find the buyer.
But in the in a boom or a goodtime like a lot of time you have
a property, you get 40 peoplethrough the opener, you got 10
offers.
(22:31):
You can sell another couple ofproperties without any marketing
.
That's right.
So that's probably in theupturn and boom a little bit
more important to try and get onthe agent's database even a lot
of um, seasoned clients of ourseasoned buyers.
We see them create a secondemail address just for real
estate.
Yeah, because they know theimportance of judging yeah,
(22:52):
absolutely, absolutely.
Speaker 2 (22:53):
Mine's called stevan bulo property dot one seven,
seven, five, six, six, three,one, something like that.
No, it's kidding, um, butthey're kind of the four phases
to look out for.
Where are we at the moment?
Personally, I feel as thoughwe've come out of the
stabilisation, we're in theupturn phase, and the reason I
say that is on the front line,we've seen a good increase in
the number of buyers circulatingin the marketplace.
(23:15):
We've seen relatively interestrates the positive message with
interest rates we're seeingoffers coming in on the majority
of properties relativelyquickly in the residential
market, and these are allindicators that there's a slight
upturn.
In my opinion, I think rateswill play the biggest factor
(23:36):
right now because obviously weall feel better, but you know,
unless we can spend more, wecan't pay more.
So I think we're in the upwardtrend now and I think a lot of
people also that had thoughts ofselling realize how hard it was
to get a loan and are keepingproperty longer.
So there's there's not as manylistings on the marketplace
either.
So all those factors indicateto me that we're starting to see
the market move a little easier.
(23:57):
Good, I think that covers it.
I think so.
I think so, guys, like always,if we can help you michael
Bergio, stevan Bublo.
We're at NoVoke PropertiesAnytime.
Reach out Love to answer anyquestions you've got.
Speaker 1 (24:07):
Thank you very much.
Cheers, bye, bye.
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