Perth's property market - where is the oversupply?

This is an article on Linkedin by Rod Davidson from LMW Advisory which I found interesting.



"There has been a lot of negative press about the oversupply of properties still affecting the market in Perth. However we encourage buyers and sellers in this market to look at exactly where that oversupply is coming from, as you may see a slightly brighter picture than is widely publicised.

REIWA's weekly snapshot shows that houses make up for a total of 74% of dwellings available on the market (this excludes land) resulting in the remaining 26% being units. Units themselves however only make up approximately 18% of the total housing sales. This shows there are approximately 45% more units for sale than there would be in an equalised market.

Vacant land follows the same trend of oversupply as units, once we take these two areas out of the market the remaining established housing market is at equilibrium and is in fact under supplied in many suburbs of Perth. We are also hearing this on the ground from the multiple agents we deal with daily.

This is further exacerbated within the rental market with total supply of 10,594 properties for rent, of which 4,166 being made up by units, or 39% of the total rental market. This shows that there are twice as many units for rent compared to the average supply in relation to houses.

This trend aligns with what we are seeing on the ground, where suburbs well located, close to Perth have a shortage of house rental stock and the oversupply is predominantly seen either amongst units or in the out skirting suburbs and newly developed areas.

There has been a continued decline in properties for rent from a high of 11,200 at the start of last quarter to now 10,594 in late 2016 - a total drop of 5.5%. We consider this trend is encouraging as it’s the first time in close to two years we have seen a decline. Properties rented last week were 1,166, up from 861, just four weeks ago and up from 873 the same week last year.

The total listings dropped to 13,900 about 4 weeks ago but have increased with the spring selling season and it is important to note sales over the last month have increased by 3% and are above for the same time last year.

We consider this shows that the market is continuing to trend into recovery. If this continues and we believe it will, we will look back and say that is the bottom of the market, only time will tell.

If you would like advice on where and what to buy, I welcome your enquiry
0414 906 810 - [email protected] "

 

where is the oversupply?

1 and 2 bed apartments in the Belmont LGA?

 

drive around Balga,then you will see the oversupply

 

And Nollamara too?

 

yes

 

Not a bad article and I agree a lot with it. Most of the oversupply is the development product from the boom but it will run out eventually as construction has tanked in the past 12mths. It's all stuff that was started 18-24mths ago.
But not much has been built subsequently in the past 12-18mths so we will eventually eat up all that over supply - thought some suburbs will always struggle when they just have FAR too much. It took Westminster 12mths to soak up it's oversupply in about 2008

 

Read yesterday Peppy grove median house price was $7m at peak today median $2m.....omg

Where is the oversupply?
Lets throw a dart, prices falling is a symptom of oversupply....

 

I love Peppy Grove.

I do not know if I would put too much faith in that statistic.

 

I agree, I don't put lots of faith in stats as they in the main confuse, out of date and not accurate.

 

construction is in full gear here,nothing is slowing down here,people still buying dev sites,
its like 2008 boom here
if you can not see it,i can

 

Not sure if this is tongue in cheek?? if this is the case share the deals

2008 was when the market crashed in Perth.

 

I see a few legacy projects trying to float. Not much excitement.

Want to share?

 

I can start posting photos of started but abandoned projects in Perth if that's what you mean by nothing slowing down.

 

nah is ok,you right some are halted

 

When I drive past and see abandoned projects I wonder what has gone wrong. Some of them are quite advanced too.

 

Yup. It's scary seeing those large ones sitting still for quite awhile.
Sometimes it's due to their complicated finance set ups where they only have funding for xx months and the Financier won't roll over to another time period so they have to find someone else - usually at worse deal too

 

The excess supply has its challenges, rental market is bad right now. We really need supply to slow down so that the rental returns support a reasonable value.
every market even oil which was very stable for so long caused it downturn by excess supply, all developers, investors should take this into account. Dont build a dwelling if its going to be vacant

 

Perhaps some light at the end of the tunnel, my g/friend has finally sold 12 OTP and starts building in February.

Imperio – Mount Lawley 1, 2 & 3 Bedroom Apartments

 

I don't think supply could slow much down more than it has, it's been a record low 12mths of construction starts. The population needs to increase for the rental returns to come back.

 

and most importantly jobs, this unfortunately is effecting market sentiment and have heard stories recently where workers from high paid mining jobs have had to sell their primary residence.