June 2015 Market trends – what you need to know and where the market is heading.
We are very near the end of the Financial year and it has been an interesting year to say the least for the Perth Property market. In general the market has changed from a sellers market to a buyers market and the rental market has also changed significantly as well.
However, in the years to come prices will come up again, simply because Perth is and will continue to be an attractive place to live.
In their recent market analysis Herron Todd White points to:
- Domestic migration;
- International migration;
- Major infrastructure projects; and
- Our proximity to Asia, compared to other Australian Capital cities
as reasons why the current market conditions will change for the better. They forecast of a more modest growth of 5-7 percent per annum which appears be to be sound in the long term. To download the latest report from Herron Todd White please click here.
So what can we expect the next 12 months?
Recent articles in the media, suggests that all is doom and gloom but is that really the case or are the newspapers just selling fear (because fear sells better than good news stories)?
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 scroll down to the Take Away Message section).
In the past 3 months the number of jobs advertised hovered around 10600 jobs. Looking back the past month, there has been an increase of around 200 jobs.
Given that some of the labour intensive construction projects in the oil and gas industry are coming to completion at the same time as a slowdown in the mining industry there has been a general sense of doom and gloom in the past couple of months but the iron price has started to increase again with a 40% increase from $40 per tonne in April to $60 per tonne which is good news. Looking at how the job market is tracking, it is probably best described as steady with a pinch of optimism.
2. Rental Market
There is no doubt the rental market in recent months has been tight if you are landlord. The median rental price is has dropped by $10 to $430 per week and the vacancy rate is now at 4.5% which means that property managers are experiencing less enquiries for available rentals. There are no signs that things are going to change in the near future. Although increasing the rental income seems difficult at 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.
3. Properties for Sale
Since the last update a month ago, the number of properties on the market has increased to around 14,200 properties for sale. As such there are 1500+ properties above a balanced market so buyers have the upper hand and with the trend going up there is no reason to believe that this is changing.
………So what does all this mean for you?
Your Take Away Message.
As a buyer
Now is a good time to go property shopping. 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.
As a landlord
Be aware that tenants are spoilt for choice. Though some may 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.
For more tips on maximising your return on your investment property click here
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 (and possibly the following year). 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 agentThe good news is that you have control of 3 of the 4 variables.
To discuss your situation and how you can add capital growth to your property please contact us