Home loan brokers at Smartline Rockingham keep a close eye on the market. We know market trends because we have seen numerous market cycles. Recently, the Real Estate Institute of Western Australia (REIWA) published statistics indicating that there is a rise in the number of homes on the market. While that isn’t the best news in the world for sellers, it can be great news for buyers.
According to REIWA, close to half of all sellers are accepting bids lower than their original asking price. The average discount is 5.3%. While that may not sound like a lot, an asking price of the reported 2014 median of $553,000 for the Perth market would yield an average discount of $29,309. That is more than eleven times the discount on established properties for first home buyers under the First Home Owner Grant (FHOG).
REIWA reports the median price for the entire Perth metropolitan market as $553,000. Landgate reports $540,000. There was another report of $542,000. We are eagerly awaiting the March quarter figures. David Airey, President of REIWA, reports that the numbers will probably show Perth as experiencing a 4.6% growth in 2014.
Inner city areas saw drops in the median price, with South Perth/Victoria Park dropping 4% for a median of $740,000.
Apartments and Units
Landgate figures for apartments and units in WA appear to show a decreased market for apartments, villas and units. Due to weak investor activity, December turnover is in the neighbourhood of 30% under normal activity. The median price for homes classified as “multi-residential” was $444,000 for the December quarter of 2014, nearly identical to September.
Vacancies have risen to 4.2%, with 600 more properties appearing on the market during the December quarter. Median rent dropped from $450 a week to $440 a week. That broke down to $420 for a unit and $450 for a house.
In Regional WA, Busselton showed the strongest numbers of 2014 for both the December quarter and the year. Their market grew 9.4%. Albany and the Mandurah/Murray region grew 1%, while Northam’s growth was almost 3%.
The contraction of the resource industry and its effect on construction continued to have a negative impact on the Pilbara market. Port Hedland dropped 3% in the December quarter and 14% for 2014. The good news for them was that the median price was $773,500. Karratha was down 15.4% for the December quarter and nearly 30% for 2014 to a median of $499,000.
What REIWA Thinks
Mr Airey is of the opinion that the contraction of the resources industry is causing the population in WA to fall. He feels that it will affect the housing market in WA for all of 2015, but is waiting until the March numbers to make a solid prediction.
What We Think
All of the years we have spent in the home loan industry in the Rockingham and Perth markets has taught us a lot. But the main lesson: housing is always a great investment. When someone buys a home in a good neighbourhood that has a lot of access to amenities, jobs and infrastructure, it is nearly impossible for them to not make a profit over a ten year period. The only caveat here is that the home must be well-maintained to preserve its value.
We think the “soft market” is a “hiccup” and that it won’t be around for much longer. We also think that there are a lot of great bargains to be had right now for those who want to look. You don’t have to receive a massive discount on a home for it to be a bargain. The asking prices may not be going down any, but the actual selling prices are.
Call Smartline Rockingham
Talk to a home loan broker at Smartline Rockingham. Using basic information, we can start paperwork to get you pre-approved for a loan. Call (08) 9527 1800 to learn more.