Aussie John Symond predicts Coast recovery in 2010
12 May 2009,
AUSSIE Home Loans founder John Symond has demonstrated confidence in the Gold Coast property market with the opening of the company’s seventh store here but does not expect a full recovery until late 2010.
Symond, who was on the Coast to open the new Robina branch, also forecasts another drop in interest rates of 1.5 per cent by the end of the year. For him, the recession means ‘game on’.
“You are going to enjoy low interest rates for a couple of years and I think the Reserve Bank will sit on rates where they are at the moment for a the next couple of months, but then I can see another 1 or 1.5 per cent coming off official rates,” says Symond, who has built Aussie Home Loans to become Australia’s leading mortgage broker, with a loan portfolio worth close to $30 billion and 850 mortgage advisers.
Symond has also sent a warning that the demand created by the First Home Owner’s Grant has ‘overheated’ the market.
“The first home buyer market is overheating and that’s a concern. I really hope that the boost to grant is only continued for new housing. New housing provides real jobs and gets people out of existing housing and takes a bit of pressure off the rental market,” he says.
“There is a danger of people tripping over so as to not miss out on the $14,000, but what we are seeing in some cases is that they’re paying $30,000 or $40,000 too much. That’s no good. I think the steam has to come out of that because there is a real risk when the grant is full and it cant’ go on forever. The first home buyer market up to $500,000 could drop overnight and values could fall 5 or 10 per cent. Those young people will be in trouble.”
Symond has boosted his market share following the acquisition of Wizard Home Loans earlier this year and has set an ambitious target to open 200 stores by the end of 2010. The buy-out figure has not been disclosed but Symond told Gold Coast Business News that he paid ‘mid 20s’ ($million) for the Wizard brand, while GE paid ‘400 odd’ ($million).
“We’ll be going hard to achieve 200 stores by 2010. If we can get close to that by the end of next year I’ll be happy,” he says.
“Aussie has benefitted from the downturn more than most because we have seized on opportunities out there. We acquired the Wizard distribution business at a fraction of the price that GE paid four years ago.
“It has given us scale plus we are writing record volumes in our own right. Last month we cracked for the first time $2 billion for the month and the month before we equalled our previous best of just over $1 billion. Aussie is growing, we are recruiting and opening new stores and rolling out new products. We want to grow to provide a really strong alternative to the big banks.”
Symond says the Gold Coast is an important market and is banking on population boom and a property recovery to stimulate demand for Aussie Home Loan products.
“The local market is really important. The attraction to buying the Wizard brand was because they went down the line of shop fronts and we didn’t, so that will complement our model very well,” he says.
“You need to service the local community and the local community also needs to see you. We have developed a wonderful brand over 17 years but it has been invisible.”
Shaking off doomsayer sentiment, Symonds is optimistic that economic recovery will come within the next two years.
“The good news is that at least 90 per cent of Australians will keep their jobs and enjoy dramatically reduced interest rates and pay cheaper fuel. So it’s not all bad news, but unfortunately there will be some sectors of our community that will be impacted. But the vast majority will be in a better position.
“I think there’s going to be a tough couple of years and then hopefully at the end of next year we might start seeing some uplift. The positive side is that if you’re looking to get into the market and have done your homework you can buy a property at the right price and even in some cases get a bargain.”
“We are seizing opportunities all the time. We have got a very close eye on the market but we’re not rushing into anything at the moment. Acquiring the Wizard business has been a big mouth full but we have done all that now. Certainly we will have a close look and if there are some opportunities we feel are too good to let go, we will certainly be there.”
A personal triumph
“It has been 18 years and I’m in my element when there are turbulent times. When the downturn upset the apple cart for most organisations and businesses, for me it is sort of game on. I started Aussie in the middle of the recession in 1992, had no money, no backers - just a dream and a vision and good people around me to work with me and share the dream. We have acquired Wizard in the middle of this recession, so I do relish tough times because I can seize on the opportunities and focus on the upside of what’s going on instead of feeling sorry for myself and jumping in the trenches with my tin helmet.
“I think these times offer some fantastic opportunities to improve your business and you just have to be brave sometimes, but you also have to be very careful.”