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A constricted housing supply may have led to more and more property buyers using buyer’s agents, according to finance broker and managing director of Balmoral Financial, Matthew Symons.
Although the federal government embarked on its mission to deliver a gargantuan 1.2 million homes in the five years to June 2029, many from the broking, property, and building industries have called out that there will be a substantial shortfall of homes by this deadline.
And while the most recent data available from the Australian Bureau of Statistics (ABS) for dwelling approvals has shown a slight improvement in the number of commencements (up by 0.7 per cent for the month), the September quarter data painted a different picture.
According to the ABS, 44,884 dwellings were completed during the quarter, a far cry from the estimated 60,000 target required for the government to reach its housing goal.
Explaining how this has turned property purchasers towards buyer’s agents, Symons said that with fewer properties available, “competition is fierce”.
“Buyer’s agents give clients an edge by providing expert guidance, access to off-market opportunities and stronger negotiation power,” he said.
“Housing supply is lagging and the population is growing strongly. New residents need somewhere to live, but options are limited. This is creating a very tight market, where buyers are struggling to secure properties, making expert guidance more valuable than ever.”
However, this is not the only reason Symons has noticed an increase in demand for buyer’s agents over the last five years.
“I’ve noticed that more of my owner-occupier clients regard working with a local buyer’s agent as a competitive advantage, because the buyer’s agent knows their preferred suburb inside out, street by street, and can give them access to off-market properties. Increasingly, they’re willing to pay for this so-called unfair advantage,” he said.
“Investors, though, tend to be more location-agnostic: they want an investment-grade national buyer’s agent who can scour the country for locations that offer the strongest long-term capital growth and rental prospects, and meet certain data metrics. Doing this research requires time, skill and data that most people don’t have.”
Symons even went on to compare the rise in buyer’s agent demand to the mortgage broking industry.
“Two decades ago, people were more sceptical of brokers and many preferred to go straight to lenders directly,” he said.
“But as more buyers worked with brokers and saw the benefits, word spread. Over time, mortgage brokers became a trusted part of the process and now around 75 per cent of all loans originate via a finance broker.
“I believe buyer’s agents are on a similar trajectory, much like how they’ve become a norm in the United States.”
Despite the increase in popularity, Symons said that many clients still push back when offered a referral to a buyer’s agent, mainly due to cost concerns and trust.
“For many people, it just seems easier to represent themselves,” he said.
“That said, many change their mind when considering a potential financial upside. For example, if a consumer buys a $2 million home and it grows 10 per cent in the first year, they gain $200,000 in equity, which far outweighs the nominal fee for the buyer’s agent.”
Symons predicted that there may be a further increase in the use of buyer’s agents as word of mouth spreads, particularly if housing supply remains tight over the coming years.
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