Drop in business is a real threat for conveyancers

AUSTRALIAN Institute of Conveyancers NSW has warned of slumping business across the industry as higher interest rates and fewer investors hit transaction volumes.

Jennie Tonner, AIC NSW president, said trade was down around 30 per cent since the RBA’s latest rate hike in September.

Tonner said the lift in interest rates further slowed business activity for practitioners already grappling with fallout from the federal government’s Budget tax changes.

According to Tonner, the number of transactions was down for both units and houses.

“It’s pretty much everything, because your investors have completely gone,” Tonner added.

She said available stock was the lowest seen in around 18 years.

“Usually the Tuesday after the October long weekend is the beginning of spring market and you are gangbusters from that day until Christmas Eve … and that’s not happening.”

In the industry veteran’s view, house hunters and vendors were still feeling out the market since the central bank hiked rates on September 29.

“When there’s an interest rate hike, a purchasers borrowing capacity reduces and so then there’s a recalculation,” she said.

“Properties on the market have to be adjusted down as well because that impacts them and then there’s getting a vendor’s head around that.”

With work ebbing, Tonner said some conveyancers were looking to cut costs.

Larger operators tended to move out of offices or put off staff, while sole operators would ride out the downturn at home, she said.

“It’ll be those that have offices, those that have more than two staff that will struggle,” she said.

Tonner predicted the industry could handle another six months of tough times before practitioners looked to exit.

“I don’t think we’re there yet,” she said.

The comments come as new Cotality data on Thursday showed auction activity nationwide remained sluggish moving into the second half of spring.

Auction volumes across combined capital cities were down 19.2 per cent last week at 1414, representing a 46.2 per cent drop on the corresponding period last year, it found.

Five of the seven capitals – the exceptions being Adelaide and Hobart – held fewer auctions than a year earlier, according to the data.

Looking ahead, Cotality economist Annabelle Mezieres said most capitals had fewer auctions scheduled this weekend.

“Cotality estimates that roughly 1800 homes are scheduled for auction next week, slightly fewer than the 1869 scheduled this week,” she said.