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“I don’t get paid enough to stand around waiting for you”- The value of customer service.

The value of customer service.

I had an interesting experience today.  One of my suppliers, whom I spend on behalf of Evolution Realty a large sum of money annually, has one of their staff contact me about a query.

I must say I usually have a lot of good things to say about this company, a National brand and major supplier. (You could call me an advocate really).

There was a problem delivering on one of my orders, and the technician called me to query it.

I asked if he was in the area for long, and could I drop out and see him. I was not able to answer his questions immediately, so offered to meet in person as he was nearby, but couldn’t for about an hour.

He said no. I offered for one of my staff to drop out and see him in 5 minutes, then the clanger!

“I don’t get paid enough to stand around waiting for you”.

WOW, what a slap?

Then I started thinking.

·         I know this man is a nice fellow usually.

·        Maybe he is having a bad day?

·         Maybe his wife left him this morning?

·         Maybe his cat was run over?

·         Maybe he is sick?

You know, I am a fair man. I just thought, we spend tens of thousands of dollars a year with your company, do I really want to hear about your budget problems, not to mention the total lack of respect?

Answer, NO.

It isn’t that I don’t care, it is that as a business owner, I have my own issues, my own customers to attend to, and that remark, whilst it may be true, was a poor reflection on a company that fights hard to win new customers and no doubt satisfy its existing ones.

I wonder what management would do if they knew?

I am not a vindictive person so will let this one slide though to the keeper as they say, but it also caused me to think of the value of staff or team members treating customers well.

This man had a bad day and made me feel like I was not worth 5 minutes of his time.

·         If you are in business, a good question to ask, how do we treat our customers?

·         Do team members treat your customers this way and we don’t even know about it?
Are staff trained sufficiently to understand their role in the business

·         Are staff rewarded for outstanding client care?

Anyway, that is my experience.

Has anyone had a great or a poor general customer experience before that they can share?



How to navigate through the Property Market

Exerpt... Top 3 of 21 Top Buying Tips.

1.    Ready set go!

Now, more than ever, the person that successfully buys the home they love is the person that is prepared in advance to buy. I have seen time and time again, nice people miss out on buying, not because their price offered was not good, but due to other factors that meant they were not ready to buy.

Ready means ready in the following ways;

i.      Ready to make the move as soon as you find the home that suits

ii.    Have your finances ready to go

iii.   Your home is sold or well advanced on the market

iv.   You know how much you can spend

v.    You are reasonably well aware of the market in which you want to buy.



Before putting yourself through the process of looking for a suitable property, working out values, making offers and so on, I suggest you start right at the beginning and set some goals and parameters.

Work out why you want to move or buy?
If it is for your own home to live in?

i.      What about the existing home is it that doesn’t suit my needs?

ii.    How long will that be tolerable?

iii.   When would I like to be moved?

iv.   How long do I see myself living here?

v.    What is the ultimate lifestyle I am trying to create?

vi.   Do I have a timeframe in mind?

vii.  Am I able to buy without selling or do I need to sell first?


If investment purposes;

i.      What returns am I realistically expecting?

ii.    Do I intend to ever live here?

iii.   Am I more interested in yield or capital growth?


And general;

i.      How long will finance take?

ii.    What is my maximum budget?


3.    Due DilIgence

We live in an information society. It is possible to get information about almost anything. Before you buy or start the process, it is essential to do some important ground work, so that you make the right decisions and get the right price.

i.      Market research

a.    Days on market

·   How long do properties like the one I want to but take to sell?

·   Am I prepared to risk a low ball offer for a good listing and miss out, especially for a new listing?

·   What are the patterns if the listing is unsold after 3,6,10 weeks?

·   Which agents behave which way in the market as to price and price adjustments?

·   Which agents sell their stock in less than average/ more than average days on market?


b.    List to sell price ratios

·   Which agents are renowned for pricing correctly close to actual fair market value?

·   What percentage below asking price is typical?


c.    Actual sales evidence

·   What are the most recent actual sales figures that compare to my preferred property?


ii.    Location and lifestyle search

a.    Where do I want to live?

b.    Where can I afford to live?

c.    Is location more important than the accommodation itself? (You rarely get exactly what you want)

iii.   Finance

a.    How much can I borrow?

b.    What is my maximum budget?

c.    Have I allowed for stamp duty/ Settlement agent fees?

d.    Shifting costs

e.    Murphy’s Law (Allow for a few thousand dollars for contingencies)

f.     Current value of your other assets/ home

g.    Do you know what your house is really worth now (not what an agent said it is worth)?

h.    Is it worth getting a sworn valuation?

i.      Can I move if I get a little less than what I hoped for?

j.      The settlement and moving process/ do I understand it? 

To receive the entire 21 tips, FREE in an E-Book titled "The 21 Essential Home Buying Tips" click on the image below.


Do it yourself:  

(or DIY) is a term used to describe building, modifying, or repairing of something without the aid of experts or professionals. The phrase "do it yourself" came into common usage in the 1950s in reference to home improvement projects which people might choose to complete independently. Source: Wikipedia.

Recently an article appeared in a major newspaper promoting the benefits of property owners selling privately without the use of an agent.

A very one sided argument was put forward claiming both owners saved thousands and were far better off.

I thought it would be worth exploring this argument.

It is true we can all save money by doing things ourselves. Granted.

Examples of how we could save money by DIY projects.

1)      Cooking- Restaurants and cafe’s make a living by not only serving food, but providing an environment and an experience that overall gives its clients an experience that they will remember. Of course you can buy a steak at Coles and cook it at home. Many people do that and there will always be a place for that. Likewise there will always be a place for fine dining and dine out services.

2)      Making coffee at home- A coffee costs less than 50 cents to make and yet I pay $4.80 for my typical brew each day. WHY??? If all that mattered was saving money, I could make one at home, yet cafe business flourishes. Again, it is the whole experience people pay for not just the cost of the coffee.

3)      Make clothes- You could knit you own socks and a jumper, make shirts and even your Dockers beanie or Eagles scarf. Why don’t most of us???

4)      Car repairs- Change the oil yourself, detail the car yourself, do minor repairs. Yes we could all do that and no doubt would save untold dollars.

5)      House extensions- In theory, we could all build our home. Bunnings, TAFE, Home Ideas Centres run courses how to "owner build". The savings could be as much as 25% on a typical home and that could be hundreds of thousands of dollars for some buyers. Yet the percentage of owner builders is relatively small, why is that?

6)     Grow vegetables-Many of use grew up where the veggies were grown in the back yard. Tomatoes, lettuces, herbs. Many probably still do this and what a great idea. Even the local Applecross Primary does this. Could we survive purely subsistently growing our own veggies, maybe? So why don’t we all do that?

7)      Dentistry- I reckon you could pull your own tooth if you were brave enough (Don’t try this at home please). Last time I went to the dentist, it is not cheap. I have never thought, gee I better save some money and pull my own tooth. Mmmmmmm? Interesting. Dentists receive years of training and are professionally trained, with the right tools.

8)      Eggs- Grown your own eggs in the backyard with a chicken coup. Easy to do, I have done it. Fun, lots of free eggs. Why don’t most of us do this today???

9)      Tax- It is easy to do tax returns right? Many of us might do that. Why do most professionals get Accountants to do their tax returns??? Accountants have had years of training and are abreast of all the latest laws and legal deductions.

RISKS- for every story that can be produced of an ecstatic private seller, I could no doubt show you one that tried it and ended up sold after they appointed an agent. Most people could sell themselves, but not with the same result or experience. Agents are experts at their craft.

ANYWAY the list is endless. Of course you are allowed to and can do most things in life yourself. And YES you will sometimes save money.

The reason we don’t do all of these things is simple.

1)      We are all too busy.

2)      Let the experts do what they do best and let me do what I do best. That is called the 80/20 rule (or the Pareto principal) which is that 80% of all energy is wasted and 20% of what we do produces results. In other words, specialise and be effective and productive.

No one is a jack of all trades. Nor should we want to be.

There is one fundamental flaw in the argument of selling a home yourself that simplifies the whole point. Here are some of the reasons why most sellers choose a professional agent.


1)      There is no evidence that private seller save money. Agents through their marketing and negotiation skills are trained to create competition, position the property correctly and get a higher sales price. I believe that most buyers will resent letting the seller save on a selling fee and the buyer will want the discount anyway.

2)      Agents have spent years in many cases (and many have literally negotiated hundreds of transactions). Most sellers might sell a few houses in their lifetime and cannot possibly have the experience of a good agent in this process.

3)      Even the best agents do not sell their own homes, just like a doctor does not operate on themselves and it is said that a lawyer that represents themselves has a fool for a client. The best agents get the best local agent to sell their homes. There is a reason.

4)      Negotiation is the most underrated value an agent adds. It is very hard to be unemotional and objective when negotiating your own home. Most sellers are too close to the process to do it as effectively as a seasoned professional agent.

5)      Agents don’t have a conflict of interest. How can a seller be able to be objective when they are the prime beneficiary of the proceeds of the sale?

6)      Some buyers don’t want to deal directly with a private seller. The buyer likes to negotiate without it becoming personal.

7)      Agents have professional indemnity insurance protecting all consumers from misrepresentation.

8)      Agents have to comply with the Trade Practices Act, must ethically advertise a property and fully disclose everything relevant about the property that is known. It is much harder for a buyer to have recourse than when a professional agent is involved.

9)      Agents have the experience to write the offer and acceptance contract, so as to protect all parties.

10)  Agents will know the current market as they have dealings every day with buyers and sellers. The market can change daily and private sellers will not know what is happening like an agent will. An agent has to work in the market after the sale is made, so has a reputation and legal issues to take into account. A private seller will take the money from the sale and vanish, sometimes out of town. Any damage (Things not as they seemed or were expected once settlement occurs) done is of less consequence to a private seller, whereas an agent would have to deal with the issues involved.

11)  There are over 12 ways to find buyers. Even though 50% plus of buyers may come from the internet, there are still other ways to find buyers that private sellers do not have. In this way it is a large gamble as the best way to get the highest price is always to have more than one buyer competing at the same time. Therefore all methods to find buyers should be employed to get the best result. It is very common that a buyer does not buy the property that they first enquired on.

12)  Agents get wholesale print media rates that are passed on 100% to sellers that use the services of an agent.

13)  Agents have other listings to “cross sell” onto an owner’s property. Some 70% of all sales occur through “cross selling”. A private seller only has one listing to attract buyers.

14)  In Australia, the overwhelming vast majority of real estate sales occur though real estate agents. The reason is that they add value in the skillful marketing, finding, negotiating and closing buyers. They add value by maximising the sale price higher than would be the case if there was no agent.

15)  Agents have access to the Real Estate agent website which currently is the second highest traffic site in WA.

16)  Once a deal is done, there is a lot of work to manage the steps right up to settlement. Many buyers get “buyers remorse” and the sale is not made until the money is in the seller’s bank account. This is a big underrated job of a professional agent.

17)  Stress- Selling a home has been rated as one of the most stressful experiences we can encounter, right up after death, loss of a loved one, divorce and bankruptcy. Why would you attempt to put yourself through this stress when there are experts that can help you navigate through the process with relative ease?

A good agent will not only help you get sold, will get you a higher price in most instances through their experience and skill set, and do it with less stress.

If you have had a bad experience with an agent, that is true in any profession that there are some operators less skilled than others. Keep talking to agents until you find the right one. There are plenty of top agents.

Thank you and see you in the market place...Ian Barnes 

Pitfalls all potential sellers must know- Tip 1

1.    Choosing the highest quoting agent- 3 things to know                               
Oldest trick in the book

Most sellers want to sell for as much as they can achieve, that is understandable. In fact one of the biggest fears for a seller is underselling. It is for this reason often, an average, less accomplished agent is selected based on one of the biggest cons in real estate.

What is one of the oldest scams in the industry?
The Real Estate Appraisal.

a.      Compliment the owners house

b.      Be charming

c.       Tell the owner what they want to hear about price

d.      Get the listing at any price

e.      Work the seller down until they are realistic or need to sell.

They say an opinion is only as good as what you pay for it. There is a reason Real Estate agent appraisals are free.



ii.            Endowment effect

Due to the “endowment effect”, a psychological phenomenon which says “is a hypothesis that people value a good or service more once their property right to it has been established. In other words, people place a higher value on objects they own than objects that they do not.” (Source Wikipedia).

Often, a well meaning, charming and nice agent that says what an owner wants to hear is unlikely to be seen as “conning” the seller.  Instead, the agent will say they are just trying to get you as much as they can for their seller.

BEWARE: When an agent says they “love” your home. That should hardly make a difference as they are not going to be buying it. Instead a much more pragmatic approach is required finding the best agent to represent you.


iii.            Conflict of interest 

Real Estate agents work on commission only. It is not like the Olympics where second and third best get a prize. It is a winner takes all industry. If you get the listing and make a sale you get paid. If you don’t, you get nothing.  

It is for this reason and the endowment effect listed above, that often the honest and competent agent in fact does not get the listing. Sellers need to be very careful as agent’s know that they must win the listing in the first instance in order to get paid.

It is also for this reason; I believe that agents are one of the least reliable sources for establishing true market value. There is enormous conflict of interest issues in appointing an agent based on their opinion as to the value of your property.

If they tell the truth, they will in all likelihood not get the listing.


AGENT 1- (Gets listing)

·         Lists property 10-20% too high above current fair market value, say $1.195M

·         Gets several price adjustments

·         Sells property in 90-180 days (or more)

·         Sells for $980,000

·         Agent was not necessarily honest and/or, accurate and/or competent

·         Paid a selling fee for being 20% wrong in appraisal

AGENT 2- (Gives appraisal at say $1M)

·         Missed listing to Agent 1

·         Was accurate

·         Was competent

·         Was honest

·         Was paid zero

Every time an agent takes an overpriced listing it creates this problem where buyers say “No one pays the asking price”, and therefore requires a discount off the asking price. This is due to a very common practice to place properties on the market at unrealistic, aspirational prices. (Some which take 2 or more years to sell, or worse, not at all).


iv.            The solution

Take price out of the equation and appoint an agent based on other factors, such as;

a.      Trust and professionalism
b.      Competence
c.       Track record
d.      Marketing plan

After you have selected that agent, develop a pragmatic method to extract the “highest current fair market value” and there are many ways to do this, without risking coming on too high, or hiring the wrong agent based on a conflict of interest in seeking agent opinions.

The end result for the seller is a almost certainly higher actual sale price in most instances, far less stress, and far less days on the market. All of this has to be in the seller's best interests.



Putting the market into perspective

The recent decision by the Reserve Bank to keep interest rates on hold was welcome relief to home buyers and therefore home sellers alike. Interestingly, the decision had some commentary that is worth examining. "Interest rates have now been on hold for the past nine months - Reserve Bank governor Glenn Stevens said in a recent speech that Australia is in the most stable period for interest rates in the past five years".


I think if we surveyed the typical buyer or seller today, there would be a feeling that the environment in which we are all operating is one of volatility and uncertainty, and consumer sentiment very low, yet in this climate interest rates are in fact quite stable, and not running away as many would have feared or even felt was the case.

In previous Blog entries, I have commented and in episode 3 of Evolution TV  that the property fundamentals are very good.

·         Unemployment still very low in WA
·         Interest rates historically low and stable
·         Population growth high
·         Housing shortage
·         Real Estate values down so value high
·         Property is a medium to long term hold
·         Stock markets all over the place and extremely volatile recently
·         Globally, other economies weak in comparison to the local market

As we see some properties approach 2006/2007 prices as to the value, the question is as to when do we jump in. Waiting for the market to recover is academic if you are a trade up buyer or need a home to live in.

In previous Blogs I have explained why it is better to trade up in a down market,  but all of the arguments about buying a new home in terms of money, miss one fundamental reality.

We Australians buy homes for a vast number of emotional reasons not related to money or financial ones. This includes but is not limited to the following;

1)    Australians are house proud. We want to show off our pride and joy, invite our mates over to see our new Cedar lined alfresco, our new roll on turf or new kitchen. We are social creatures and often our home is an extension of who we are
2)    Security- There is a feeling of security knowing you cannot be kicked out of your home (Assuming you are not taken away by the authorities or evicted by the bank for non-payment of the mortgage). No rental inspections, no grumpy Property Manager telling you how to live, no rules about pets and so on. We like to be the "King or Queen of our own castle".
3)    Capital appreciation- Homes over time go up in value. Rent money is dead money and is making the owner rich at your expense. Remember property is a medium to long term hold. I was talking to an owner recently that bought a block in Como 20 something years ago, a quarter acre for $90,000. Today that property is well more than $1million dollars. If you "get in" to the market and hold, you cannot help but see growth.
4)    Privacy- Owners can erect walls, fences, grow shrubs, have a dog in the front yard, place alarm systems or even say "no" to unwanted viewings or inspections. You have the privacy that a renter can never have.
5)    Forced savings- (Noel Whittaker said in his famous book, "Making money made simple",  It is well known by financial experts that we will all make the required payments on the car or mortgage without problem. Without that commitment, very few will save the equivalent money. In other words, paying off a home if forced saving. Think about that for a moment. Buying a home forces you to make the fortnightly payments, and over the long term your asset will grow.

Feel free to subscribe to this BLOG, and receive automatic updates when new postings are made. Also please comment on this material if you choose. Thank you and see you in the market. 

5 consecutive quarters of price falls

The following was recently posted on the REIWA website. To see the full article, click here.

"Preliminary data from the Real Estate Institute of Western Australia show that Perth has experienced its fifth consecutive quarter of falls in the median house price.

Our data is showing that prices fell by around 2 per cent in the June quarter, notching up 15 months of successive decline.

This is a longer period of price retraction than was experienced in 2008, when prices pulled back for one year only.

The big difference is that in 2008 the median fell by 12 per cent, whereas the last 12 months of decline has been half that rate at 6 per cent.

So, although the fall in median price has been over a longer period the actual fall in price has been more gradual since the median peaked at $505,000 in March 2010.

I expect the median to settle at around $475,000 once all sales data comes in, which would mean that Perth’s median has pretty much returned to the level it was at in December 2007, before the big market correction and GFC which followed.

Our preliminary data and that of Landgate, which together represents around 80 per cent of the market, suggest there has been an increased proportion of sales in the $350,000 – $500,000 range whereas sales in other price segments have declined. It’s notable, though, that sales over $1million remain quite stable and that premium property is holding up.

House sales in the June quarter softened marginally from the March quarter with May recording the strongest activity.

Our early data suggest there has been little movement in the median sale price for multi-residential but turnover for units, villas and townhouses has been stronger than in the previous quarter.

REIWA data show that properties for sale in Perth have been running at around 17,000 for much of the June quarter after peaking at 18,200 during April.

The average number of selling days has increased to 82, the highest level since the 2004-07 property boom when it fell to a low of 36 days in mid-2006.

Sellers must be patient and realistic about price.

Meanwhile, over in the rental market the overall median rent is steady at $380 per week, although the vacancy rate lifted slightly from 3.2 per cent in the March quarter to 3.5 per cent in the June quarter.

We’ll have our more comprehensive data on the June quarter out in a few weeks, and this will be covered thoroughly in the real estate lift-out in The West Australian Newspaper on Saturday 6th August".

Six signs/ indicators of a market at or near the bottom?

When is the market at bottom? It is almost impossible to know for sure... There are some tell tale indicators to give clues.

It is important to get things in perspective though, and remember property is a medium to long term hold. (7-10 years plus).

As investors start to see alternatives to the extremely volatile stock market of late, property does provide many advantages to the investor and owner occupier alike, as you can see it and generally it does fluctuate to a lesser extent than the stock market, and offers benefits such as some tax advantages;

·         Tax free for an owner occupier
·         Negative gearing for investor

In addition to that you can add value to it, and live in it. 

Six signs/ indicators of a market at or near the bottom?

1)    Rental shortage- Rents rising and a shortage of good rentals. This makes it attractive for investors again.

2)    Low unemployment- Whilst the workforce is stable this underpins a strong economy.

“Western Australia has recorded the lowest rate of unemployment in the country. The Australia Bureau of Statistics reports the unemployment rate in WA fell by 0.1 per cent in December to 4.4 per cent, equating to 1300 fewer unemployed West Australians. Nationally, the unemployment rate dropped from 5.2 per cent in November to five per cent in December”.

3)    Shortage of housing- May be as much as 72,500 homes by 2020 short of demand according to the HIA. As at 2010 the figure is around 17,400 homes short.

"WESTERN AUSTRALIA. The trend estimate of the unemployment rate for Western Australia generally fell from 7.4% in June 2001 to 2.7% in September 2008, before rising to 5.5% in July 2009. The trend then fell to 4.3% in July 2010, before rising to 4.5% in October 2010. The trend has since fallen to 4.2% in June 2011."
Source: ABS

4)    Population growth - Some predict the WA population could double by 2050.

“Perth population to double by 2056: report. Updated March 05, 2010 19:11:00

A new report predicts Perth's population will double by 2050, with an influx of migrants from both interstate and overseas. The State of the Cities report provides a snapshot of the 17 largest cities in the country with the aim of improving the liveability, sustainability and productivity of each one. It says Perth's population is tipped to rise from 1.6 million to 3.4 million by 2056 with Wanneroo, Swan and Rockingham the fastest growing areas in Western Australia.”
Source: ABC News.

Perth is growing faster than most capital cities, with Queensland, so the future looks bright from a demand perspective. Well located properties close to schools, shopping, work and transport should perform very well. There is a fundamental shortage of housing, and as building approvals are down, there must be an eventual backlash in the form of price catch up.

5)    Cost to build or develop is marginal as to whether it is viable for developers. Established homes selling below the cost to build/ replace. – That is the case now. Many established homes are selling for not much above land value. Often 20 year old homes have been depreciated down to zero by the buyers (It used to be 2.5% per annum or 40 years), and we often see near new home selling below what it would cost to;

a.      Buy the land and pay stamp duty
b.      Hold the land for the construction time
c.      Build the home
d.      Finish the home

Often we see no holding costs or finishing costs so the value is very high right now.

6)    Low interest rates- Still low on historical standards. One of the big four banks is offering as at today 6.99% for 1 year (on their website). The average for the past 50 years is around 9%. Some analysts are predicting the Reserve may put interest rates down in response to what some think was too fierce and adjustment up in the first place. The very minimum appears a climate of relative stability for interest rates and low overall compared to historical averages. Many of us remember 18% plus rates.


SUMMARY: Value is high, if you want to buy/ move, it would appear that the future looks bright and property is a solid medium to long term buy. Jump in now!

It makes $ sense to move in a down market

Are you ready to trade up for a better home?  Many current home-owners are strongly considering the possibility of a move up during this current real estate market, as a slow market is one of the best times to buy property.

Did you know that if you are trading up, you are better off moving now than waiting for a market to recover.

That is a fact. Let me show you why!

1)      Your home is worth now $2M or 20% less than 2 years ago. (say it was circa $2.5M before)= $500,000 less.
2)      The one you want to buy is now $3M or 20% less than 2 years ago (say it was $3.75M before)= $750,000 less
3)      The gap was $3.75M less $2.5M which is $1.25M
4)      The gap is now $3M less $2M which is $1M

You are better off in this example by $250,000 selling in a down market if trading up. (20% of the difference).

1)      Your home is worth now $1M or 10% less than 1 year ago. (say it was circa $1.1M before)= $100,000 less.
2)      The one you want to buy is now $1.5M or 10% less than 1 year ago (say it was $1.65M before)= $150,000 less
3)      The gap was $1,650,000 less $1,100,000M which is $550,000.
4)      The gap is now $1,500,000 less $1,000,000 which is $500,000.

You are better off in this example by $50,000 selling in a down market if trading up. (10% of the difference).

In fact, with reduced real estate prices and an increase in listing stock you will not only find great deals that are too good to pass up, but with so many properties to select from, you are sure to find exactly what you are dreaming of.

Now is the time to move up in the real estate market!  Don't let these bargain prices pass you by! Should you be looking for a move, now or in the future, I look forward to the opportunity to help you move up from your current home.  


Leading Property Managers of Australia (LPMA)

Evolution Realty are members of LPMA. Why choose a member of the Leading Property Managers of Australia to manage your investment property?

·        LPMA members are bound to comply with a comprehensive Code of Practice, benchmark levels of service and business practice over and above those required for statutory licensing in the real estate industry. 

·        LPMA member receive cutting edge skills based training and advice unequalled throughout Australia.

·        LPMA has a credentialing program to assist both member firms and employees to gain recognition as being “the best of the best” in property management.

·        LPMA members attend regular forums and have opportunities to network with other members to share strategies, tips, tool and ideas to ensure that they can provide you with the best service and advice at all times.
·        LPMA has a referral network of like minded property management specialists to ensure that clients have access to specialist property management professionals no matter where they are in Australia.
LPMA members are at the forefront of Australian property management practice.  


Aussie consumers keep their foot on the brake

Westpac and the Melbourne Institute released their monthly measure of consumer sentiment this week and it showed that confidence amongst consumers continues to wane.  The consumer sentiment index fell to 101.2 points in June 2011, its lowest level since June 2009.

Despite the fall in sentiment, the index remains above 100 points which indicates that consumers are more optimistic than pessimistic, but only just.

The decline in consumer sentiment does not bode well for sales transactions.  Historically, as sentiment has fallen so too have sales volumes.  Volumes are already particularly weak across the country, sitting -13 % below the five year average.  If the measure of consumer confidence remains at these low levels, we would not expect that there will be any significant improvement in sales transaction volumes, subsequently, the prospects for any significant growth in values is also reduced.  It is important to note that the index can be quite volatile on a month-to-month basis and is clearly heavily influenced by economic events and releases each month.  In saying this, the index has been trending lower since mid 2010.

The consumer sentiment index is comprised of a number of other subsets of data which feed into the overall result.  A number of these measures were particularly weak during June 2011.  The table below details these measures, comparing them to results 12 months ago, two years ago and five years ago.

There are only two measures which indicate optimism over pessimism at the moment, they are current conditions and time to buy a major household item.  It also seems as if the last 12 months has been particularly hard on families with the index at a very low level (75.9 points).  It looks although households believe that things aren’t set to get much better either with their expectations about economic conditions indicating a less than confident outlook for the next 12 months and five years.  If there needed to be any further evidence of a conservative and uncertain consumer here it is.

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