August Market trends – what you need to know and where the market is heading.
With September in sight, we are getting closer to spring, however, there are no signs that the Perth real estate market will be changing from winter mode to spring mode anytime soon. On a positive note, winter mode is also the time for finding some great opportunities if you know what you are looking for.
Outlined below are some of the market indicators that will provide clues on what to expect.
(If you just want a quick snapshot without the detail go straight to the Take Away Message section).
Looking further back to late 2014 the number of jobs were swinging from high 11000 up to 13000 so the local employment market is still down a little but at least we are not going backwards.
2. Rental Market
As a landlord 2015 has not been a good year with an increasing vacancy rate and a decreasing median rental income. To make matters worse this trend is continuing with the vacancy rate at 5.2% compared to 12 months ago when the vacancy rate was at 4.1%. This means that property managers are receiving fewer enquiries for available rentals. Having said that the completion of a number of city based residential blocks is likely to be a contributing factor. As such, there are no signs that things are going to change in the near future.
Although increasing the rental income seems difficult at the best at times, there are ways to increase your net cashflow if you own an investment property.
For tips on how to increase your cashflow on your investment property click here.
As an investor, secure your tenant at the same rent they pay now. If you have to find another tenant you may have to drop your rent to attract a good tenant. As a landlord, if you are looking at selling your investment property now is a good time to list it for sale.
This is especially the case if a lease is due to expire in the next three to six months, as you can expect a lower rental yield.
If you are thinking of selling your investment click here to discuss your situation.
3. Properties for Sale
Buyers have even more to choose from than a month ago as another 278 properties are currently on the market. Putting that into a short term perspective, there are still slightly less properties on the market for sale today than in May and June this year. Looking at the past 3 months the market is still in status quo when it comes to properties for sale.
The median property price has since the September 2014 quarter been consistent around $550,000 but in the last quarter (June) it dropped down to $536,000 though this is an estimate from Reiwa. However, looking at the median price for 2014, the June quarter had the lowest median price of the 4 quarters so there is hope the median price will increase in the next quarter.
Days on the market has also increased a little from 68 days to 71 days on average so not a huge swing but it’s still going the wrong way.
………So what does all this mean for you?
Where is Perth on the National property clock?
National valuation firm, Herron Todd White released their property clock in July. In their view Perth is still in a declining market for houses and we are yet to reach the bottom (6 o’clock). Though we are now towards the end of August there is no change on where Perth is on the property clock.
Source: Property Observer
Based on the clock alone, buyers should take their time finding the right property and sellers should act now and go to market today rather than wait for the short term as the market is only going to get worse.
However, is market prediction really that simple?
Below, is a summary of your situation as a
- and/or Seller.
Take Away Message
As a buyer
Now is a good time to go property shopping. The property market is not changing anytime soon so be patient. Consider properties that have been on the market for more than 6 weeks. Sellers that have just listed their property for sale are less likely to accept lower offers even if it is a buyers market.
Attractive properties will always be snapped up quickly so it is important that you do your research first so you know when a good property presents itself.
As a Landlord
Be aware that tenants are spoilt for choice. Though some tenants maybe not be aware of this, it would be risky to assume that your tenant is not keeping an eye on what is going on. If you have a good tenant, make sure they are happy.
Ensure that you approve repair requests from your property manager promptly and to a high standard. The side effect of regular maintenance is that the tenant will feel that they are being looked after and hopefully will be less likely to look for another rental.
As a seller
If you are thinking of selling your property, there is no point in waiting for the market to improve as the property market is likely to stay as is for the rest of the year. There is even speculation from some analysts that the market may not turn until after 2017.
With APRA tightening the lending rules for financial lenders, it will become increasingly harder for investors to obtain finance for investment properties. For more information on this please click here
Be realistic with your asking price. A 6 month old appraisal or a sale of a similar property last year counts for nothing in the post boom market.
Keep in mind that you can still generate capital growth for your property, however, you just can’t rely on the market to do all the work for you.
When selling a property, there are only 4 variables
• The location,
• The right marketing strategy,
• Presentation of the property, and
• Your agent
The good news is that you have control of 3 of the 4 variables.