Perth’s commercial confidence erodes. Iron Ore prices down. Oil prices down. Another tranche of job shedding. We in residential real estate land, watch on. Like a car accident in slow motion, it’s horrible, and yet we are unable to tear our eyes away from this unfolding scene
So how does this affect the real estate landscape?
In Victoria Park, the average buyer is a young professional couple. Concerned about servicing their mortgage in the future when they have a child and go to one wage, but happy to live it up on the café strip until then. They predominantly inhabit the $600,000-$700,000 range. And so in this range we currently see a slight slipping in prices but still good sales volume. This is a reflection of general cooling of confidence in the market place.
Go down a price bracket. $300,000-$500,000 and the world is a different place. Once the most contested bracket in the market, it is now deathly quiet and reeking of opportunity for astute buyers. You see, the Mum and Dad investors are gone. Evaporated into thin air. The first homebuyer incentives that injected life into the sub $500,000 bracket are also gone. Whipped away by the Government like a magician’s tablecloth. Now when that 2 bedroom apartment for $340,000 comes to the market with a tenant paying $360 a week, the home opens are very quiet affairs indeed.
If we jump to the $800,000-$1Million + bracket in the Town of Victoria Park, the story is different. The sales have slowed but for a different reason. The numbers are still in the home opens. Buyers with genuine needs. They are financially established. This is the second or third home they have bought. They are older, wiser buyers in the main. They are a group who are directly affected by Perth’s job shedding phenomena. And they want to defend their hard earned capital. They will not be rushed. They will buy well. They want value.
So when does this crisis of confidence stop? What will turn the tide?
In my opinion, it is inevitable that the Mum and Dad investors will all wake up one day like hibernating bears, they will rub their still bleary, sleep-filled eyes and in unison they will collectively think (with the media’s help)…that their job is safe. That money is incredibly cheap. That their money in the bank isn’t working for them and that they ‘understand’ residential real estate. This realisation will be the spark that lights the fire of recovery. And the new found confidence will filter throughout the whole real estate market.
Green shoots of confidence.
So with an understanding of the market and the belief that the green shoots will come, there is Opportunity.
Now. Right Now.
Not when the hordes all make a decision, herd-like, to act together…but right now.
There are choices in the market place. You can make an offer without other buyers breathing down your neck. And you have the rarest of things in real estate…choice.
All the great economic pundits talk about being anti-cyclical. Do the opposite of what the herd is doing and in time, you will reap the rewards.
“We attempt to be fearful when others are greedy and to be greedy only when others are fearful." Warren Buffet.
Baston & Co. Property