Hello and for many years. In today's episode 22 - my favorite number and I like many of my colleagues have decided to make a prediction about the development of the real estate market in 2020. I'm a firm believer that the real estate business is a people business and it's more important to know what people are going to do, what their behaviors are going to be and how they're going to feel in the coming year, as opposed to my colleagues who emphasize numbers in an attempt to look more professional. So I would like to categorise the market into 4 participants and for each of them I would like to tell you my opinion of what will happen to them and how they will act.
Participant #1 - searchers, these are buyers and renters. They will swim in their own waters, next year will be theirs, we are entering a buyer's market, they will set the rules of the game. A lot of people say - there are no buyers. There are always buyers, sometimes it's a little harder to find them. There are buyers, there will be buyers, it's just that the majority of them will be looking for their own use, those who are looking for investment - for rental purposes will reduce dramatically, they have even reduced dramatically already, as a consequence the number of transactions will reduce, but the number of transactions of people who are looking to buy for their own use will remain. They will be in a better position, they will be able to impose conditions, get good deals at good prices.
Participant #2 - givers, sellers and landlords. They will be at a disadvantage as they already outnumber the seekers. This means that they will have to slightly lower their expectations of the profit they want to make on the property they are selling or the yield they want to make on their rental property and the timeframe in which that transaction will occur. Gone are the days of putting an advert on the internet and a week later you are on a pre-contract, now sellers and landlords will have to be patient because deals will not happen as quickly. Especially for properties over 100,000 euros, which will be on the market for a very long time, maybe over 6 months now. For sellers and landlords to be successful they will need to be flexible. Different performances like - ma do you know how much the neighbour sold for last year, do you know what money I was offered - no. We have to take into account the new market realities. And the new reality is that buyers are going to want more and more discounts, prices are not going to increase at a double digit rate, they may not even increase. It is right to know that many sellers who have severely overpriced their properties will not be able to realize for a very long time. These offers, I don't even call them offers , they are wishful thinking by someone who has decided they are going to seize the moment and make some good money. So if they don't adjust the price in a timely manner, no sale. These are the so called unmotivated sellers who I don't even count as market participants.
Participant #3 - the banks. A lot of people - the banks will raise interest rates. The banks are not going to raise interest rates unless there is some war or some world upheaval, that is, there will continue to be cheap money. But, the conditions for taking credit are already, and will become, more and more onerous. It is much harder to take credit. This is very good, because only truly motivated buyers will be able to take out a loan and buy a property. And not everybody, going, I'm going to buy my 14th rental apartment, give me another loan.
Participant No. 4 - Real Estate Brokers. They don't have much choice - they will either comply with the new market conditions or do something else. We've seen it a few times, the fast track deals and commissions are over, from here on out comes a little more investment in advertising, an increase in the cost of finding clients, more time will be spent finding suitable properties, negotiating and closing deals, who isn't willing to pay and take the time just won't be.
