Crystal Balling the Year 2020 | A.D. COVID19
The state of the Perth residential market and where it’s headed now is any ones guess.
Last week I attended a 2020 Real Estate Industry Outlook seminar hosted by Investor and Buyer Agent group Momentum Wealth led by Damian Collins, also REWIA’s President.
Some very important insights and considerations relayed to the room of investors, developers and real estate influencers eager to learn ‘what next’.
Main point: no one knows yet the impact of the emerging health crisis on the WA property market but if government and the public do what is needed then the crisis will be short lived.
What We Do Know
Pre COVID19, Perth showed positive signs of Recovery (as at Jan 2020).
Some of these main signs included (past tense intended);
- Rental rate increased: vacancy rates down to 2.2% (Feb 2020, REIWA) – which is an early indicator of the potential for future capital growth.
- Stock levels tightened: listings in Perth declined from 17,220 in Feb 2019 to 12,618 in Feb 2020 (REIWA) – this means buyers have less stock to choose from.
- Building approvals declined: when annualised, down 53% from their peak in May 2015. (MomentumWealth). Also notable were the number of new residential dwellings approved in WA for the year to Dec 2019 totalled 14,656 (low when compared to past 2 years).
Other strong indicators to show where Perth is currently include :
- Auction Clearance rates: Last week showed 32% for Perth and although not high, Sydney and Melbourne are currently still showing continued signs of strength at over 70%+. This is an important indicator as is used to help define a buyers or sellers market.
- Mining activity in WA has been trending upwards (up 26% annually in year to Sept 2019)
- Population Growth: up 37% annually to June 2019 and noticeable interstate migration decreased (MomentumWealth)
- Median Prices for the last quarter in 2019 showed 0.4% (annually this was -4.0%)
- Rental Yields for January 2020 were 4.3%(MomentumWealth)
- Affordability: Price to Income ratio was 5.2 (MomentumWealth)
- Improved Lending Environment: with 5 cash rate cuts now over 12 months PLUS removal of 7% serviceability buffer (understood to have been set too high for current environment).
1st Home Buyers – The Ones To Watch
As mentioned in my previous CWRE Perspectives article, for over 12 months 1st Home Buyers in Perth have been better off, more than ever. A stark contrast from the values being paid in Sydney and Melbourne and even Hobart!
Today’s Reserve Bank cash rate cut to an all time low and the expectation that all Banks will follow swiftly to prevent mortgage defaults means borrowing money to buy a home is cheap.
Marry this with the Federal Government 5% Deposit scheme, an Increased Keystart income limit and the State’s 1st Home Buyers Grant – this group is least impacted by the COVID19 crisis. Unless of cors they become unemployed!
Our CWRE Perspective – What does it all mean if you need to sell now.
Well, in my opinion the next 4 -5 weeks will define where the Perth residential real estate market could be headed in the medium term (3-6 months) – whether we are destined to stabilise quickly or if 2020 is lost in terms of growth (recovery) altogether.
We wont know until we see a real impact on jobs/ employment, consumer spending and ability to provide services and deliver production.
From my Perspective – if you’re looking to sell now, consider these 4 steps:
- Get 3 real estate market appraisals with perspectives from both local and non-local agents (ensuring you gain a full spectrum perspective of the market, not just closed to a local buyer base – not all properties are sold to local buyers).
- Get your home ready to sell well (think like a buyer, ‘what do they want’ – not what you think they need). Your agent will be best poised to answer this.
- Make improvements that matter most to buyers. I am convinced from customer survey insights that Liveability features which benefit the occupant on a daily basis matter most. Granite bench-tops have been a perceived indicator of ‘quality’ but they don’t pay back. Solar PV, solar passive design, energy efficiency deliver on comfort and reduce household utility bills. Note: price range, condition and age of the home will dictate what improvements should be made.
- Be absolutely realistic with your list price. Do NOT over price. Listen to each of the agents and make an informed decision.
I am here to help you find the right answers and achieve the best outcomes to the above 4 points.
I invite you to tap into my experience and passion so you make a better informed decision no matter what suburb you live or invest in.
Contact me via
 First Home Loan Deposit Scheme (10,000 FHBs will be able to borrow up to 95 % of a property’s value without paying the traditional Lenders Mortgage Insurance).
 I have sold in over 50 suburbs in Perth over 20 years and have gained a broad and deep understanding of Perth’s market place. I’ve learnt you don’t need to have a local ‘office’ to sell well, in fact a different perspective outside of local pricing boundaries can often deliver better results. It’s the skill of the selling agent; their innovative marketing strategy and ability to garner trust through transparency that will define your own success.