With both the Federal and NSW State elections now out of the way and an interest rate cut from the Reserve Bank of Australia under our belt, the signs are that the declines in the property market in NSW are now bottoming out and the threat of political uncertainty has been replaced with a sense of business as usual.
According to CoreLogic, Sydney values had declined at their slowest rate at the end of May – drifting just -0.5 per cent lower for the month. Annually, Sydney has seen a -10.7 per cent fall in property values, but this had reduced to just -2.0 percent for the three months to end May.
What this means is that the freefall the market seemed to be in is now pulling out of the nose-dive. The median value of a dwelling in Sydney is now $776,135, and while this is considerably lower than previously, it is still significantly higher than the rest of the country.
With the median value more than $300,000 higher than property in most other state capitals, it would be fair to assume that the legislation governing property transactions was also a stand-out. Sadly, this is not the case.
Education standards for real estate agents are woefully inadequate in NSW. Prior to 2002, to gain a real estate licence you had to go to TAFE for three years and demonstrate industry experience. However, under a regime of industry ‘improvements’, NSW Fair Trading now makes it possible to gain the qualification required for a Certificate of Registration in less than a week.
This has created a pool of real estate agents who are grossly under prepared – not just for the general challenges of selling what is, for most of us, our most valuable asset both financially and emotionally – but especially in a market that in itself is trickier to deal with.
As the peak industry body for real estate agents in NSW, REINSW represents more than 2000 real estate agencies and more than 20,000 individual members. Property services is a $107 billion industry annually in NSW, making property bigger than the mining industry ($21 billion), the retail industry ($22.8 billion) and tourism industry ($38.1 billion) combined.
Our members are integral in the majority of the 220,000 plus residential transactions that occur across the state every year. And real estate agents in NSW work with nearly two million landlords and tenants every month.
We passionately believe the real estate industry needs to improve and move away from old stereotypes about agents to create new performance expectations of genuine accountability, transparency and good governance. We want to raise the bar and work with Government at the highest levels to solve the challenges of housing across NSW.
This is why we are currently seeking a Commissioner for Property Services to manage the regulation of the industry in NSW, moving the industry out of NSW Fair Trading.
As an institute with more than 100 years’ experience in the industry, it is our observation that property buyers, sellers and the industry as a whole are being short-changed by the current structure of governance for property in NSW. The legacy has been increasing affordability issues, unnecessary risks for property consumers and the erosion of education standards for an industry that demands a high level of skill and trust.
Real estate practice is not easy. Real estate agents manage high value transactions of significant complexity that occur infrequently for most property owners. Our homes are the most valuable and psychologically important assets many of us own. Such a transaction requires an experienced and dedicated specialist.
Sydneysiders invest nine years of their income into a typical dwelling, need to save for 12 years for a deposit and service the loan with 48 per cent of their income according to CoreLogic. Governance that treats property transactions the same as any other high street purchase – like a haircut or purchasing a toaster – while ignoring fundamental issues of value, complexity and trust is both inappropriate and inherently risky.
A Commissioner for Property Services would overcome the silos that exist across government departments, which play a significant role in the red tape and expense that makes up housing and planning in NSW. A Commissioner would create regulatory consistency and deliver both improved standards of real estate service and higher levels of consumer protection.
In addition to a new property services commissioner, REINSW is working to introduce higher and additional standards of training that raise the bar and build trust with buyers and sellers.
To this end we are seeking to increase entry level education and experience requirements to become an agent and add the requirement to engage in quality on-going professional development training in a way that is monitored and regulated under State legislation.
We are also working on a Pathway to Professionalism program, creating an additional qualification that meets the strict standards of externally recognised professionalism, as a way for dedicated agents to prove their merit, and for consumers to easily distinguish excellence.
The word “profession” means different things to different people. But at its core, it’s an indicator of trust and expertise.
In the same way that travellers can choose between different standards and levels of service when booking a holiday – either a camping option, a middle of the road option or a five star luxury service – we believe property sellers should be able to decide on an appropriate service based on a combination of skill, complexity and price.
The Professional Standards Council (PSC) is the independent statutory body responsible for promoting professional standards and we are working to establish a scheme that will be accredited through the council.
They use the 5 E’s to define the elements that are necessary to qualify as a profession: ethics, education, experience, examination and entity. On our pathway to professionalism, we’ll need to demonstrate that we not only meet but exceed the required standard in each of these areas.
But REINSW believes we need to add another E to our journey – evolution. If real estate agents are to be recognised as professionals, then along with the 5 E’s we must also embrace the reality that our industry must evolve. If we don’t collectively embrace a mindset of evolution, we simply won’t be in a position to commit to the work required to elevate ourselves to a recognised professional standard.
The Pathways to Professionalism journey is a long one, and once implemented, will extend to other states through our association with the Real Estate Institute of Australia.
Our goal is to change hearts and minds – both our own and those of consumers.
The irony is that this all sounds like a blast from the past. It harks back to an era when our education standards were much higher, and ethics actually stood for something. But it’s undeniable that our industry has suffered greatly over the years due to the constant lowering of education standards and a lack of oversight, including weak disciplinary and enforcement powers.
It’s time for real estate to go back to the future and change.
Tim McKibbin is the CEO of the Real Estate Institute of NSW, www.reinsw.com.au.