PropertyESP attended the WA Business News Property Outlook breakfast last week which showcased Hayden Groves (REIWA), Paul Blackburne (Blackburne), Vivien Yap (Acton) and Michael Workman (CBA).
Hayden Groves started the session by outlining that the 2016 median price was once again on par with 2007 and that the premise that WA property doubled in value every 7 years was no longer the new norm. The median house price in Perth is now $525,000, unit price $420,500 and land $258,500.
There were 31,000 property transactions in 2016 which compared bleakly to the peak in 2013 of 60,000. In addition during the iron ore peak, there were 1500 people migrating to Perth per week which now compares to 139 persons/week.
However despite these adjustments, there was a 2.2% increase in property prices in the last quarter for the central region and it was this figure that gave the REIWA President a glimmer of hope. As he said himself, he can’t wait to report on an increase in property prices over two consecutive quarters as this will be the good news he believes which will restore consumer confidence.
While property listings peaked at 16,000 in November 2016, as of the 7th February listings had dropped to 14,700 and this was also a good indicator that the market was stabilising.
It is currently taking approximately 62 days to sell a house and 73 days for a unit, but this is also expected to decline by the end of 2017.
On the rental side there has been an increase in availability of stock by 68% in the last two years with 10,500 properties currently available for rent.
REIWA believes that 4000 rentals on the market is the ideal position for market parity (which was achieved in 2014) but with ongoing population growth this figure has now grown to 6000.
It is taking 50 days to lease a house and 54 days for a unit. Current vacancy rates are at 6.4% with median weekly rent at $368 (down $37 per week from the peak).
Paul Blackburne reinforced that they were receiving about 200 enquiries per month for their apartment projects but that conversion rates were still low. While Vivien Yap also agreed that interest from buyers had grown approximately 15% and she quoted, as an example, a Floreat home where they were expecting 26 groups to view and instead received 84 visitors.
There is no doubt that the consensus is that buyers are now savvier and better educated and they are undertaking their research before venturing into the market. With this in mind, sales agents need to be equipped to not only educate but convert.
But the one thing we did take away from this session was the obvious flight to quality that we are seeing across all sectors.
Groves quoted that there were currently 500 homes for sale in Baldivis and it would be our opinion that the outlying suburbs that tend to attract first home buyers would also be experiencing the same level of oversupply, especially as the FHOG only applies to new homes.
In addition anyone trying to sell or rent a 1970’s Maylands apartment, with all the new stock that is on hand, will find the current market challenging.
Similarly in the commercial sector there is a preference for new stock over old and you may need to now consider upgrading or renovating your older property in order to compete effectively.
However a word of caution – the numbers quoted at the breakfast where just the median – they do not reflect the case across all suburbs and to assume so is dangerous.
There are suburbs that are performing above the Perth median because of their location and nearby infrastructure. It is therefore essential to know exactly what is happening in your preferred purchase location before entering the market.
At PropertyESP we don’t believe in generalised statements – the devil is in the detail! So if you want to know what is happening in your suburb of choice contact Samantha Reece today on 0452 067 117. It is certainly better to be in the know – so that your choice is the best one!