WA Perth market 2019

You’re in a good position young man.


We can’t predict the future but we do know that housing affordability (measured by house prices to median incomes) and mortgage costs are as good as they have been in well over a decade.


In addition, there is plenty of stock to choose form and plenty of eager vendors.


Yes, with the east coast crashing the Feds could step in and try to stimulate the market with some FHB goodies. But, in the scheme of things, it will be a pittance. What’s an extra 10k over the lifetime or a mortgage?


Usual rules apply; try and get the best house you can in places people actually want to live. Rule of thumb within 10k of the city and think carefully about the amenity you want.


Don’t move to Baldivis if you enjoy a night on the town.


Don’t move to Midland if you like the beach.


Finally, don’t overextend yourself. Keep your mortgage costs less than 30% of your net take home pay. Some 26 year olds might be happy to eat baked beans and forgo nice holidays for 10 years in order to afford a bigger better place. But I suspect most would regret it. You are only young once.

 

Current take home is $4500 per month, 60k in savings. ANZ calculator reckons I could get a 420,000 loan. Doesn’t let me much choice. Preferably SOR, but no further than Cockburn. South lake, jandakot, cooby, Hilton all look promising, but my salary is holding me back I think

 

There are plenty of good options in that price range. Just don't rush into it, the perth market isnt going anywhere *soon*

What kind of stock are you looking for? Unit? House and Land? You are on the right track coming here and getting involved. I'm 24 looking to make my first purchase this year and have learnt a lot in the 6 months ive been using this site.

Is this for long term PPOR or initial PPOR to be turned into an investment?

 

First - online calculators are generally crap. You are best talking to one of the brokers on here about how much you can actually borrow as there is no point looking at $420k if the reality is actually $350k. Generally it's more not less though

You can get a lot of bang for you buck down that way but I agree stick north of Cockburn. If you were open to duplexes you could get closer in like Bull Creek/Bateman

 

Good news for the vacancy rate watchers/stalkers.

Perth Vacancy Rate Drops Below 3% In December 2018

Having a vacancy rate with a 2 in front is very positive news for indications the supply for rentals is dwindling, increasing investor sentiment and future market conditions.

@JL1 any insights from your awesome collection of data?

 

@Pigey, what do mean the agent 'buys' the listing? Asking as am interviewing/engaging agents local to Mt Hawthorn soon.

"Though there's been chatter amongst local agents that Annie and Tina from Acton, 'buy' the listings, and then steeply discount them not long after listing."

 

Agents condition sellers all the time. Are you
a) testing the market
b) serious on selling with realistic expectations
c) have a price in mind and would stand ground

Interviewing agents is the wrong way to go about it. See them in action as a potential buyer for their current listings. See how they interact with their buyers. Ask them for comparable sales and see how well they are prepared. Ask them for random bits of information about the property. Throw curveballs and see if they falter. After a few day, see if they call you back to see how you are going and if you are still interested in making an offer.

Even in a market like this, I see many agents who don't give two hoots about the client (buyer or seller).

 

Home ownership has other costs council rates, water rates, building insurance, bank fees (if any). This can be $80+ a week in total

Being your own home you also have maintenance and repairs costs.
Owning a garden you might find you spend more looking after it than being in a rental.
I wouldn't be in a rush to max out my borrowing and having the highest monthly repayment the other costs need to be considered.

 

yeah its looking awesome. Essay coming so grab a cuppa..

We should see a little further fall in rental listings through the coming months before it flattens out for autumn/early winter. Come July this year however is when it will get really interesting. for some reason the most active time in the perth rental market is july through spring (UK migrants timing with their school year?). I expect we will be getting well below 2014 listing numbers and see rents really push up.

One thing that has annoyed me is REIWA seems to have revised their sales listing data. Last year it was looking like sales listings were on a clear path to recovery. this year they have revised their "12 months ago" figures up dramatically, such that we are now seeing the highest sales listings on record. This has massive implications for my recovery forecast, and explains why last year didn't end stable. they were showing an apparent recovery that didn't exist.

In numbers:

• current sales listings = 16,619
• last year = 15,152 (higher than same week in 2017)
• what they said they were 12 months ago: 13,300 (lower than same wk in 2017)

So they understated their data by over 12%, and showed a listings decline that was actually a lift.

My stance now is that the recovery will be entirely driven by tightening in the rental market, so i don't expect to see too much action until late this year and setting up a strong 2019.

Population lift is slow and steady, new developments are down, and new dwellings per person will be in "market growth" territory by late this year.

Luckily the eastern states is such a mess that interest rates can't go too high and lending won't be getting any stricter, and with current house prices i don't see access to finance as the constraint for WA that the media are touting. especially when renting will cost more than that finance..

 

@JL1 I was looking at the sales listings scratching my head thinking they looked different (much higher) but I didn't have the proof - I'm glad it's not just me going mad!

Thanks for your detailed data analysis

 

Not a literal buy but where they tell you it's worth more than it is so you go with them then after a week or 2 encourage you to reduce the price.

 

I’d go a step further: a tightening rental market is a cast iron precondition for house price inflation.

It’s basically the only thing that will get investors back into the market and convince FHBs waiting and watching to buy.

 

Yep, agree with most of what you've said @JohnPropChat, we've already done majority of what you've suggested over many years of living in the area and interacting with the local agents, however you've assumed we've come in blind and just picked some random agents to interview.
Now we have a filtered list of agents that we think can do the job from a buyers perspective you still need to get em in for an interrogation from a selling perspective, which includes working out how much they're working you.

 

Yeah I read 'buy' in a financial sense, not just conditioning buyers which in my experience all agents try to do!

 

Isn't this manipulation of data illegal ? How does common man trust their data ? Many people assess market condition based on their data.

Is there any reason for them to update data ? I know some data will be updated later on based on further verification. But 12% is too much.

 

A dropping vacancy rate in this market is indicative of two things;

1) Post APRA, people who wanted to buy now can't. So their only option is to rent. The restricted credit environment will still have a downward pressure on new construction and the aspirations of the middle class.

2) Rents will rise as new homes can't be built due to overly onerous 7% serviceability criteria. Infill housing is more difficult as land is stagnant because people can't build, compounded with also not being able purchase in existing suburbs anyway for the 7% bit.

Sub-note - Development finance is laxxing off a little but the end purchaser is still throttled by 1 above. So I see more of the "Develop and Hold" model coming through and that means less GST and less CGT base for the state and ATO.

 

Since nothing was implied about your prior research, I erred on the side caution and just told you without assuming that you know what you are doing.

 

CBRE report has some good insights

 

Some rosey predictions for the rental market from Jarrad az at Investors Edge. He must be prettypretty con to publicly declare that his landlords should expect a 10% bump in rent by year end.

 

@LTLT16 Great time to use that FHB grant of voiding stamp duty id say. Its what im looking to do right now. However it wouldnt surprise me if federally they up the building grant to 15k but to be honest they should just be giving 5k to FHB for existing buys along with voiding stamp duty to stimulate IMO.

Im looking to do the same. Trying to get into a nicer suburb with the current property economy such as Padbury, Kingsley, Greenwood or warwick. Just need a 3 bed 2 bath with okay backyard to pop up.

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Anyway separate note @Westminster ... 24 Harness Street, Kingsley. Recently subdivided into battleaxe but im trying to work out how? Zoned R20/R40

Minimum requirements with state planning suggest 380sqm. but the entire block was only 713sqm and it isnt a corner