CHANGE IS COMING!

For way too long the Property Market has been dormant with prices sliding some 21% from its peak in 2007.  But the winds of change are starting to pick up.

People always want to pick the top and bottom of the market.  Whist picking the exact moment is near on impossible you can certainly see the top and bottom swings as they occur.  Let me explain.

The reason we are having this protracted slump is basically down to the fact that our adult population in WA actually decreased after the mining building boom in 2013.  Many of those construction workers left the state to find work.  Then, in an effort to bolster the building industry the Government subsidy for first homeowners was made exclusively for new constructions.  So, we had the double whammy of reduced demand and increased supply.   Hence the price drop.

With so many properties for sale, many were then put up for rent.  At one stage we had almost 13000 empty rentals in WA.  The normal Vacancy rates are about 4000. The weekly rent payments therefore dropped quite dramatically as Landlords were trying to fill empty properties.   So, of late, it has been cheaper to rent than buy a property.

The current empty rentals are now under 5000.  That means we are heading to a “normal” vacancy rate.  That usually means that Landlords will now try to get a few extra dollars after years of poor returns.  At that point some renters will see that house prices are low so may think that maybe it’s now better to buy than rent.

Adult population is also now starting to increase, a little from immigration and a little from new mining operations.  Nothing startling like the boom of 2006/7 but nonetheless an increase.

So, we now have a tightening rent market and an increase in demand.  You could then say we are at the bottom of the swing.  I believe that there is already an increase in sales numbers, if our office is anything to go by, but the firming prices will follow late this year and into the next.  But do not expect anything like the previous once in a lifetime boom.  A solid base with small but regular increases will be just fine after what we have experienced.