Last Sunday the WA State Government announced the easing of restrictions for COVID-19 including the ability to meet in groups of up to 10 people which means we can resume home opens, albeit with appropriate social distancing and hygiene precautions still in place, which is as it should be.
The result was an immediate increase in buyer enquiries, which had already risen the previous week on the back of WA’s low infection rates and the talk of easing restrictions, and requests for details of private inspections or home opens.
Whilst we don’t know what the property market is going to look like in six months time, some buyers who are looking to buy property now seem to be paying too much attention to online headlines and not the actual situation as it stands in the market at the moment.
So where does it stand?
To begin with, after falling by almost 50% at the end of March/early April, sales transaction activity jumped 53.3% for the week ending 26 April following an 8% rise in activity the previous week. There is less new property coming onto the market (listings are 5% lower than 4 weeks ago and are now 20.7% lower than the same time last year) with many potential sellers simply choosing to stay put for the time being. We’re also coming into Winter, which is traditionally a quieter period in terms of new listing activity, and personally I’ve always considered Winter a great time to sell given that it means that sellers are typically in less competition.
The reduction in supply will assist to stabilise prices and mitigate potential price softening – and I say potential because as yet we’re not really seeing any price impacts – I’ll come to that in a minute.
Secondly, the combination of record low interest rates, Job Keeper package, ability to access $10k in Superannuation both now and post 30 June for those in need and option to apply for 6 month home loan repayment holidays mean that we’re not seeing people in financial distress having to sell and there’s been no reported increase in mortgagee in possession sales either.
If you’re a buyer that’s hoping to pick up a bargain, you’re going to have to gamble on waiting for a few more months to see if the situation changes.
Third, there hasn’t been a 20, 10 or even 5% decrease reported in Perth property prices yet. Indeed, everything I sold in April during the peak of restrictions was either at, above, or around the advertised price. Until such time as we see evidence of actual price decreases here in Perth, which is a very different marketplace to Sydney or Melbourne, sellers aren’t going to be entertaining cheeky buyer offers – there’s no need to.
That brings me to my fourth point, which is that the Perth property market, let alone the Australian property market, is not homogeneous. If you’ve ever watched one of my Nat Chats videos or read one of my blogs before you’ll hear or read this a lot. There has been some very interesting commentary, particularly amongst real estate economists, in relation to Perth potentially faring much better than the Eastern States due to where we’re at in the property cycle, which prior to COVID-19 was arguably at the bottom of our downturn with prices starting to show signs of an increase, combined with a potential boost for our mining and agriculture industries as countries, particularly China, try to kick start their economies once again.
And finally, if you pay attention to research groups like RP Data Corelogic, you’ll know that they’ve done a lot of research into the property market and how it recovers after major global events and financial crises, with the good news being that it typically bounces back quite quickly. That’s of course assuming there’s been an impact in the first place.
So the upshot is that if you’re looking to buy now and hoping to nab a bargain, you might find yourself a little frustrated and disappointed.
To me, property is a long term investment and not a short term speculation. It’s not trying to time the market – but time in the market – that counts.
It’s up to you as a Buyer to decide to get in now, or take your chances on the market changing.
We don’t know what’s in store for the market in the months ahead but we know that past predictions have often proven wrong and that sellers don’t factor in price reductions until there’s evidence that they’re actually happening.
Good luck with whatever you decide!
As always, if you’re interested in buying or selling in the suburbs surrounding Beaufort Street I’d love to help. Call me on 0405 812 273 or email me at [email protected]