WA Perth market 2020

Haha yes I was thinking earlier today how Mark McGowan has just fixed WAs interstate migration problem. The NT might want to consider making closed borders a permanent measure.

Of course a fraction of a percent positive change in population is nothing when we're looking at 10%+ unemployment. But I agree it is yet another small positive for WA coming out the other side and we'll be quicker to recover than others. But things are still going to get worse before they get better as unemployment will take some time to subside when after emergency measure are over. We're looking at 12 months minimum before any positive data comes out of the real estate market so we best all hunker down again, like we've been practicing in Perth the last 6 years.

There will be a fair bit of price volatility in all property markets including Perth while the virus and lockdowns play out. I think April will see the lowest number of new listings ever recorded as buyers and sellers abandon the idea of transacting and the market totally dries up. But desperate sales will occur which might deliver some shockingly low prices when they do happen.

 

Adding to this that no doubt the average mortgage in WA is far lower than the average mortgage in NSW and VIC which means WA population can cope better with reduced incomes which in turn means less distressed/forced selling and/or bank repo's. Also our market was just coming off the bottom so far less further to fall than NSW and VIC

 

Apartments are not my cup of tea but could of interest to someone
https://www.realestate.com.au/property-apartment-wa-victoria+park-133365694

Apparently needs a reno but the yield will likely end up being circa 8% to 10%

#donenofeaso #doyourowndd

 

Gotta love good old Perf! Where you can buy an apartment walking distance to the city for just over 100k
Insane how undervalued this city is!

 

Interestingly, agents on the ground are still closing deals inner ring without too much hassle.

 

My partners mother has been settling 20-25 properties a month since mid December and this week has only settled 12 and has 10 lined up for the next two months..

 

Have to factor in seasonal variations as well. Only time will tell but those that are fortunate to not have been financially effected are still buying. Healthcare, many parts of IT, some parts of Engineering, some parts of Mining and Manufacturing are still going strong.

 

BHP wants people living in town rather than FIFO given the infection risk that 1000s of FIFO workers represent.

 

I first read this as they were buying 20-25 a month which is just about impossible without a large team but then it dawned on me that she must be a settlement agent.

 

Haha yeah she runs her own settlement agency along with her partner who is a lawyer. His business has taken off. It seems many people are interested in creating and updating their Will.

 

To add some colour to my last post, here is the change in number of rental listings (realestate.com.au) between Monday 9th March and Monday 6th April (4 weeks). Typically all states would have flat listings throughout this time:

• NSW: +14.5%
• VIC: +15.5% (+22% in Melbourne metro!!)
• QLD: +15.8%
• SA: +7.7%
• WA: -1.2%

I started collecting data in Feb 2017 and this is the highest number of listings I've ever recorded for VIC. NSW is equal highest to its August 2019 peak but still rising, and WA is at its lowest on record seemingly unaffected by Covid (not to say we won't see some impacts in the near future).

Usually you would expect to see the sales market impacted first in owner-response to a crisis, however to see rental listings shift so hard and fast is nothing short of astounding for a data nerd like me, and can only be a response to people terminating leases in absence of new migrants to take them up. Watching this space closely.

 

There has been minimal immigration to WA over the past few years and the people likely to leave during a downturn have already left as Perth hasn't really gone through a boom to bust from.

 

The trend didn't surprise me but the numbes did for NSW and VIC.
All the short term rentals are in pain and wanting to get a regular tenant.
Transient population are going back to sharing instead of living it up.

 

Yep, this is all conspiring to hit the Syd & Melb rental markets hard:
- 0% occupancy for Airbnb properties in inner Sydney & Melbourne is shifting landlords to list them as residential rentals
- No new back-packers or international students arriving and looking for accommodation as the usually would
- Borders are effectively closed so there are no new immigrants looking for a place to rent

Add these strong supply/demand factors to the 6 month eviction moratorium with government encouragement to negotiate lower rents - a perfect storm for rents in major capital cities to be in free-fall over the next few months.

 

Perth market snapshot for the week ending 5 April 2020
Perth Market Snapshot For The Week Ending | 5 April 2020 | REIWA

NEW
06 April 2020

Sales activity decreased 30.5 per cent in Perth this week, with REIWA members reporting 287 transactions.

This decrease can be attributed to a 21.6 per cent fall in house sales, 48.6 per cent fall in unit sales and 30.5 per cent decrease in vacant land sales over the week.

Properties for sale
There were 12,356 properties for sale in Perth at the end of this week, which is 1.8 per cent lower than last week.

A closer look at listing stock levels shows house listings decreased by two per cent, units decreased by 2.5 per cent and vacant land stabilised.

This week's total figure for properties listed for sale is 1.36 per cent lower than levels seen four weeks ago and is 27 per cent lower than levels seen a year ago.

Perth rental market
REIWA members reported there were 5,496 properties for rent in Perth at the end of this week, which is 1.5 per cent more than last week.

This week's rental listings figure is 1.38 per cent lower than levels seen four weeks ago and is 19 per cent lower than levels seen a year ago.

Leasing activity decreased 17.5 per cent in Perth this week, with REIWA members reporting 827 properties leased.

View our Perth Market Snapshot graph for a detailed breakdown of the past week.

 

It's a shame REIWA doesn't give weekly figures for new listings, I think that would look as dramatic as the collapse in sales activity.

 

It's good to know the rental listings have remained relatively stable... Although leasing transactions are clearly down and general sentiment is fear-based.

Unfortunately I am currently trying to rent my unit as my tenant vacated in February - overall I'm glad he's gone as he stopped paying rent and left the unit in a state. But now I'm struggling to get people into the property to view it, let alone commit to a lease. It's advertised at what was market value rent pre COVID-19...

I'm considering just to leave it vacant and ride it out. The option of reducing the rent and offering a 6 month lease wouldn't guarantee a tenant, and by dropping the rent I'm sure I'll open myself up to a less than desirable tenant. I've been burnt by 2 tenants in the last 12 months and want to be very strict about who I take on now... It just costs too much time and money and effort going to court trying to chase down outstanding rent and also fixing the damage caused

But I also understand the current climate and that people have and are losing jobs, and that maybe I will have to come to the party and just reduce the rent to meet the market. Is anyone else in the same boat?

 

2 bad tenants for the same property or across your properties? Which suburb is this if you don't mind me asking?

 

Hey John, the 2 bad tenants were seperate tenants in separate houses. One last year in Mandurah, and the unit I am referring to is in North Perth (I ended up selling the Mandurah property).

It's unlucky to have two bad tenants in separate properties back-to-back but also it is just part of investing unfortunately and also helped me learn a great deal of lessons. I guess this coronavirus situation has helped me sit back and reflect - I almost don't want to put someone in there (Nth Perth unit) as I don't want them to wreck it! Even though I know that is silly..

I also don't want to panic rent just for the sake of finding a tenant who may cause me issues further down the track.. But financially I will need the rent at some point in the next 3-6 months.

I realise a lot of my ramblings is just me thinking out loud, and understanding of the fact it's very difficult to know what to do in this type of situation - a once in a lifetime pandemic.

 

Assuming cash flow is not an issue, I agree 100% that getting a half decent tenant should be a priority but the thing is I've had tenants that were perfect on paper, good incomes, great references etc and still ended up causing massive headaches so then the question is - how do you tell if a tenant is good or not? Sad truth is - only time will tell.

Having an agent that can be firm with tenants, when required, is a great start. Zero tolerance policy and good landlord insurance as well. Good luck.