What happened? This is what so many are asking themselves in the land industry today.
Looking back, there is one distinct difference between the younger version of myself (when I first started in the industry) as compared to today, and that difference is perspective.
When the market crashed in 1989 there was no enquiry, the market just ground to a halt. Perspective allowed us to take a step back, view the totality of the booming market, acknowledge the strong fundamentals and start developing strategies for when the boom inevitably ended.
With this in mind, we held true to ourselves;
- We are a boutique land sales company and strongly believe that we should not be taking on projects that conflict with others. One project per suburb is the stance we took to enable us to have no conflicts of interest and gives us the opportunity to implement strategies that may be unique for the area.
- We were selective in taking on projects. For example, Latitude was offered a project to sell in Tarneit late last year if we would guarantee 300 sales per year. Clearly, this was never going to happen unless the market remained in boom mode and the prices were heavily discounted (and this was highly unlikely). We did not accept this challenge and this project will now struggle to achieve 30 sales per month unless some very clever marketing programs are created. This example highlights an evolving challenge we are hearing today, as we see so many Developers struggling because they purchased their development based on heavily inflated sales rates and price growth that could not be sustained.
The boom is over and now the market has returned to normal conditions. Normal inquiry rates, normal Estate/lot comparisons by the purchaser and normal timelines to close sales. However, the feeling within the market is more erratic in nature as some of the larger companies have taken on the easy approach by unnecessarily offering silly rebates/discounts. If the market had stood firm the discounting wasn’t necessary. This may be the result of so many inexperienced people in management who have not experienced previous downturns. I reiterate, unlike market corrections of the past we are still experiencing reasonable enquiries in most locations.
The outcome of erratic rebates and discounting has created a new problem, confusion. Consumers are more confused than ever trying to make sense of heavily discounted prices which ultimately results in them taking more time to make a decision. This is a discussion for another time.
Add to the above the re-introduction of referral fees, gifts and competitions to builders consultants, we now have building consultants (once again) referring business to land developers based on what’s in it for them – not what is best for the client. This adds to the confusion in purchasers’ minds.
There is no doubt the market has been reduced in size by the departure of the ‘get rich quick’ speculators, most would say a welcomed departure. Whilst these people are gone there is still a market out there which is clearly indicated by the fact, we still have people showing interest by making enquiries. In February we experienced strong sales in townhouses and affordable housing on a few of our projects, these were achieved from Sommerville through to Underbank at Bacchus Marsh. Land sales were down at Bacchus Marsh, but we still saw 8 signed contracts for the month. One of our better performing projects was Austin at Lara where we finished with 12 signed sales for February and we already have 13 sales for March, no discounting or giveaways were required to achieve these sales.
Our focus now is to capture “new” markets. Some need to be educated on how to enter the market. Then there are those who cannot quite afford to enter the market and a clever marketing campaign could see these people enter the market earlier than they were expecting. We are also seeing a shortage of rental stock in many areas and this will see the return of the investment buyer.
At Latitude we are busy building marketing programs for these, and we are looking forward to launching our book titled a “GUIDE TO PROPERTY INVESTMENT. This will be launched in April to attract buyers to the residential land projects marketed by Latitude. We are currently looking for the best Investment Sales manager to over see this exciting new marketing initiative, so we are actually growing our business to seize the current opportunities.
At Latitude we see the current market as a time of opportunity for us. A time for moderate growth as we seek three new land marketing opportunities for 2019. We are employing and looking forward to securing some amazing new projects. We look forward to an exciting year of growth ahead.