13 August 2018
As we head into 2018, I believe this year will be one of market transition across the country.
It will also be a year of finance, with those who can secure it likely to be the ultimate winners. It’s no great surprise that Sydney and Melbourne are transitioning out of the strong price growth they’ve experienced over recent years.
However, that doesn’t necessarily mean they’re going backwards. Instead, their growth may fall back to one or two per cent annually. That market transition will be driven by reduced consumer confidence, which is a reflection of the price of money as well as how easy it is to secure finance. Confidence also usually wanes when the media starts speculating about softer market conditions.
It’s clear that Sydney’s market has already come off the boil and Melbourne’s is likely to follow suit but in a more moderate way.
It’s important to realise that transitions happen in both directions, with some markets slowing while others are strengthening. I believe this will certainly be the case for Brisbane, which is on track to transition to stronger market conditions.
That said, Brisbane is a city of different markets with the inner-city in the midst of it’s well-publicised new unit oversupply. It is Brisbane’s outer suburbs that represent good value and cash flow, as well as attractive lifestyle drivers, that will experience the most improvement in my opinion.
Of course, there are already increasing numbers of interstate migrants into Queensland given it’s housing affordability as well as it’s many attractive lifestyle opportunities.
SA and WA back in the game
I also believe it will be a year of positive transition for South Australia and Western Australia. South Australia always seems to lag behind other capital cities and by the time most investors realise what’s happening it’s too late. The truth is that South Australia’s transition is already happening.
In Adelaide, however, it’s only the 15-minute ring around the CBD as well as areas like Christies Beach that are worth considering. We all know WA has been woeful over recent years, but this could be the year it finally turns a corner. The State Government has been concentrating on jobs growth, with employment numbers reportedly starting to improve. If locals start spending money because they’re more confident about their livelihoods, then, that in turn will stimulate the market.
However, when I say WA, I mean Perth and select areas within the city as well. If interest rates increase, even if only by a blip, those green shoots of confidence might evaporate as fast as they appeared. Tasmania will continue to percolate until cash flow doesn’t look as attractive as other areas, such as Brisbane. I remain skeptical about Tasmania’s growth because it’s mainly being driven by investors chasing investors purely because of affordability.
Owner-occupiers aren’t the ones who are pushing up prices.
I believe it may lurch from under-supply to over-supply pretty quickly – and then you’ll probably have 10 years of no price growth at all.
A question of money
We’re now into our third calendar year of lending restrictions and I don’t believe they’re going anywhere anytime soon. Investor numbers have only recently started to slow so there will need to be more evidence before APRA loosens it’s grip on investment lending. Banks might want more flexibility but it’s unlikely to happen. So 2018 will be a year of market transition but it will also be a year of finance. The price of money remains cheap but it’s availability continues to be constrained.
That’s why I believe it will be the sophisticated investors who know which markets are transitioning to the positive – and who can secure finance – who will be the property victors by the end of the year.
31 October 2017
Peter Williams via thewest.com.au
Billionaire Kerry Stokes has added his weight to the view that conditions are ideal for entering the housing market, staking his reputation on now being the best time to take the plunge.
The Seven Group Holdings and Seven West Media chairman said the situation came as the State showed it was recovering from the shock of miners cutting their costs by a combined $10 billion in recent years.
“Right now any young person out there, any apprentice, worker, tradesman — the best thing they’ll ever do in their life is walk out this weekend and buy a home in Western Australia,” Mr Stokes told a WestBusinessLeadership Matters event on Tuesday.
“With interest rates low, housing prices low, this is the time to think of their future right now. I’d put my reputation on the fact this is the best time for them to do that,” he said.
“If that’s the case and everybody else agrees with that, then we’re past the bottom.”
Mr Stokes’ remarks follow Housing Industry Association figures showing affordability in WA had improved dramatically, in part because of national efforts to tighten bank lending standards for investors.
In the past two years, loan repayments on a median-priced house in Perth fell by more than $260 a month, or $3120 a year. Elsewhere in WA, they fell to $1545 from $1773 a month.
Kerry StokesPicture: The West Australian
However, a report yesterday showed Perth had the nation’s second-most expensive residential land prices at $730 per square metre, a 5 per cent gain over the year to June. The Housing Industry Association-CoreLogic Residential Land Report said land prices rose by 19.6 per cent in Melbourne and 9.8 per cent in Sydney.
Mr Stokes said the State’s economy was showing signs of improvement after miners’ efforts to improve efficiency had contributed to the downturn.
Leadership Matters Lunch with The West Australian: Country Chair for Shell Australia Zoe Yujnovich. Photo by Michael Wilson, The West Australian.
Ben WyattPicture: The West Australian
“So when they’ve saved some $10 billion in costs that’s supposed to come out of workforces in WA. That’s a shock we have to get over and we’re actually getting over it now.”
WA Treasurer Ben Wyatt told the event that competition in the retail gas market had largely offset the increases the McGowan Government had imposed on electricity tariffs.
Discounts of up to 30 per cent are on offer with new player Origin Energy this month, joining AGL, Kleenheat and Alinta in the gas price war.
At the Leadership Matters event are WA Newspapers Group Business Editor Ben Harvey, Treasurer Ben Wyatt, Rob Scott (Wesfarmers), Zoe Yujnovich (Shell), Tom O’Leary (Iluka) and Kerry Stokes. Pictures: Michael WilsonPicture: Pictures: Michael Wilson
Mr Wyatt said that situation could last until the early 2020s.
Incoming Wesfarmers chief executive Rob Scott said while the loss of disposable income and lower population had hit retail businesses hard, there was cause for optimism.
“We still see opportunities,” Mr Scott said. “We see a good path for growth.”
12 April 2017
Modified by realestate.com.au
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Read more here why Auctions are becoming more popular in WA.
Perth real estate agents are predicting an increase in the popularity of auctions over traditional offer-acceptance sales in Western Australia, saying auctions could help fuel the state’s dull property market.
Auctions are not typical in Perth and only represent about 3% of the market, but agents and auctioneers say that is changing, with a growing number of vendors favouring auctions over private treaty sales.
CoreLogic data shows the number of auctions in Perth is on the rise, with 1964 held last year, compared to 1692 in 2015. So far this year, there have been 404 auctions in Perth.
First National Druitt & Shead Doubleview principal and auctioneer Rob Druitt says auctions have become more popular because it heralds speedier sales in a slow market.
Druitt says auctions enable the vendor to get a quicker understanding of where their property sits on the market, with the intensive marketing campaign usually spanning 30 days.
“The other important phenomenon is that in this market, the ‘no price marketing’ clearly isn’t working… because the market is driven by price. If your price is right then the market will see value and you’ll get offers.
“Price is the driver in this market. Buyers are looking for value.
“In inner-city Melbourne… 80-90 % of properties sell by auction. In Perth, you’re only talking about 2-3 % of total transactions. It’s a smaller number but it is rising and there’s a number of prominent firms around Perth who are embracing it more and realising the benefits for both the buyer and seller,” he says.
Acton chief executive officer Travis Coleman says the number of auctions in Perth has been on the rise for the past three or four years.
“A lot of people are doing it because we’re moving from a market where there are extended days on market and we’re trying to shorten that and bring the price discussion to a head in a shorter time.
“Auctions are not just limited to the upper end of the market. [Acton Coogee agent] David Bombara is doing it down in Spearwood, the mortgage belt areas, with great success and actually selling quite a few properties prior to auction,” Coleman says.
He says auctions are a transparent property sales technique and generally mean quicker turnaround times, rather than having a property sit on the market for four to five months, or in some areas even longer.
Realmark Western Suburbs director Adam Gilbert says the increased take-up of auctions across Perth was due to the competitive market and shortage of supply.
“What the market wants is transparency. In a market where there isn’t a real understanding as to what is a real price, what is a market price and what is an agent price – the market is saying just give me an opportunity to have a go.
“Auctions are very transparent, very honest, aligned with what the market wants and they do bring urgency not only for the buyer but the seller… to make the best decision in a shorter period of time.
“I think agents in WA need to get in tune with the current market. The market is evolving, the landscape is changing, technology is assisting buyers to gain information in a much shorter period of time so I think we give our sellers the option to consider auctions,” Gilbert says.
But CoreLogic head of research Cameron Kusher says with declining values in Perth it is unlikely that auctions will become more popular in the short-term.
“Auction volumes were a little higher last year than they were in 2015 for Perth, however, auction sales still represent a very small proportion of the overall market.
“Although selling by private sale in Perth is tough, a lot of vendors probably feel as if it is not worth the additional expense to sell at auction, particularly when the success rates have typically been well below 50% this year,” Kusher says.
03 November 2016