As the Sydney market reaches almost unprecedented highs, Perth buyers and property owners have been looking on with a mixture of envy and relief, depending which side of the fence you sit on.With a median house price in Sydney nudging the one million dollar mark, and papers full of talk of an affordability crisis, many are speculating whether other markets will follow or if the bubble is about to burst.
Economic, political and financial decisions can seem to be made based on what’s happening on the eastern side of Australia, but where does that leave those of us sitting outside the simmering Sydney and Melbourne markets?
Leading Abel McGrath property consultant, Michelle Kerr, says there are a number of factors at play that have combined to drive the eastern states’ property markets to ever increasing levels. “Sydney, in particular, is now being viewed as an international city and destination in the same league as Paris, London and New York,” Ms Kerr says. “Generally, if you look across the globe, the most sought after cities of the world are traditionally expensive the closer you get to the epicentre.
“As our major cities grow, it is unfortunately symptomatic of what happens as urban centres develop.” Ms Kerr says although Perth is growing in terms of sophistication and as a destination, it is not driven by the same factors that are currently fuelling the Sydney and Melbourne markets.
“Perth is at heart a big mining town and because of our reliance on the commodities industries, we do feel the effects when those sectors suffer,” she says. “We operate on entirely different fundamentals from the East Coast.” She says although industry experts traditionally allude to predictable cycles to explain market fluctuations, these cycles are becoming increasingly hard to pick.
“When any market slows down, a sense of balance returns to supply and demand,” Ms Kerr explains. “The Perth market, at the moment, seems to be evenly balanced between buyers and sellers.” She says although buyers have the upper hand when any market deteriorates, she would caution against sitting back and trying to pick the bottom of the market.
“I would caution buyers, particularly those looking for a family home, that the choice of homes in the Western Suburbs remains challenging. “Don’t wait to pick the bottom of the market in the hope that you’ll pay less,” Ms Kerr adds. “You might end up missing the perfect house for you.”
As for predicting where the Perth market is headed in the next 12 to 18 months, Ms Kerr says a crystal ball would come in handy for anyone trying to pick where it is going next. She says with so many local and international factors at play it is too difficult for even the most seasoned industry insiders to predict.
“When buying a home stick to the fundamentals, which include doing your research and making sure you can afford the loan you take on, then regardless of what happens in one, two or five years, your risk is minimised.”
Property is for the majority of us an emotional buy and for that reason, Ms Kerr says, it remains independent, to a certain extent, of what is happening in the market.