Disrupted real estate market in 2023: how do you survive when buyers and sellers are no longer synchronised?

The real estate market in 2023, once a harmonious space where buyers and sellers found common ground, has been disrupted by a series of formidable challenges. Factors such as the pandemic, inflation, rising interest rates, high mortgage rates, and the ongoing conflict in Ukraine have created a complex and demanding landscape in Europe's real estate markets in recent months and recent years. This situation has left sellers' and buyers' demands out of sync.

In this post, we will explore the underlying reasons behind this desynchronisation and look into valuable strategies you can use to survive and thrive in this new and ever-evolving real estate paradigm.

Where does the disconnect between buyers and sellers in the real estate market in 2023 come from?

To address the disconnect between homebuyers and sellers, you need to identify what caused this situation. First, the current cost of living crisis, higher interest rates and mortgage costs lead to a decline in the buying power of potential buyers and, therefore, housing affordability. A recent working paper by the International Monetary Fund analysed and compared the buying power of Europe's households between 2021 and last year and identified a decline of more than -20% on average. Things get dire for the UK, for whom the IMF paper found a nationwide decrease of more than -40%!

In a market where buyers have less and less money, it is difficult asking prices for properties like before. However, things are not as straightforward as you might think. What is true is that after a 10-year-long period of almost exponential house price growth (more than +45.9% in the EU, according to Eurostat), real estate experts see a slowdown on the European level. Yes, home prices are dropping, but not as much as expected. The latest data from Eurostat shows that between the beginning of the second half of 2022 and Q1 2023, there is a decrease of -2.1% in housing prices in the EU. This downtrend is a bit higher in countries like Sweden or Germany, where prices dropped by almost -7%.

When you compare these figures on the consumer and the seller side, you see that these two don’t move in a synchronised fashion on the real estate market in 2023. The situation becomes visible when you analyse the European transaction volumes: Eurostat compared Q1 2023 data with Q1 2022 data of housing transactions in the EU. 13 out of 14 countries show a decline between -8 and -50%(!) in housing transactions.

Despite the challenges, it's essential to recognise that every crisis presents opportunities. You can identify these opportunities and adapt your strategy by understanding the market and the needs of both buyers and sellers. In the following paragraphs, we will discuss the approaches that can help you overcome this mismatch situation on the buyer’s and seller's sides.

How can you advise sellers in a declining market?

When facing falling prices, it’s essential that realtors provide valuable advice and support to sellers. This starts at the beginning of a seller's journey during preparation. In this period, sellers require assistance. You should guide sellers through the process, ensuring their properties are presented in the best possible light. This includes optimising their real estate ad with high-quality photos, virtual tours, and compelling property descriptions.

Consider utilising online valuation tools; these provide sellers with transparent and accurate property valuations. This helps manage expectations and gives sellers realistic market predictions of their property's value.

Further, you should ensure that sellers are encouraged to participate actively in the valuation process. By involving your client in discussions and taking their input into consideration, you can foster trust and create a collaborative environment that leads to informed decision-making for home sales. This is where our Property Advisor comes into play –– with this solution, you can deep dive into property data by analysing properties, conducting detailed property market analyses, and checking out comparables with your prospects! All this information can then be shared with potential clients in a comprehensive report.

How can you develop the buyer base?

Now that you have the seller's side all set up, it is time to focus on the other side, the buyer’s side. Expanding the buyer base is crucial if you want to thrive in a desynchronised market. There are a few essential factors to consider. First, maintaining regular contact with potential buyers can be advantageous even if they are not actively searching for a property. By staying in touch and providing relevant market forecasts, you can keep buyers engaged and increase the likelihood of finding suitable new homes.

Second, leveraging technology solutions, such as customer relationship management (CRM) systems and tools automating real estate marketing, can help streamline and optimise buyer communication. Automation is your next step in managing leads, personalising communication, and ensuring timely follow-ups.

Automation tools like SweepBright can be crucial for developing the real estate buyer base as it provides various benefits. Such tools can automate lead generation by capturing inquiries and expressions of interest from multiple advertising channels and communication tools. This ensures that potential buyers are noticed, expanding the reach to a broader buyer audience. By simplifying processes like property entry and appraisal, using automation tools can save you time to focus on analysis and customer interactions.

Tools for automation can further support you throughout your entire management process. Remember to look for automation tools that have a reliable infrastructure which will allow you to explore new opportunities and find more buyers in the real estate market.

Unlock new opportunities in a desynchronised real estate market in 2023!

Surviving and thriving in a desynchronised real estate market requires adaptability, strategic thinking, and a customer-centric approach. By understanding the reasons behind the disconnect between buyers and sellers, advising sellers effectively, and developing a solid buyer base, you can navigate the challenges of the market and position yourself for success. Embracing these strategies will help you establish yourself as a trusted advisor and a valuable partner in the dynamic real estate landscape.

Is your business also concerned by the current market crisis? We are happy to show you how to turn current challenges into opportunities! Contact us now: