November Director's Desk - The truth about transition.
Tuesday 17 Nov 2015
I've been saying in my blog that the market is in transition but I think it's important to clarify exactly what I mean by that. I am certainly not suggesting or predicting the hot market we have enjoyed for most of this year is about to flip from terrific to terrible. Far from it. But it is changing.
Let me be clear, 'transition' is not meant to be a subtle way of suggesting that I think the market is going to dive. That's because I don't believe it is. 'Transition' doesn't have to mean high to low or hot to cold. It means it isn't the same as it was, and importantly it also means it's still changing.
Probably the change that will take the biggest adjustment is the fact that there are no longer any guarantee prices will automatically increase. To be honest there never was any such guarantee and there never will be, but market strength allowed players to grow accustomed to values improving to the point it is now expected.
Not any more. It doesn't mean values won't improve. Our team are definitely still achieving some healthy price growth but right now it is a bit patchy and unpredictable. Keep in mind the clearance rate of 62% over the weekend is only just below the 65% which we consider normal so there is still activity even if the numbers do appear softer.
My advice is the same as it has been throughout most of this year. Vendors don't need to panic but they do need to be mindful and set realistic expectations.