There are critical changes happening in the Perth property market this month- get up to speed on them below now!
Here Jarrad Mahon, Director of Investors Edge Real Estate gives you his deep insights into the Perth property market, a must watch for Perth property owners or Perth property investors with an interest in the property market, property investment or property management in Perth.
Important graphs I refer to in this update
If you prefer to read, see the transcription here…
Hi Jarrad Mahon from Investors Edge Real Estate, bring you my Perth property update for July. Pretty excited to take you through the market so grab a coffee and sit tight.
I’ve titled this Perth property update ‘Balancing Act’ what we’ve got going on our market at the moment if you picture a seesaw, we got some negative factors pushing our market down and they would be the uncertainty around our election, we’ve also got the mining industry slowing down and we’ve got the economy being brought back and tightened to bring us back into a budget surplus, so that we are not in deficit anymore; so those factors are negative to our economy .The mining slow down, the election and the tightening of the budget.
What we have to offset that and it’s a very blunt instrument, the property market has been offsetting those negative factors we actually need the property market to succeeded otherwise our whole economy is going down the toilet, so our blunt instrument for doing that is our interest rates.
I’m just going to take you through what happening in our rental market and in the sales market and why we need a number of interest rates cut before the end of the year to keep this balancing act going.
We are in s a sellers’ market in Perth and I’ve put together a lovely graph being the engineer I used to be, showing at the start of the year in January we had 9285 properties for sale and that dropped month on month 9000, 8500 to our low point in April 7885 so we were in a real sellers’ market then property selling really quickly and turn over at April was across the whole market. Since then back in May I wrote a Perth property update called ‘Potential Turning Points’ and that’s when I noticed the market had started going back the other way, at 8500 properties for sale.
During June I came to and said “Not much has changed guys, I’m keeping an eye on it” and we still held tight, what’s happened this month in checking things we are back up around 9000 which is was the case in February , the market is definitely softening and were finding properties are sitting a little longer for sale, we are still in a sellers’ market but this trend is definitely going back the other way.
These negatives are having there affect and we’ve got to get an interest rate reduction by the RBA, to get us back and start correcting things because otherwise we will be going back to a neutral market which is usually at about 10-11,000 listings and then above that we are in a buyers’ market. So things are turning around and softening and look out for that interest rate drop because the whole economy needs it.
That’s the sale market, when I look across what’s happening in the rental market now the last 4-6 weeks we’ve been finding it really difficult, a lot more difficult to rent properties. When you jump on real estate.com instead of 2 or 3 properties for rent in the suburb we’ve got 6, we’ve got 8, we’ve got competition, for the first time agents are advertising a week’s free rent for a tenant to incentivise them just to get them in.
We started anecdotally seeing that and our managers and leasing specialist are having a lot more trouble finding those tenants with the extra competition and that’s been reflected in the vacancy rates. I’ve gone and done the numbers and from January this year we were at our tightest, we were at 1.9% vacancy rate and it was just really hovering at that 1.9-2% up until April, we were at that point and then from there we have really started to soften. In May and June and July we are now up at 3.2% so that’s a considerable increase from back at 2% and it’s no longer a given to find a tenant quickly, we need as much lead time in the changeover of tenants two to three weeks lead time and we need to listening for feedback, pricing the property sharply, to attract interest and then getting a quality tenant selected from that pool.
So why is the rental market softening? well we can look at where all of our buyers in our sale’s market have been coming from, you can see other news in the media at the moment saying “Cheaper to buy than rent” I saw an article the other day, it’s actually cheaper to buy in 78 Perth suburbs than it is to rent, and so what we’re finding is as tenants are leaving the rental market and going and buying in the sale market we’ve now got less tenants, less competition and our rental market is softening.
That’s a full cap for you, on what’s happening in the sale market, the rental market and come check us out next month and I will keep you updated.
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