Thomas Merriman

Bull and Bear, most people think about these two words as a referral to their animal interpretation but there are a select crowd that associate these two words with the volatility of a trading market, namely the stock market. 

The property market in Sydney has often been regarded as a strong market for return on investment, however, traditionally property was bought, held for 20,30,50 years and sold, and a profit was guaranteed. 

Recently, or, more commonly in recent time, say the last 10-20 years, property has been bought, renovated, lived in or rented for the hope of said return, sometimes returning well and rarely, but notably, some have suffered a loss.

However, this new heat in the Sydney Real Estate market is introducing a new and probably ongoing trend of upward pricing, increased returns and evolving investment strategies. The problem we are yet to face is, when the return will come, if the ‘bubble’ bursts? 

If the Real Estate market continues to grow at the current rate, the growth and return will just keep refreshing itself quarter-on-quarter and year-on-year but it is not sustainable, nor is it healthy. Not to mention the amount of buyers it locks out of the market. 

However, there are a few things that may be unfolding in this market with the increased use of ‘Buyers Advocates’ and ‘Agent Negotiators’. There is also more emphasis on multiple key external impactors when people are deciding to buy. Also, there is a lot of emphasis on the types of buyers in all their variations. Consider the first point, people employing people to sell, and now, buy assets, investments and opportunities by way of Real Estate, on their behalf – much like the stock market. Key external impactors; this can be as basic as ‘school catchments’ and as in-depth as the growth percentage in the surrouding suburbs compared to the suburb in question and its potential response to a neighbouring suburb boom. And finally, the type of buyers, ‘fear buyers’; buying with the fear of the market rising and ‘forced buyers’; buying because they have sold in a ‘high market’ for a return and need to get back in. There are obviously a number of other key buyers, but for the point of the excercise, these two are quite common at the moment. 

The lean toward a trading market in property, much like a ‘stock market’ is more now than ever, property has, in the past, and normally, been bought in the hope of gaining a return but the pace in which property is being built, renovated, traded, rented, sold, bought and growing in popularity is bringing Australia, but more prominanlty, Sydney, into a more ‘market’ type sales arena for Real Estate – as I often refer to it, and so do most. 

 The point is this; I am interested in the different ways in which people are approaching the market from all aspect of the Real Estate industry for Agents, Advocates, Buyers, Builders, Investors, Vendors and the other associated accoutrement. The scape of our industry may adapt to conditions or adopt strategy to adjust to conditions and I see more of a trend toward a trading type market where fluctuation is variable but risk is hedged, debt is high and gearing is negative. Not unlike the conditions we are in now. 

Will this bubble burst? Who knows – It depends on who you speak to. 

What if it doesn’t burst and growth declines but stabilises will the newly converted settle or will this industry become more of a market with seemingly less volatility and more transactions, much like the shares traded in non-commodity based areas, like banking. Is this a silly thought? Is this just a more structured version of what the whole Sydney Real Estate market has been like or is this just the way forward? Obviously there are a large portion of the investor side of the market who have been trading this way for years, but there is no doubt its popularity has increased and with it, a new evolution, or revolution in the industry. 

Bull! We buy, Bear! we sell. Or would it be, Bull! We sell? 

Thomas Merriman.