"When will the Market get better?"

I'm continually being asked...

I am continually being asked “when will the market get better”, by which they mean when will property prices rise?

Western Australian Housing Market News

Western Australian Housing Market News

Obviously we are talking about the WA property market, which has been on a long but steady decline since 2007/8. Prices have declined because we have had a net adult population decline since the end of the mining building boom. At the peak of construction we had 1000 people a week coming to WA. As work dried up most if not all then left the state leaving behind thousands of properties. Most were put up for sale but given that supply outstripped demand prices began to fall. Many could then not sell as they owed more than they could realise in a sale. So then they became rentals. But then a similar trend happened in rentals.

At one stage we had 10500 empty rentals. The average for WA is only 4000. So again with an oversupply weekly rentals dropped. So now rentals are comparatively cheap so why bother buying putting more downward pressure on selling prices. Further the Government restricted First home Owners grants to new houses. This then had the extra effect of adding to the housing stocks further exacerbating the oversupply of property. So the basic economic truth of supply and demand Continues to work against any price rises.

So how will we know when it’s about to change?

The best indicator will be rental vacancy rates. We expect to see positive adult population growth into 2019. Hopefully, they will absorb some of the rental oversupply. At that point weekly rentals will start to stabilise or increase though only slightly. Some will then see the light and think about buying. At that point the upward cycle will start a long slow recovery.

So look at rental vacancy rates heading towards 4000 and properties for sales listings tightening towards 10,000. Currently it’s near 14000. If you are a buyer, that will be the bottom of the market so buy. If you are a seller that will be a time to be realistic and don’t price too far ahead of the market or you will still not sell. It’s not an answer to the question but is a pointer to what will bring an answer.


Lui Marcelli

Owner of Country Realty.

Buying Market Rentals Selling
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"When will the Market get better?"