The rising interest rate environment is presenting its own set of challenges for commercial agents, chief among them the increased competition they now face amid a smaller pool of buyers.

CBRE’s head of Private Clients & NSW Metropolitan Investment Nicholas Heaton said a noticeable proportion of potential buyers had adopted ‘wait and see’ attitudes and were sitting on the market’s sidelines.

But despite this, activity had remained healthy with inquiries averaging about 150 per campaign.
“I would say that during the global financial crisis (GFC) inquiry dropped to about one third of that number,” Mr Heaton said.

Sentiment between now and the GFC period was also markedly different he observed.

“Pre-GFC about 80% to 90% of people would have said we were headed for a long-term recession,” he said. “But now it’s pretty evenly split between those who think we are and those who believe this certainly won’t be the case.”

Cover all bases

Mr Heaton, who has had more than 20 years’ experience at the pointy end of the property market, advises agents grappling with the rising interest rate environment was to ensure they had all bases covered when casting their nets for potential purchasers. 

“From a marketing perspective there’s not as many buyers as the market’s not as hot,” Mr Heaton said.

“So if an agent wants to achieve the same outcome as was possible when interest rates were sitting steady at historically low levels then it’s important for them to have access all channels of buyers - local purchasers, interstate purchasers, off-shore purchasers and the investors, occupiers and developers among them.

“If you’re not targeting all these groups, you’ll have some leakage and may be missing your top buyer.

“And if you do that and don’t uncover your best buyer in this kind of fickle market it may be the difference between a good and bad price.

“Vendors want 2021 prices – which was the peak of the market most recently – and if you don’t have access to all those buyers it may sell for 10% to 20% less than the best possible price.”

Strength in numbers

As for Mr Heaton, the current economic environment meant his
“days had got a lot busier”.

“During a booming market, vendors are willing to go with the last commercial agent with whom they dealt or whoever they are dealing with at the time,” Mr Heaton said.

“Now we’re finding they are seeking out experienced agents with proven track records to give them the best chances of achieving the outcomes they want.

“My advice therefore to any agent would be to join the ‘super teams’ agencies are forming nowadays rather than to try to hunt by themselves.”

The light at the end of the tunnel Mr Heaton pointed out was the view of several economic observers that the cash rate will peak at 3% or a fraction less.

“This has been fairly groundbreaking from a commercial real estate perspective,” he said, “because as a purchaser or vendor you can pretty much plan mid-term now. Prior to this positive shift it was hard for people to make informed decisions as there was no real indication as to how far interest rates would rise.

“We’re of the view that bank interest rates will be peaking at circa 4.5% whereas most people sitting at the café [so to speak] were thinking that figure would be closer to 6%.”

Interest rates in Australia averaged 3.86% from 1990 until 2022, reaching an all-time high of 17.5% in January 1990 and a record low of 0.1% in November of 2020. (Australia Interest Rate - 2022 Data - 1990-2021 Historical - 2023 Forecast - Calendar (

AMP chief economist Shane Oliver is among those forecasting at the lower end of the spectrum. Mr Oliver’s latest update calls for the cash rate to peak at around 2.6% which is at the low end of the market and most other economist’s expectations. “Market and consensus expectations for rates to rise above 3% are too hawkish,” Mr Oliver said in his August 5 update, “as global supply pressures on inflation appear to be easing; the RBA is already getting traction in terms of slowing demand; inflation expectations are still contained; and many households will experience significant financial stress with rising rates.”