Welcome to the June Perth Property Update where we bring you a mid-year review on the Perth rental and sale market with special input from our Denise Thompson – REIWA Property Manager of the year for 2010.
We also take a closer look at the psychology behind the choice of Meeting the Market when selling or renting a property and the factors that come into that decision.
What the latest statistics are telling us
As we enter winter we are seeing a new record for supply on the WA market with 22,605 properties currently for sale, which exceeds the peak of 22,297 in December 2010 (Source: RP Data).
However the number of sales compared with the same time last year are 4.5% higher, so more properties are selling.
Are you hibernating for the winter?
Winter, along with Christmas, is traditionally the low season for demand in the rental and sale market. In winter people are settled into their jobs, their kids back at school and we can’t fight our primal urge to hibernate from the cooler weather. All of this leads to less people looking for new homes compared with other times of the year.
Choosing to meet the market
Caught off guard
When we first entered this buyers market at the start of the Global Financial Crisis in September of 2008, only a handful of people were prepared for a Buyers Market or willing to accept it. I sure wasn’t ready for it.
Owners still had the highest market value that their property had been appraised for set in their head like concrete and I was guilty of it too with my own portfolio. We thought it would be any day now and the market would return to growth.
Adapting to the market
Well we are nearly 3 years on and except for a short lived recovery fuelled by the economic stimulus in 2009, we find ourselves still in a buyers market with no clearer picture of when it might end.
As agents we were met with the reality that the approach to selling real estate drastically had to change. The market wasn’t changing so the exceptional agents have adapted- doubling their customer service and follow up, sharpening their marketing to boost exposure, driving demand with pricing strategies, embracing new technology, honing their negotiation skills… all to bridge the gap between what owners want and what the market is prepared to pay.
You can point to all the recent supporting sales data as to where a properties’ market value may be at and then be conservative on your pricing and still have the buyers in the market place tell you otherwise.
Listening to the market and making a choice
As owners we have invested time, energy and money into property and whether we realise it or not plenty of emotion is also involved. So the true market value of your property can be a hard to listen to but when you break it down you have 3 simple choices when selling a property-
Choice 1: Will you quickly listen to market feedback, choose to meet the market and get the best price the market will pay, allowing you to move forward; OR
Choice 2: Will you quickly listen to market feedback, decide that now is not the time to sell, taking your property off the market; OR
Choice 3: Not listen to the market, leave your property on the market to go stale after 6-8 weeks, then perhaps choose to sell 6-12 months later at price far lower that you would have otherwise gotten.
For me and my owners the third choice is not an option.
It may feel that holding out for a buyer at the higher price will get you that price, but all it is doing is turning away genuine buyers, meanwhile every week on the market the buyer demand is slipping away until your home is stale and when there is no competition for a home the only price someone will pay is a low one.
Creating buyer demand
An agent’s job is to create the demand in as short a period of time as possible, and then get as much feedback and the best price from the market for you to make a decision.
If you are not getting the demand it can be for a number of reasons- marketing, professional photos and/or price.
Taking a closer look at the number of people viewing your property online, coming to view the property in person, the feedback on the homes presentation, features, location and price… will then allow you and your agent to troubleshoot your property’s positioning to ensure it is getting the buyer demand to sell.
So choose an agent that has adapted to selling in this market, be prepared to listen to market feedback and above all else make a choice to sell or not.
Imagine what would happen if all properties listed longer than 2 months came off the market tomorrow?
I thought I would leave you with this thought…
If owners and agents that had properties listed for more than 2 months simply made a choice to meet the market or to withdraw from the market… overnight we would be back to a market with normal level of supply of 10,000 homes for sale and normal capital growth of 8-10% per annum.
Rental Market Update- The media is wrong!
-By Denise Thompson, Investors Edge, REIWA Property Manager of the year for 2010
Have you been watching the news and current affair programs showing lines of tenants around the block, all fiercely bidding for a rental property, with many families missing out and having to live on the street.?
Well across the 87 Perth suburbs in which we manage property, we are finding a very different story. In some suburbs owners are having to lower their rents when re-letting their properties to meet the rental market and tenants are being much more fussy and selective of where and what they rent.
It is not that we have an oversupply problem like we are seeing in the sale market, as the number of properties for rent in most suburbs in the metro area has remained pretty tight. The vacancy rate average across all Perth suburbs remains at 3% currently (RP data) but we are finding some suburbs are experiencing much more demand than others.
Market factors that have lowered rental demand
- Young adults staying at home longer with their parents, taking advantage of a lower cost of living.
- Adults of all ages choosing to live together and share the rental cost, resulting in less overall rental demand.
- Less demand from interstate and overseas migration.
- Less demand in Winter and Christmas period, where people are settled into the year or too busy for changing houses.
Making the most of seasonal demand
As managers there is nothing we can do about the first 3 factors above but what we can do about the seasonal demand is where possible write our leases that are being put in place now to expire in January, when we are again at our peak of rental demand at have the most amount of potential tenants in the market for a new rental home.
Presenting your property for maximum demand
The other thing Landlords can do is make sure their properties are well maintained and presented so that you not only find a tenant quickly but have better quality of tenants to choose from.
I’m sure you have heard it said many times that everything always moves in cycles and following a low in the market there will always be a high, its just a question of when. There are always opportunities in every market and to take advantage of them you need to be informed and rest assured you can call on our team to give you the Edge when buying, selling and renting.
Have a BIG end of financial year!