Here I give you my latest update on the Perth sale market, rental market and investing opportunities… There has been BIG changes over the last 2 months so I thought you should know where we are at.
If you prefer to read, see the transcription below.
Here are the graphs I talk about
Sales Market Update
G’day, Jarrad Mahon here bringing you my latest Perth property market update, my final one for 2014. We’ve had a lot of changes in the sales market so stay with us, I’m going to go through those, as well as the rental market and investment opportunities available.
Taking a look at the sale market, things have actually changed a hell of a lot over the last two months. In October when I last came to you we had 10,823 properties on the market. In November we saw that jump very substantially up to 12,739 and now we are at 13,279. That’s the single biggest month on month increases we’ve seen in the last 18 months to 2 years, so a really big increase to the supply of properties.
I actually predicated that back in October as I saw the number of properties coming on every week exceeding what was being sold, but it’s happened to a much greater extent than I ever thought it would. And so now we are officially in a neutral market.
The typical point that we have crossed to become a neutral market is 12,000 properties for sale, we are now at 13,280 so what that means for buyers is that there is a hell of a lot more choice out there and sellers have to be really sharp on price.
What we start to see happening is when we are looking at recent sales, in some areas these will give us a good guide on price, but in others prices have shifted slightly down on where those sales are at, we are going to have to be a bit more realistic as to what price we might get in some areas now.
But for buyers great news, there will be a lot more choice, you can take your time and make sure the property fully suits what your after before making an offer and you are not as likely to have competition.
But for the sellers if you are pricing the property well, marketing it well, you can still get a result in this market, it’s still neutral, we’re not in a buying market just yet. What I expect to happen moving forward now is there will be very few buyers out in the market over the next month, everyone generally has a break for Christmas, a break for holidays and we probably won’t see buyers return until the second to third week of January at least.
So there are a lot of sellers that will be preparing their house over this time and we’ll probably see a whole range of new properties hit the market in the second to third week of January, I’ve got a few ready to come on myself.
Just capping out the sale market, the number that have been selling have been sticking relatively consistent so it’s not that the number of sales every week have decreased, it’s just that we have a lot more stock coming on and the number of sales hasn’t increased with it.
Rental Market Update
Then when we go across to the rental market, I’m pretty encouraged there for investors. We are finally seeing the stats show that we are coming back from our peak of supply. Our rental vacancy rate has hit its maximum in September at 4.1%. We then had it drop to 4% and 3.9% in November and we’ve stuck at that 3.9% so we are heading back the other way, which is great.
Rental prices will start to stabilise, but it’s still a shock for those investors that haven’t re-leased their property. When they are coming up for re-leasing we can expect around a 10% drop. The most difficult scenario is when we get a break lease, the tenant wants to move on, and has to agree to the drop in rent as well as the owner and it’s a difficult one to negotiate, so they are our main sticking point at the moment.
If we can price the property right, market it well, it should only take two to three weeks to find a tenant and we are starting to get a few more applications coming in on properties and just getting back to normal.
We’ve really got about another week left in December to find tenants and that will go quite for the rental market as well, so don’t delay in finding a tenant over the next week otherwise you could be up to 3-4 weeks further vacancy before the market starts to kick in again in January.
Now investment opportunities in this market. I’m just going to summarise it by saying by very selective. If you are looking at a development site or a subdivision, make sure the numbers really stack up. You’ve got to have them stack up to insulate you against any changes in the market
If you are looking for a longer term buy and hold, my advice is to take a very strong look at dual income property. I’m very excited about what they can do for an investors portfolio , having a higher positive cash flow every week is certainly better than having to reach into your pocket and it also insulates you against any changes in the market. You can’t go backwards by making a profit and that’s a great strategy to look at for this time in the market.
That’s everything i wanted to cover today. I wanted to keep it short and snappy for you. Hope you have a wonderful Christmas ahead. I am available over the next few weeks to do appraisals, just if you want to re-assess and do some planning for next year. I’ve also got my property success plans, I’m happy to sit down with you and get your strategy right for 2015.