Frustration and disappointment have always been part and parcel of the home buying process. But there is always another opportunity just around the corner….right? Maybe, but not at the moment.
As one of the Western Suburbs busier agents I usually have a constant flow of new homes coming to the market and can usually assume that there will always be people buying and selling for various reasons. People have kids, kids move out, people upsize, people downsize – family and financial situations are always changing.
As a result of these changes there are always a flow of new homes of various shapes and sizes coming to market to satisfy the appetites of my growing list of home buyers, and there is nothing that brings me more happiness than seeing a new family move into their new home and the excitement and joy that comes with it.
But, the past 9-12 months have been a strange and challenging time for buyers, with extremely low numbers of homes available for sale, and anything relatively livable being snapped up quickly. As an agent it is very frustrating, as many of the families that we have come to know well during their search for a home are still homeless – and I don’t like to disappoint anyone!
So, when is this going to change? This would probably be the most asked question of any agent across the Western Suburbs. From Floreat through to Fremantle, the cry is all the same, whY are there no homes for sale.
It is interesting to look at sales volumes annually. This year had the lowest level of transactions since 2008. Interestingly this is not just a Perth thing. Recent articles I have read from both the US and the UK point to the same challenges in their markets with record low stock levels.
So maybe what we need to ask is not why are there no homes for sale but instead why are people choosing not to sell?
So let’s look at some of the many reasons being touted by those in the know as to why people are choosing to stay put:
- We all have too much debt: Australians as a nation are carrying extremely high levels of personal debt. Moving home usually equates to borrowing more money and all the associated costs that go with it. Statistics show that most of us have borrowed way more than enough and are feeling the pinch. Also with job vacancies on the rise in WA many families have had to pull in the purse strings in the short to medium term till the economy improves.
- General Lack of confidence: There is an enormous amount going on globally at a political, social and economic level. In addition, the Australian economy has also taken a battering. Add into this terrorism, and you have a recipe for a general unease. History shows that these are not the environments in which people make big changes, opting instead for more of the same.
- My home is worth less than what I paid for it: Those who are purchasing now may think prices are high, but turn back the clock to 2008 and you will see just how far they have come back. Those home buyers who bought at the peak of the market pre-GFC are more than likely sitting on a loss of some size …ouch! This could also translate into a reduced number of people selling and upgrading as they simply can’t. Selling would mean recognising and being able to absorb the loss.
- Tighter bank lending: Regulators have clamped down on the banks exuberant lending to ensure the stability of our banking sector. Banks are limited to a fixed % of their loans being allowed to investors. In addition, the lending requirements for the standard borrower have increased dramatically with far more hoops to jump through. This has had the overall effect of reducing the amount of people that can qualify for loans thus reducing people’s ability to borrow more, upgrade and sell their current home.
- I am not selling now because the market is going to get better next year: A common discussion with many sellers is ‘should I wait till next year?’ No one has a crystal ball but most experts agree that prices are certainly not on the way up yet. We will need to see some significant improvements in the economy and employment in WA before prices improve significantly. The possibility of interest rates rising next year will also have ramifications for the property market, but we will have to wait and see.
But the truth is that experts and economists rarely get it right so in reality is more than likely that it is a combination of all of the above, with a dash of a few things that no one has enough thought about.
The one thing that is for certain, is that it doesn’t look like changing in the short term. So, the best advice is, if you find that perfect home, don’t dilly dally. There are way too many buyers looking at the moment to have the luxury to think about a decision for a few weeks. Certain price brackets are traditionally more popular than others but overall the entire Western Suburbs is short on stock.
The anomaly in all of this is price levels. Normally a market tight on supply would tend to drive prices up, the normal rules of supply and demand. What we are seeing is that although stocks are low, prices are not skyrocketing. Buyers are well researched and are still only willing to pay fair value.
Conversely, what a great time to SELL. With the balance squarely tipped in the seller’s favour at the moment, this might be the perfect time to sell and secure that price that will allow you to transition to ‘your’ next move.