Articles

Buying Hayden Groves Property Prices Selling Renting

Jun 27, 2024

Beat the Spring Rush

One of the major problems with the local property market right now is the blockages caused by short housing supply. Would-be sellers - whether up or down-sizing – are ‘stuck’ because they are struggling to find property that meets their needs and with short rental supply too, the usual ‘fall-back’ of renting for a period is also problematic. With only around 3,250 properties listed for sale on reiwa.com buying opportunities are limited considering there were around 14,000 listings less than five years ago. However, if you are considering selling your property, it's worth considering bringing your property to market sooner rather than later. Off the back of higher-than-expected inflation figures reported this week, interest rates could be on the rise again come August and with the usual spring listing rush not far away, more supply could come into the market. That said, it remains likely overall supply will remain below average levels for some time, particularly given higher levels of state migration, piling pressure on the demand side. Buyers remain hungry for quality property despite recent interest rate rises with sales numbers running at about 900 per week metro wide. Average days on market have settled though, stable at 8 days for the past three months. The Reserve Bank’s rapid increases in official cash rates added 35 percent to average mortgages in 12 months, or about $1,000 extra per month for an average mortgage. This is beginning to hurt those borrowers who took on low interest fixed rate mortgages in 2021, many of whom have properties in the outer suburbs. Supply in these markets will rise if these borrowers can’t meet these higher repayments. For property owners in and around Fremantle, coming to market now gives sellers the opportunity to buy closer to a settlement period that will align with more property coming to market in spring, avoiding the need for a ‘double move’. Sellers are holding the competitive advantage in the market so there’s opportunity to negotiate outcomes that include things like an extended settlement period or ‘rent back’ options. Importantly, in this market selling and buying within the same time-frame is preferrable as property values continue to rise, choice remains constrained, and investors turn their attention to our relatively under-valued market.

Buying Fremantle Real Estate Hayden Groves Real Estate Property Prices Selling

Jun 19, 2024

Get Your Price Right

Fremantle’s property market continues its positive trajectory with short supply and solid demand. This current imbalance is keeping up property values as buyers continue to compete for the limited homes available throughout the area. FOMO enthusiasm gives rise to some ‘unicorn’ selling outcomes too, with seller expectations sometimes rising faster than market sentiment. The short supply means agents are desperate for listing stock and, unfortunately, one response to this market is for agents to offer ‘happy prices’ to would-be sellers, the aim being to secure the listing and hope the market ‘catches up’ during their period of authority. friends, lovers and others have their own opinions Additionally, emotional attachment often leads homeowners to believe their property is worth more than a market consensus of a fair price. Opinion of market value for property is largely a subjective exercise; various agents will have differing views of market price, and friends, lovers and others have their own opinions that influence would-be sellers. Sellers who have committed to another property at a higher-than-hoped price will also be pressured to sell their own home for more than the market might bear. The result can be price expectations that exceed market reality. In truth, the value of a property is not determined until a buyer is found, negotiations finalised and the contract for sale completed. The combination of market information, comparative property sales analysis, demand and supply levels, buyer activity and property presentation provide an insight into what fair market price might eventuate for a property, but what does the anticipated or listing price have to do with the final market price? In short, plenty. Statistics show that sellers that over-price their property lose money in the end. Sellers that allow their property to languish on the market due to unrealistic price expectations (either derived from themselves or an over-zealous agent) end up fighting against the buyer sentiment of a “stale” listing; a property that has been on the market for above average periods of time. Such properties are often simply over-priced and buyers will discount them because they think “there must be something wrong with it if no one has bought it.” Sellers that discount listing prices to sell will almost always end up selling for less than if they had a realistic market price expectation from the beginning. Sellers are well advised to take in professional advice from a local REIWA agent and form a considered, unemotional opinion of value based on facts, evidence and reputable market data.

Buying Hayden Groves Real Estate Property Prices

Jun 13, 2024

Is the market too hot?

Thinking I should have heeded my own advice two years ago and bought real estate (which I foolishly did not), I enquired recently about a neat, two-bedroom duplex half in Rockingham advertised at $459,000. A little high, I thought, given it had sold three years’ earlier for $230,000. The agent informed me, she had received offers already - site unseen – for over $500,000, a gain of about 120%! Value gains of more than 33% per annum are generally unsustainable, but stories such as this are not uncommon in the current market. Meanwhile, broader economic conditions are posing some challenges, with the national economy slowing to an anaemic 0.1% for the March quarter, the worst quarterly performance in 24 years. Interest rates are not likely to come down anytime soon with March’s inflation at 3.6%, higher than hoped. The inflationary costs of fuel, rents and food are pressuring family budgets with household spending still on the rise as is credit card debt. We are more pessimistic too with a recent survey finding the percentage of people feeling optimistic about their personal future falling from 32% in July 2022 to 13.5% in February 2024. cost of living and housing affordability have been the two top issues Without the recent surge in migration levels, Australia would be in a technical recession. A recent survey of current and future concerns by Foresee Change, reveals cost of living and housing affordability have been the two top issues for Australians since October 2022. Issues like climate change and security of personal information have since dropped out of the top ten major issues of concern. With the economy faltering and pessimism rising, most property commentators would be predicting a significant slowdown in the housing market. So why not this time? Housing supply and the lack of it remains the core challenge of housing affordability and the primary factor behind the rapid rise in house prices locally. Our ‘lost decade’ of meaningful net value gains from 2010 to 2020 has deterred substantial investment in sufficient housing across WA. Meanwhile, there has been a significant rise in population growth, well exceeding forecasts of net migration of 90,000 per annum where actual migration gains from 2008 and 2019 was 225,000 annually. Despite the surge in population since 2007, dwelling approvals never exceeded 50,000 nationally in a quarter until the 2023 December quarter. Currently, we are running about 20,000 dwellings per quarter short of our national target to meet the federal government’s target of 1.2 million homes by mid-2029. At this rate we will miss the target by at least 400,000 dwellings. There is a sense of inevitability that local house prices will continue to rise due to the potent and enduring relationship between demand (through migration) and supply (the lack of it) irrespective of broader economic conditions.

Buying Fremantle Real Estate Hayden Groves Property Prices

Apr 4, 2024

Perth Property Takes Lead

It doesn’t seem that long ago when Perth’s property values made us the cheapest major capital in the nation. At the time, it failed to make any sense that Hobart and Adelaide’s median house prices were significantly higher than ours given our low unemployment, high wages, lifestyle and economic strength. Two years ago, Perth’s median home value for the March quarter was reported by Core Logic as $525,800. The current median house value for Perth as reported this week sits at $703,502. In March 2022, we were the most affordable place in Australia to buy real estate with all the evidence pointing to Perth being on the brink of a property boom. Back then, buyers dabbling in the Hobart property market parted with $820,000 during the quarter, in our nation’s capital they paid $982,000 and in Brisbane $760,000. In Darwin, the median house price reached $583,000 and Adelaide put on a tremendous 7.1 percent spurt from the previous quarter to reach a median of $649,000. Melbournian buyers paid a median of $1,121,500 for a detached house and Sydney topped the list with an extraordinary median of $1,590,900 for the quarter. Perth’s median house price growth for the twelve months to March 2022 was 4.1 percent. Compared to the same twelve-month gains had in Hobart (31.5 percent), Brisbane (26.7 percent) and Adelaide (24.8 percent), Perth’s property price gains back then were comparatively modest. Perth’s annual house price growth is now a nation-leading 19.8 percent and showing no signs of slowing. Brisbane sits in second place at 15.9 percent, Adelaide 13.3 percent and Sydney (somewhat remarkably given their high median price) has put on a further 9.6 percent. Remaining capitals are still growing but by less than 3.5 percent. Usefully, Core Logic’s statistically references ‘series peaks’ demonstrating current market sentiment within the context of a ‘since -COVID’ cycle. Brisbane, Adelaide and Perth are the last remaining cities to be at peak since that time with Sydney, Melbourne and Hobart all having peaked in early 2022. It would appear Perth has some way to go with Adelaide’s median home value at $734,173, and Brisbane’s – the capital most typically value-aligned with Perth – at $817,564 with both still growing. I predict Melbourne will continue to constrict from its current $778,892 median value, Hobart’s anaemic growth at 0.3 percent could turn negative at the year progresses and Sydney’s growth pattern will stall. I punt Adelaide is close to peak growth and whilst remaining positive will only gain 5 to 8 percent over the next twelve months and Brisbane should continue its double-digit performance for the remainder of 2024. With Perth gaining 1.9 percent in March and 5.6 percent for the quarter, we could see gains of around 22 percent this year. Meanwhile, local rents are up 13.7 percent for houses and 15.9 percent for units. Housing affordability has deteriorated and will get worse before more supply arrives.

Buying Fremantle Real Estate Hayden Groves Investment Selling Housing Crisis

Mar 20, 2024

Selling to Buy

Supply of homes to buy remain well below the long-term average. REIWA reports 3,971 listings available broken down into 2,230 houses, 1,129 units and 612 vacant lots. This time last year there were 7,262 listings. Meanwhile, sales volumes last week were 1,036 metro-wide up from an average of 615 weekly transactions in 2019. The lack of supply and listing choice is exacerbated by would-be sellers’ lack of confidence in coming to market, fearful of not being able to find a property that meets their needs once they’ve sold. And, given the high levels of demand, offering to buy ‘subject to sale’ of their own property is often trumped by buyers without such buying terms. Normally, sellers would rely on moving to a rental property for a short period in the event they’ve sold and yet to find an alternate home. However, the rental market is tighter than the sales market with median rents at $640 per week up from $360 per week in 2019. A mere 1,817 properties are for lease on reiwa.com and vacancy rates are at less than one percent. So, how do sellers overcome this dilemma? Firstly, be ready to come to market at short notice. Once you’ve chosen your preferred agent, present your home and arrange for professional photography. That way, your agent will be ready to go to market within a day or two should you successfully buy. Secondly, if you decide to sell and need to buy, structure the sale contract to give you sufficient time to buy an alternate home by negotiating a longer settlement period. Thirdly, consider a negotiating a ‘rent-back’ period with your buyer. This may not suit the buyer of course, but if an investor ends up buying your property, then this option comes into play. At settlement, sellers can remain in their home, pay rent to the buyer and have the luxury of only needing to move once upon finding their next home. Fourthly, introduce yourself to as may agents as possible when searching for your next home, give them your contact details and let them know what you’re looking for. This gives you more chance of securing a home ‘off-market’ whereby more flexible terms around settlement and the like are common. Finally, have confidence you’ll find a suitable home after you’ve sold. Sure, you’re not likely to be spoilt for choice and you may need to compete to buy, but there’s sufficient stock coming through the market to meet most family’s needs.

Buying Fremantle Real Estate Hayden Groves Real Estate

Mar 14, 2024

More Growth to Come

Perth’s housing values have increased more than 50 percent since the end of 2019 firmly putting an end to speculation that our run of price gains was purely due to the low interest rate, stimuli-fuelled COVID period. Core Logic reports Perth’s current median home value to be $687,004 up 52.9 percent since the bottom-of-the-market March 2020 price of $449,325. Current values eclipse the previous 2014 peak of $518,540. We’ve been witness to similar markets in the past. For example, back in 2006, Perth’s median house value rose a whopping 40.6 percent in twelve months thanks to the mining boom. Prices retreated relatively quickly after mining-related construction jobs ended and workers returned to whence they’d come. Back then, WA’s population gains went from +1,000 persons per week to -150 per week in a short period, hence the fairly spectacular downward adjustment in house values; demand simply fell away. There is a fundamental difference in Perth’s housing landscape this time around with population gains, low housing supply and relative affordability the three fundamental drivers of our market. These three factors are set to underpin positive house price growth for at least this year and into next with no predictable market shock on the horizon to bring this upward trajectory to a premature end. Considering each fundamental in turn, Perth’s house prices could gain a further 15 to 18 percent this year based on current trajectories. WA’s changes to population growth are at peak levels with around 22,000 new arrivals quarterly. Overseas migration is out-pacing interstate migration growth and with a housing shortage, the demand for more homes inevitably pushes up house prices. Meanwhile, REIWA continues to report low listing numbers currently at about 3,250, well below long term averages. The supply pipeline looks bleak too with current annual dwelling approvals 24 percent below the 10-year average for houses and an astonishing 74 percent below for units. Clearly, we are not going to be building enough homes for to cater for our population gains anytime soon. In fact, WA is leading the nation in terms of time taken to build new homes. Yet Perth remains one of the most affordable places in the nation to buy property with a year-to-date median house price of $718,500, well behind Sydney’s $1,395,804, Melbourne’s $942,671 and Brisbane’s $899,474. We have nudged past Hobart’s $696,508 in recent months. And the percentage of average household income to service current average mortgages in Perth is 29.8 percent, way more affordable than Sydney’s 58.1 percent. Interest rates are predicted to fall later this year as the broader economy slows. It’s foreseeable that such a move will add further fuel to Perth’s already hot property market.

Buying Fremantle Real Estate Hayden Groves Real Estate Selling Property Management Renting In The Community

Feb 29, 2024

Sorry, Disconnected

Sometimes, governments make decisions that have unintended consequences that impact the practical ways certain industries work. Canberra’s latest effort to over-regulate comes in the form of changes to the Fair Work Act that formalise an employee’s ‘right to disconnect’. The changes effectively mean an employee may refuse to monitor, read or respond to contact from an employer outside of the employee’s normal working hours. As an employer, I think it’s perfectly reasonable for an employee to ignore my phone call after hours, and unless it was a serious emergency, I wouldn’t be calling them after hours anyway. But, do we really need to make a law for it? For the real estate industry, the implications could be significant. The business of real estate – sales or property management – doesn’t happen during usual business hours. The laws extend to an employee (sales representative or property manager) refusing to monitor, read or respond to contact from a third party if the contact relates to their work. This includes contact from vendors, tenants, buyers and lessors. The obvious issues for national companies operating in Western Australia have been neatly overlooked by east coasters with the 3-hour time difference in summer could mean an effective workday starting in midday in Melbourne and Sydney and ending here two hours later. The changes could result in lost business if employees refuse to take urgent calls on a critical matter, such as a live sale negotiation. And what about a matter concerning safety at a property where property or person is at risk where a worker is required to manage such emergencies? The new laws are set to become law in July this year. After which, a tenant, needing assistance to get into their home after losing their keys at 6 pm can expect no reply from their property manager. A vendor, - in theory - wanting to know how Saturday’s home open went, can’t demand a response from their sales agent until Monday morning. As a result, many real estate employees will ignore the new laws and carry on providing service to their clients, tenants and buyers outside normal working hours. It won’t be until something goes wrong with the employer / employee relationship that challenges might arise. Employers could find themselves in strife with the Fair Work Commission if a disgruntled employee claims they were expected to work outside normal business hours without the right to disconnect. Employees working from home further muddies the water given these arrangements enable a degree of flexibility that transcends normal work hours anyway. Time will tell what impacts come from these laws that seem to be an answer to a question no one ever really asked.

Buying Hayden Groves Property Prices Housing Crisis Renting

Feb 22, 2024

Who’s to Blame?

Housing affordability is one of the most significant challenges of the modern era. Both house prices and rents are at record highs in Perth and across much of the nation with Perth’s median house and rent prices at around $600,000 and $600 per week respectively and growing faster than any other major Australian capital. We understand that the reason for these rises is down to simple economics, higher demand and short supply means prices and rents rise. Governments have done a spectacular job at shifting blame away from their own housing policy failures to investors, banks, real estate agents, local councils and developers. Yet, each of these sectors play a pivotal role in delivering the existing housing stock. Governments, on the other hand, through their taxation and other policies actively undermine housing supply. Property investors, mostly families that own a single investment property, provide 90 percent of all residential rental homes across Australia, housing millions of tenants. They obtain a moderate benefit by claiming some of the expenses stemming from that investment against their taxable income via negative gearing. However, once positively geared, investors pay tax on the property’s income and pay Capital Gains Tax if they make a profit upon selling. Banks, whilst not the most popular corporate citizens, provide the funding for property through mortgages. Banks also provide the funding for developers. Us real estate agents provide the services that help investors navigate residential tenancy laws, help people into home ownership and enable property transactions. Local councils often stymie property developments, especially increased density but they also adapt their planning laws over time, enhancing our urban environments. Developers provide housing on mass, adding density to areas where people aspire to live, work and recreate. Part of the reason property values are rising is the cost of construction, both labour and materials, has risen by around 40 percent in 3 years with end property values for finished product not at levels sufficient to support the viability of the project. Developers work to a margin and if the project fails the feasibility test, it doesn’t get built. That’s why new emerging density areas such as those around the new Metronet hubs will take several years to be developed; the cost of delivering the project is higher than the combined value of the housing produced. These cost constraints are not limited to construction costs. Land tax, holding costs, public art levies, developer levies, rates, headworks fees and stamp duty are additional cost burdens representing around 25 percent of the total development costs. This is where government ought to step in. If they were serious about housing supply, government would support the groups that provide the housing. Instead, state and federal governments either fail to provide the housing themselves (public housing waiting lists are at record highs) or set policies (stamp duty, tenancy law changes and land tax for example) that actively discourage additional housing supply. If it isn’t government, who is to blame for the housing crisis?