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Ten years is not so long in the property market

Ten years ago the Google search engine was founded, President Bill Clinton denied having relations with Monika Lewinski, the Real IRA perpetrated the Omagh bombing, the film Titanic scooped eleven Oscars at the Academy Awards and six sailors died in the Sydney to Hobart yacht race during wild weather. 

These things might seem very recent to many people, but time marches on. To look at how things have moved in the property market over this period for example, here's a snapshot of what was happening in Perth at the beginning of 1998. 

The median price of an established house for the March quarter was $140,500, a growth rate of around 8 per cent on the previous year. A unit would have cost you around $95,500, price growth of around 7 per cent over the preceding year. 

It took around 40 days to sell a home (currently it takes more than 60), and the average monthly housing loan repayment was $730, a fall of just over 11 per cent on the previous year following a drop in interest rates. 

Three bedroom homes were renting for a median of $138 per week, while two bedroom units were available for around $113 per week. 

The most popular selling price in the March quarter was $125,000. There were 162 properties sold at that price, with Bassendean and Tuart Hill dominating in that price range. House prices were starting to move upwards in established parts of the city. Half of all residential property sales were between $100,000 and $200,000. 

The top five suburbs in the March quarter of 1998 were Swanbourne, Churchlands, Mount Claremont, Mosman Park and Swan View, with a median of $305,000. The bottom five for this quarter were Shoalwater, Two Rocks, Medina, Kardinya and Lathlain, with a median of $122,000. 

Often when people look back at how prices were ten years ago, they shake their head and wonder why they didn't buy or invest then. "If only we had known!" is a common cry at a family BBQ. 

But with good research, an understanding of the market and discussion with a REIWA agent, general trends in real estate can be better understood. It has long been the Perth experience that house prices tend to roughly double in value every decade as the population grows, placing pressure on prices, rents and demand for well located properties. 

With this in mind, it's instructive to look around currently and wonder where Perth prices might be ten years from now. Even with the boom behind us, modest annual growth is anticipated this year and beyond. There's no good reason to be regretfully scratching your head in 2018, saying, "If only I had known!" 

12 Jan 08
Credit: [Reiwa article: Ten years is not so long in the property market] 

 

 

 

 

No room at the inn: vacancy rates tighten around Christmas

The Real Estate Institute of Australia, based in Canberra, recently issued research showing that residential rental vacancy rates have averaged an all-time low of 1.9 per cent across the country for the past two and a half years. 

This compares with a 20 year average of 3.6 per cent. The industry tends to benchmark anything below a 3 per cent vacancy rate as indicative of an undersupply of rental accommodation. 

In addition to this, Australian Bureau of Statistics data showed recently that all States and Territories experienced population growth over the 12 months to June this year, ranging from 0.7 per cent in Tasmania to 2.3 per cent in Western Australia. Indeed, in our State where new building approvals have fallen the population continues to grow significantly through interstate migration alone, with 490 people per week coming here to live and work. 

Fewer constructions, more people needing homes and declining vacancy rates for rental properties - all these factors seem to be pointing to some obvious conclusions. 

Rental properties will likely become scarcer over the summer months, adding to price pressures in this market, although it remains to be seen if the market can accommodate any further rent increases. Currently the vacancy rate is around 2.5 per cent, but it did drop dramatically to an unprecedented low of just 0.8 per cent in the March quarter this year. 

It also means that the supply of housing stock currently for sale may start to be soaked up in the New Year, as pent up demand emerges from those who have been hesitant now coming back into the market. 

This time last year the median house price in Perth was $457,000. By March of this year that had climbed a little to around $465,00 and then three months later it dipped for the first time in many years back to $452,000. However, things picked up again in the September quarter lifting the median back to around $460,000. Now, as I write this column, REIWA's early figures for December indicate that we will soon overtake this, perhaps reaching a new record median price in the New Year. 

In other words, while the dramatic boom of the last few years is over, prices growth is continuing at a modest rate across most suburbs. 

The Christmas period is traditionally a quiet one for agents, although things tend to pick up in the New Year. This means our agents, sales consultants and property managers will be working extra hard next year as they meet the challenges of a changing market. 

REIWA wishes all our members and the community of Western Australia a very safe and happy Christmas holiday. 

21 Dec 07
Credit: [Reiwa article: No room at the inn: vacancy rates tighten around Christmas]