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Post Lockdown Market Update – WA is doing well, but the rest of Australia is in trouble…

June 8, 2020Uncategorizedadmin

WA real estate is holding strong.

The number of homes currently on the market has continued to drop and is creating competition for buyers. In the last two months we’ve been flooded with enquiries, private inspection bookings and have had 12 Perth homes go under offer.

I don’t have a crystal ball, but history shows us that after a major event like COVID-19 markets tend to rebound, and rebound very strongly.

Here’s five things insulating Perth from the impacts of COVID-19 compared to other capital cities in Australia …

Listing numbers are down dramatically (and continuing to drop)! In April there were just 6,534 homes on the market. Which is roughly 1,000 homes less than the month before in March (that’s a massive drop in such a small time frame) … And as I’m writing this blog post, that number has dropped even further to just 6,067 homes (according to reiwa.com data). To put that in perspective, this time last year we had just under 12,000 homes (excluding land and units) on the market in Perth. This is creating lots of competition for Perth buyers, because there aren’t enough homes for sale to meet the demand.
When COVID-19 hit, WA was in the recovery phase of the property cycle. This is completely different to over east who were at the peak of their market and will likely see home price declines of 10% and maybe even 20% over the next year or so. Meanwhile, Perth has just come off the back of a 5-year economic slowdown and our property prices have already corrected (we reached the bottom of the market in 2019). As long as we don’t see many distressed sales flood the market (which the mortgage ‘holidays’ and jobkeeper payments are helping with), Perth property prices should remain insulated.
The Perth vacancy rate is very low, currently sitting at 2.2 per cent. When the vacancy rate is this low, renters look to buy their own home, as it is cheaper for them to pay their mortgage than it is to rent. On average people spend 18 months to 2 years to buy a home, and as the Perth rental market began its recovery three years ago, we’re now starting to see more and more renters move into buying their own home. This will increase Perth buyer competition, and again, protect Perth home prices from declining.
WA doesn’t rely heavily on tourism and immigration. Out of the 239,000 people that came to Australia in 2019 under immigration, only 15,000 of them came to WA. While in NSW, Victoria and QLD, 202,000 migrants. You can see how this will have a big impact over east, but little effect on WA. So, when you hear media reports about the Australian real estate market, be mindful that most of the commentary will be coming from over east, and be about national numbers, not local, WA numbers.
Iron ore prices are ramping up again. Prices are currently sitting at $100 per tonne and looking to continue as China ramps up their economy after the pandemic. Brazil and India are two major sources of iron ore and they’re currently having big issues with COVID-19. So much so that they’ve needed to close down their mines. This lack of global competition should keep iron ore prices in Australia high.

So, if you’re a Perth home buyer my advice is get in and buy now because if you’re waiting for prices to drop then you’re going to be disappointed!

The only thing that I would watch out for is the end of September/October when people start paying back the loans they currently have on hold. But again, I think this is going to be more of a problem over east than in WA. If something was to happen to iron ore prices, then it may be a different outcome. None of us can say exactly what is going to happen, but if we go by history, 2020 is feeling a lot like it was in 2005/06… right before the last Perth property booms.

As always if you or your family have any questions about buying, selling or renting feel free to give me a call any time on 0439 998 867, I’m only too happy to help. Stay safe and healthy!

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Six Coronavirus Fears From Perth Sellers

March 30, 2020What's Newadmin

Are you wondering how coronavirus (COVID-19) is going to affect your home for sale?

Maybe you’ve currently got your home on the market, or you were thinking about listing it for sale soon, and because of coronavirus you’re now feeling overwhelmed, and uncertain about what you should do (like all of us)! As the Australian media keeps saying; we are in uncharted territory, and unprecedented times.

So today I’ve answered the top six coronavirus fears from my Perth sellers, to help you decide what’s best for your situation, and hopefully help you feel less uncertain and overwhelmed going forward.

Will coronavirus affect my sale price… will I need to sell my home for less?

No, because we’re going to have a housing shortage, and buyers are going to be competing for less properties.

I know this sounds strange, especially with everything that’s going on in the world at the moment, and if you watch the news and the sharemarket and it’s a 24 hour cycle and they’re all talking about things crashing, and then going back up, and then crashing again.

Real estate is completely different.

If you look at history, every time there’s been big crashes in the share market, money is then transferred over into the property market – and house prices have boomed afterwards.

2020 is going to be no different.

The other main reason is that sharemarket ‘declines’ and ‘rises’ happen instantly. So, you take money out and put money in straight away. Whereas the housing market has a lag time of 3-6 months.

So realistically, we’re not going to see any sort of change in prices for another 6-12 months, and by that time my thoughts are that we will be through all of this.

Nothing is 100% certain, but we can only look at history.

Are there still serious buyers in the Perth market?

The answer to this, is YES.

People’s desire to have a family home has not changed.

And in fact, the silver lining of coronavirus is we’re no longer seeing ‘time wasters’ sending through enquiries, or attending private inspections. All our enquiries have been from people who are interested, and ready-to-buy.

These are people who have recently sold, or their home has just gone under offer, or they’re after a bigger family home because they have another baby on the way, or they’re sick of living on a small block and they would like something bigger in the Perth hills, and they’re looking to purchase a home now.

80% of the population is still have steady jobs and incomes to purchase homes.

And in Australia, around 57% of the population are employed in the public service sector. Their jobs aren’t going anywhere, and if anything they’re probably going to employ more people in those areas. So those people still have steady jobs and incomes to be able to purchase homes.

Are Perth buyers still showing up to inspections?

Yes, buyers are still showing up and asking for private inspections.

Due to the Australian Government requirements we can’t do home opens anymore, but we can still show buyers through your home privately, one person at a time.

Just this week I had a couple attend a private viewing, and they’re going to go ahead and purchase the property. They contacted me last week, because their property had gone under offer. Now we’re just waiting for the finance period, and then they’ll be putting an offer in.

Will I catch coronavirus if I allow private inspections?

I’m no doctor, but we do have strict precautions in place to stop this from happening to you, your family, the buyer, and/or our staff, in line with the requirements from the Department of Health.

To start with, our agents are only taking one person through at a time.

Before we book anyone in for a private inspection we ask them if they are unwell (or have been unwell in the past 14 days), have travelled overseas or interstate, or been in contact with anyone who has travelled overseas or interstate in the last 14 days.

Before entering the home we get attendees to sanitise their hands with anti-bacterial sanitiser, and ask that they walk through the home with their hands in their pockets and refrain from touching any surfaces. We’ve already opened all the doors (using disposable gloves) prior to the inspection so there’s no need for them to touch anything. They can just have a wander through with the agent to see if they like the home – and then once they’re done we can have a chat about it.

Once the inspection is over, we go through to close all doors and windows, giving door handles and light switches a wipe as we leave the home.

Should I wait until coronavirus is over to list my home for sale?

The answer to that depends entirely on your own circumstances.

If you need to sell now, go forward confidently and do it. Provided the marketing is spot on, and you have a professional video of your home you shouldn’t have any trouble.

But it’s the same with any market…

If you overprice it, you’re going to have trouble selling it.

By the same token, I’m not telling you to underprice your home either.

Use up to date, sales statistics to get your pricing right, your marketing right, and the sale will happen – it does in any sort of market.

And remember what I spoke about earlier in question #1 – there’s going to be a housing shortage.

This means buyers will have to compete for less homes, and will protect your selling price.

Should I take my home off the market, and then re-list it once coronavirus is over?

Currently – and we are in a changing world, day by day – my answer is no.

Because, like I touched on earlier, the ‘time-wasters’ have dissapeared, and we are only hearing from genuine buyers who are in a strong position to purchase.

If you take your home off the market now, you will miss out on the opportunity to sell your home to them.

We’ve been working with lots of these buyers for several months – sometimes over a year.

I had a couple of buyers I’d been working with for 18 months, to help them find a house they were looking for. Just last week a home came up, and they purchased it the first week it went on the market.

People take their purchasing decisions seriously.

They take their time…

…and sometimes they take ALOT of time.

This is why the real estate market is different to the sharemarket (which goes up and down like a yo-yo).

The last thing to keep in mind is, when we come out on the other side of this virus – if you decide to put your home back on the market you’re going to be competing with a whole lot of other properties that come on the market at the same time.

Then your home will be competing for buyer attention, instead of the other way round!

I hope these answers have shed a bit of light on how coronavirus could affect your home for sale, and given you some confidence on how you can move forward with your home.

If you have any other questions about the Perth real estate market please feel free to ask me here. I’d love to help you!