Disclaimer: These comments are the writer’s own and do not necessarily reflect the current opinions and policies of the Real Estate Institute of Western Australia.
This is the worst market I’ve ever experienced”, an agent with 40 years’ experience told me recently. This is a remarkable albeit flamboyant claim, but he may well be right.
The majority of real estate agencies are small businesses. Seventy percent of all REIWA members, who represent ninety percent of the entire industry, have fewer than five staff in their employ. These businesses survive on sales activity and with transactional levels at remarkably low levels in recent times, many agents are struggling. Looking back to 1990, Perth had about 42,000 transactions; not bad considering interest rates were around 18 per cent! In 2006, there were a record 71,000 sales. Last year there was a miserly 32,000. These numbers are extraordinary when you consider our population has increased by 500,000 over the past decade and with it many more homes have been built.
My view is that the market has been dribbling along the bottom for some time. Median house prices have been falling (now at about $517,000) but are falling less rapidly. The median price of apartments has actually begun to rise.
Sales volumes have improved too, marginally higher than the same time last year. Most significant, however, is the change in stock levels. In the past month, properties listed for sale throughout Perth have fallen by almost 700 after sitting between 14,000 and 15,000 for two years.
More recently, where there’s been a dip in properties listed for sale, stock levels for rent were increasing at the same rate. This is because those folk who were unable to sell were listing their properties for rent. There was a see-sawing effect of about 1000 listings that were moving between listing for sale or rent but that now seems to have ceased.
There has not been a spectacular turnaround in the market but the early signs of lower stock levels, record high leasing activity, improving sales transactional activity and stable median prices all indicate the market is in its early stages of full recovery.
by Hayden Groves
REIA Deputy President