The Perth residential real estate market refuses to give up!
Despite the pundits predicting a fall, the Perth market keeps ticking along and locally, Victoria Park positively hums.
January, February and March were crazy with limited housing stock and plenty of buyers. At that stage I expected stock levels would creep up and things would start to slow down by August.
So, it’s August. And realistically priced homes are flying out the door in Victoria Park and surrounds. Metro stock levels sit just over 9000 listings (low) and the sell-through each week is around 800 properties.
As Professor Julius Sumner-Miller famously asked, ‘Why is it so?’.
Let’s look at what has been going on in the background and rate how they effect liquidity in our market.
- Federal Election – bad , creates uncertainty
- Rates dropping – good , mortgages are cheaper, investors look at property more favourably as their cash in the bank stops working for them
- Mining uncertainty – bad , it’s WA’s kryptonite
- Shortage of established housing stock – good
- Banks appear to have eased lending parameters – good , this means more buyers in the market. It also means mum and dad developers are back in the game.
- State government fiddling at the economic levers by reducing the first home buyers grant for established homes – good/bad , short term shot in the arm for the market as some first home buyers attempt to cash in before 15 September. Creates panic buying and unnecessary angst for our most vunerable buyers. Will bring transactions forward. Possibly will reduce supply of homes for first home buyers. There could be a slow down period afterwards as the market ‘catches up’.
- Share market uncertainty – good , money moves to the property market
- Self managed super funds – good , more and more people are using their new found ability to borrow inside a super structure to buy real property instead of investing in funds or directly in shares.
- Main stream media coverage of the residential market – good , despite the market having been running in a meaningful way since earlier this year Print, TV and Radio are late to the party and are amping up the hype.
- Gentrification – good , this phenomena happens in communities as previously run down areas have people and money injected into them. Car yards become apartments and cafes, workers cottages become extended family homes and investment grade rental villas become house-proud first home buyer love-nests. This is happening right now and has been for years with mounting intensity in The Town of Victoria Park.
- Government infrastructure – good , there is a lot to be said for being a marginal seat at Federal and State levels. Suddenly we are on the radar for some money. Great Eastern Highway gets up-graded, first in line for the NBN and whether it’s real (the stadium) or jaw-boning (light rail) this all contributes in the Town of Victoria Park to make for positive community and buyer sentiment.
Well on a superficial analysis we could say the good outweighs the bad. But fundamentally the there are just two drivers.
Lack of housing supply and more buyers.
So as we look forward to Perth’s mythical Spring Market (there is no such thing, oh and I have my doubts about Santa as well). Agents will start to stuff flyers in your letterbox telling you it is time to sell. This time they would be right.
Just remember that the state of the market trumps the time of the year.
Cheers
Derek Baston
Baston & Co. Property
