Well hasn’t the year flown by! I can’t believe it is half way through the year and winter is well and truly upon us.
2018 has seen a strong start for some parts of the Perth property market. Low stock levels across the Western Suburbs have continued and have kept prices on an even keel with the average days on market still well below the state average (for those homes priced correctly). Nedlands current median price is sitting on $1,645,000, with a small increase in prices year on year of 3%.
So what does that mean for prices and the next 12 months?
Over the last year Nedlands has had 130 property transactions (only 6 more than last year) with a good level of sales at all price levels. The demand for properties in the $2M+ bracket has been strong with buyers happy to open their wallets for homes that are high quality with contemporary layouts. It seems that time poor buyers are happy to pay top dollar for the finished product with 26 sales over the past year over the $2M mark.
However, even with the large number of buyers, the need to price appropriately is more critical than ever. It still remains the case that if homes are priced appropriately and marketed correctly, then they are generally under offer within 14 days, many this year selling at the first home open. In addition, we have found that most homes have experienced more than one offer, which is definitely not a quiet market!
Homes that are overpriced are still languishing on the market with many sitting there for 6 months or longer. In fact there has been a good number of homes that have been marketed unsuccessfully and then withdrawn from the market. This is a costly exercise for the families involved both monetarily and emotionally.
More than ever we are operating in a very educated and information rich environment with all buyers and sellers having a plethora of cheap up to date information available to them. This means that the old fashioned ‘Gumtree’ method of selling (advertising it for a higher price and factoring in a discount) only leads to disappointment.
Soon we will be heading into the Spring selling season and buyers will continue to lament the lack of stock, a story that we have come to know only too well over the last 2 years. However this high demand for property is not putting upward pressure on prices, in fact, I believe the low stock level and low interest rates is the main driver of prices staying stable. This situation could change very quickly if the number of homes available for sale increased.
The banking Royal Commission is starting to cause waves that are filtering down to residential property. Investors continue to be under pressure with banks now being forced to keep the number of investor loans under control with tighter regulations being enforced by APRA.
As investment loan terms become due, investors are having to renegotiate their facilities. Most of the major lenders have investment loans substantially higher than owner occupier loans with rates approaching 6%. These loans are now principal and interest in the main, with interest only loans harder to secure. Tougher regulations for overseas buyers has made purchasing difficult for overseas buyers.
So what’s in store for the rest of 2018? The ‘big things’ that agents have their eyes on as we head into the next year is the federal election and interest rates. Economists only get it right 50% of the time but most bets are on interest rates heading upwards towards the middle of next year. For many families already struggling under heavy debt burdens this may be the straw that breaks the camel’s back. The market is still very fragile and susceptible to any major economic or financial shocks. The federal election is always polarizing for the economy as most businesses and families out decisions on hold pending the outcome.
As one of the state’s leading agents as well as a Nedlands resident I am incredibly passionate and proud of the amazing suburbs we call home, and will continue to sell the benefits of living in what I consider Perth’s premier lifestyle region.
I am always in the area and only a phone call away, so, please don’t hesitate to call me anytime if you have any questions.