Is the Perth Market going to Crash?
National news networks are coming out with dire predictions about property prices tumbling 20-30% during Covid 19. But the facts remain that all markets have remained resilient.
Let’s not forget that Perth often acts counter cyclically to the East Coast capitals. If you haven’t already noticed, Sydney and Melbourne have both experienced phenomenal growth since 2012 where Perth has continued on a downward trend, caused by rising unemployment and negative internal migration due to the contraction of the mining boom.
Lets have a look at today’s stats:
Stock on Market is the total number of houses for sale at any one time. It’s a clear indicator of supply and demand. During the boom, Perth stock on market dipped to 8,500 compared to 17,250 in Perth’s darkest hour of March 2019. That’s more than twice the number of houses on the market than in 2008! Right now we have 10,379, well below a balanced market number of around 12,000 and continuing on a downward trend.
Our average selling time in Perth is 30 days, well below the 60 days of a balanced market with some suburbs dropping well below this number.
The tightening rental market is a leading indicator of property price growth. When things become difficult to rent and more expensive, people look at the alternative of buying and with historically low interest rates it’s now proving a lot cheaper to buy than rent. Once the rental moratorium lifts in March, landlords will have the opportunity to raise rents further fueling the current rental issue and further driving renters to consider buying.
Properties are regularly receiving multiple offers and selling well above asking price giving investors a chance to finally offload properties they have been holding onto during the downturn. East Coast buyers are seeing the value in the WA market and are purchasing sight unseen. In my personal experience, last week we offered on a property that had 15 offers and finally went under offer for $130,000 above asking price.
I’ll expand more on this particular property in future posts.
It’s a breath of fresh air for home owners who have had to endure the pain of falling asset values for 8 long years.
All I can say is, hold onto your hats people, we are in for a ride!