The Perth housing market may be in one of the most incredible “sweet spots” it has been in for a long time. If you are even thinking about obtaining a home loan for a property in the Rockingham or Baldivis area, this article may be extremely important to you.
While interest rates have been falling to record low levels, housing prices have not risen as much as they were expected to. Usually, when interest rates drop, it causes housing prices to rise. This causes those who wait too long to buy to sometimes lose money when a higher home price negates the money they saved on their home loan.
So far, this hasn’t happened in the Perth market. Housing prices have risen moderately, even as they rise ballistically in Sydney and Melbourne. We keep waiting for the same thing to happen here, but it hasn’t yet. This defies history, logic and national trends. Usually, a pattern that defies all of those metrics doesn’t last too long.
Recently, the Real Estate Institute of Western Australia (REIWA) released their housing statistics for the June quarter of 2015. Surprisingly, the median price for a home in the Perth area fell $20,000 to $530,000 from $550,000. The median price of units, townhouses, apartments and villas also fell $20,000 to $420,000 from $440,000.
Regional housing prices dropped $10,000 from $390,000 to $380,000. The median unit price dropped $4,500 from $329,500 to $325,000. Some of this was attributed to what REIWA President David Airey called “composition of sales,” but Mr Airey called the price drop a “market correction” and noted that many sellers dropped their asking price to move their homes more quickly.
Mr Airey believes that the slowing of the market is being caused by supply increasing faster than population is growing. Compared to the nine days it takes to sell a property in Sydney, the average WA property is staying on the market for 71 days. However, Mr Airey has noted that the stock of listings may have finally levelled out after having increased over the previous six months.
For the June quarter, 13,739 properties were listed on the market. In the Perth metro area, nearly 60% of sellers lowered their prices, with the average discount around 6%. This represents slightly over $30,000 as an average lowering of asking price.
For first home buyers, the numbers continued to fall. 4820 first home buyers applied for the First Home Owner Grant (FHOG) in the June quarter, for a decrease of 21% compared to the June quarter of last year. The median price a first home buyer paid for a home was $430,000, down from $450,000 at the same time in 2014.
Mr Airey predicted a “soft market” for 2015 and mentioned that what he had warned us about had “arrived.”
What Does it Mean to You?
So, what does this mean to you? First of all, it means that if you are thinking of buying a home in the next five years and you have the resources, now is the time to make a move. Whether you are a first home buyer or are looking to upgrade your current home, you may never get a better combination of low interest rates and low housing prices.
The economy has been in recovery for the last few years. The Reserve Bank of Australia (RBA) has lowered the cash interest rate to a record low of 2.0% with the express purpose of stimulating the economy, especially the housing market.
The Government has made the FHOG program, the First Home Owner Rate of Duty (FHOR) and Home Buyers Assistance Account (HBAA) available to first home buyers buying new homes. This was created to stimulate the housing market and the construction industry.
The bottom line is that the low prices won’t last forever. We will be very surprised if they don’t begin to rise by the end of the year. If you want to take advantage of the unprecedented combination of falling prices and low interest rates, you will have to take action ASAP.
To learn more, call Smartline Rockingham Today: (08) 9527 1800.