Canada and Australia have much in common. So you could be forgiven for thinking that their respective real estate industries do too. On the whole, though, you’d be wrong. 

Okay yes, both nations could be described as heavily regulated ‘nanny states’ where the real estate sector is concerned. 

Both require real estate agents to be licensed.

Both contain some of the world’s most unaffordable cities. 

And current market conditions in the two countries are comparable, with housing supply shortages and affordability issues; various foreign buyer restrictions; tenancy reforms; and escalating purchasing and carrying costs factoring into an investor exodus in certain areas. 

But the similarities drop off from there. 

 

No MLS? No buyer agents?

 

For starters, real estate agents are rarely referred to as Realtors; it’s uncommon to hear that word Down Under. 

And in Oz there is no standardized MLS platform, notes Charles Tarbey, chairman of Century 21 Australia, based in Sydney, the country’s priciest housing market.

While agents are hired by sellers, it’s unusual for buyers to have one. If they choose to do so, it’s at their own cost, since as a rule the commission only goes to the selling agent. “The selling agent takes a listing, generally exclusively, and controls the process in-house,” including managing the pool of potential buyers, says Tarbey     

 

Salaried agents and minimum income

 

Commissions vary widely, with 2 per cent being average, according to Tarbey. But here’s the thing—agents in Australia may be salaried, especially those who are new to the business. A minimum threshold income (reported to range from about $45,000 to $60,000) needs to be met before agents can go to a commission-only model.

While this can launch office overheads into the stratosphere, Tarbey affirms that it gives agents “the opportunity to start full time in real estate and be paid accordingly, both in salary and commission bonus potential.”

Good on ya, as the Aussies say. 

On the downside, with agents in these situations essentially being full-time employees, labour laws in Australia make it harder to remove non-performers, Tarbey adds. 

 

Australia’s unique sales methods

 

Here’s another unique Aussie curveball—real estate sales methods vary, with auctions being among the more widespread.  “Melbourne has a strong auction culture, for example,” notes Tarbey. 

Misrepresentations around price can be an issue, but a reliable auction company will insist on transparency. 

“Typically the auction is held around four weeks after the property is first listed online, with an indicative price range provided. During this time, there are open inspections and private viewings can also be arranged. To bid at auction, buyers must have their deposit ready and their settlement terms confirmed with the agent and the seller,” explains Melbourne-based sales rep and auctioneer Melissa Baile, who’s with premium property brokerage Marshall White.

Buyers see the bidding process in real time. Stresses Baile: “Importantly, auction sales are unconditional, meaning there is no cooling off period either three business days before or after the auction.”

Another common sales technique is inviting buyers to inspect a property and submit their best offer by a set deadline. The seller will then decide how to proceed. This method is dubbed “expressions of interest,” Baile notes.

“While the variety of sales methods gives sellers the flexibility to choose the most appropriate strategy for their property, it can sometimes create confusion for buyers, as there isn’t a single standardized process for navigating the purchasing journey,” she observes. “There is room for improvement in streamlining the various sales methods, particularly in terms of clarity for first-time buyers.”

 

Misrepresentation and underquoting in property listings

 

Another issue in the industry is under quoting, where properties are listed below their expected market value in order to attract competing bids, Baile adds. This type of ‘bait’ advertising isn’t uncommon in various Canadian markets, but it’s seriously frowned on in Oz. The practice continues to be actively investigated by the federal consumer protection agency, “imposing fines and penalties on agents found guilty,” says Baile.

Money laundering is also reported to have long been an issue in the industry, and new legislation is addressing that.

 

Taxation, debt levies, and the investor exodus

 

Baile believes that the most significant challenges affecting consumer confidence include elevated interest rates and changes in government taxation. Hardest hit reportedly are Melbourne and the rest of the state of Victoria, where owners of investment properties are slapped with a post-pandemic debt levy intended to help the government recover pandemic-related costs. 

Along with this, “investors are facing multiple challenges, including increased land taxes, rising council rates, higher compliance costs,” as well as spiralling maintenance fees (called body corporate rates there) and tax on home purchases, Baile continues. “As a result, many investors are choosing to exit the market, which has created opportunities for new entrants,” who see this as a prime time to buy.

She adds, “There may be advantages in securing properties at more favourable prices. However, this trend has also contributed to a surge in demand for rental properties, as fewer properties are being added to the market, driving rental prices up and increasing competition for available rental stock.”

 

Homebuyers leaving big cities

 

Rising numbers of homebuyers choosing to move away from big cities is another notable trend.

Like much of the globe, Australia is battling shifting cross currents. Shane Oliver, one of Australia’s chief economists, recently went so far as to note that with America’s second Trump presidency, a global trade war with huge stakes for Australian homeowners could be imminent.

Despite concerns, Joel Davoren, managing director of Re/Max Australia, has confidence in the Australian system. “It’s incredibly competitive. It is not a part-time industry,” he maintains. “We are professionalized and advanced. A lot of tech innovation is launched from the Australian market…Typically our real estate businesses also operate property management departments. This adds significant resourcing pressure but is also a fantastic revenue wealth opportunity.”
Fingers crossed that the Aussie catchphrase ‘no worries’ prevails.