Perth Oversupplied with Sales and Rentals

by Administrator 26. March 2015 21:29

New reiwa.com data shows that the number of properties on the Perth market has reached 14,000, while the number of homes for rent has surpassed 6,500.

President of the Real Estate Institute of Western Australia, David Airey, said listings had jumped for both sales and rentals as a result of WA's slowing population growth rate and the effect of new building construction impacting on established home sales.

“The number of properties listed for sale has jumped by over 2,000 since the start of the year and sales have slowed by 15 per cent when compared to the same period last year.

“With 6,500 rental properties available across the metropolitan area, that’s a 210 per cent increase since 2012 and has pushed the vacancy rate over four per cent,” Mr Airey said.

Mr Airey said the very high level of house and unit construction across the state, accompanied with the fall in population growth, had tipped the scales to oversupply.

“Added to this is the big fall in the number of first home buyers choosing established homes and building new ones instead.

“However, this is great news for buyers and tenants because it means there is a huge amount of choice and very competitive pricing.

“Along with record low interest rates, there has rarely been such a good time to buy and first home buyers continue to be active in the market place,” Mr Airey said.

According to reiwa.com data, Perth’s median house price dipped by $5,000 last month to around $547,000, while metropolitan rents were holding steady at $440 per week.

“With this large supply of homes for sale and rent, it’s likely we will see negligible price growth across 2015 and a fairly slow market for those selling property or looking for tenants.

“It is essential that sellers and owners listen closely to the advice of their selling agents and property managers to ensure the right marketing and pricing in what will prove to be a very competitive environment,” Mr Airey said.

Mr Airey said that recent figures indicated that the average number of days on the market for home sales had stretched to 67, compared to the more usual 45, while the number of sellers prepared to discount their asking price was now 57 per cent.

Rental leasing times across Perth is averaging 36 days.

Source: reiwa.com


Perths Rental Market

by Administrator 15. September 2014 18:12

About one out of every four households in Western Australia is a rental property, representing approximately 200,000 dwellings.

The proportion of renters has been reasonably steady at around 28 per cent of all households for over a decade, although there is a change occurring in the mix of private and public housing tenants with the proportion of private sector tenants growing.

Most rental properties are located in the inner suburbs. For example, over 75 per cent of all metropolitan rental properties are located within a 15 kilometre radius of the CBD.

Suburbs with the highest concentration include East Perth, Karawarra, West Perth, Northbridge, Highgate, Bentley, Glendalough and Victoria Park. Rental properties can account for up to 70 per cent of all dwellings in these areas.

Surprisingly, most tenants live in houses and not flats or units. Census result continue to show that up to 60 per cent of tenants live in traditional houses, although it’s true that around half of all strata dwellings exist as rental properties.

In WA the most common age group for renters is between 20 and 34. Typically, these are people in transition to home ownership. Not surprisingly then, the most common home ownership and buying age group is around 34 to 44.

Most tenants prefer a short lease, with the more common lease being six months. Tenants clearly like the flexibility of a short lease, however more than half of all such leases are renewed for a further six months when the initial lease expires.

The median rent for accommodation in Perth is now $450 per week if you include units, apartments, villas and houses in the equation. Houses alone are generally higher with a median of around $460 per week.

Darwin remains the most expensive capital with houses renting for around $650 per week, while Canberra and Sydney are similar to Perth at around $450. Adelaide is the cheapest at $330 per week.

The average rent for three bedroom homes across all eight capitals is around $405 per week. Seen in this context, Perth is about 15 per cent above the overall Australian rental average for a house.

However, rents in Perth have been slowly coming down since 2013 with the median weekly rent dropping $25 from $475 around this time last year.

This is due to a slow-down in population growth but also from large numbers of renters having taken advantage of very low interest rates to buy a home of their own, enabling them to leave the rental system.

This in turn freed up more properties for rent and is a key reason why Perth’s current vacancy rate is now a third higher than average, sitting at 4 per cent or 5,600 properties.

By David Airey (aussiehome blog)

SOCO REALTY Sell Rent Buy Local South Perth Como Kensington Real estate agent


Home Renovations Predicted to grow by 15%

by Administrator 8. August 2014 16:22

Home renovations are set to boom over the next three years, according to the latest forecast by Master Builders Australia.

The association's forecast predicts 14.9 per cent annual growth in the value of housing alterations and additions until the 2016/2017 financial year.

This translates into an average of more than $9.6 billion per annum being spent on renovations, which is nearly 38 per cent more than the $7 billion annual average for the three years to 2009/2010.  

Master Builders CEO Wilhelm Harmisch said the healthy outlook was in stark contrast to the languid performance experienced over the past three years, during which the market tightened by an average 3.2 per cent per annum.

“The strong growth in renovations will be a shot in the arm for builders across Australia and complement the solid pipeline of work indicated by the solid lift in new building activity,” he said.

The Northern Territory is set to experience the strongest growth of all the states and territories over the next three years, with a predicted average annual growth of 27.8 per cent – well up from the 9.7 per cent average of the past three years.

Other states and territories expected to experience strong annual growth are NSW (19 per cent), Western Australia (18.6 per cent), the ACT (16.9 per cent), Queensland (14.6 per cent) and Victoria (12.5 per cent).

South Australia and Tasmania were the only states forecast to experience minimal growth, with predicted annual averages of 3.1 per cent and 1.5 per cent respectively.

Article sourced by : Residential Property Manager

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You're as well off renting

by Administrator 15. July 2014 22:51

Property prices would have to continue to rise at the same rate as they have for the past six decades for owners to be as well off as renters, according to a new research paper from the Reserve Bank of Australia (RBA).

The extensive study found the average homebuyer would be better off renting if house price growth slows below its long-term average.

"If potential homebuyers expected house prices to rise faster than 2.9 per cent (per year), then buying would be more attractive than renting,” said the RBA paper published yesterday.

In Is Housing Overvalued? two chief RBA economists argue that a comparison of the costs of home ownership with the costs of the nearest alternative – renting – "seems central to a measure of overvaluation".

On the assumption that "assessments of house prices are sensitive to assumptions about expected capital gains", the RBA finds that if prices grow more slowly, as some forecasters predict, the framework used in the paper suggests the average homebuyer would be financially better off renting.

The RBA said expectations of future capital gains implied by current house prices are in line with historical norms, which "allays some concerns about a housing 'bubble'".

The authors said house prices have increased at an average annual rate of 2.4 per cent since 1955.

"In April 2014, the cost of owning was the same as that of renting - 4.2 per cent of the value of the house. That is, houses are fairly valued," they said. 

Article Sourced from Residential Property Manager

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Perth Rental Market

by Administrator 9. July 2014 08:44

About one out of every four households in Western Australia is a rental property, representing approximately 200,000 dwellings.

The proportion of renters has been reasonably steady at around 28 per cent of all households for over a decade, although there is a change occurring in the mix of private and public housing tenants with the proportion of private sector tenants growing.

Most rental properties are located in the inner suburbs. For example, over 75 per cent of all metropolitan rental properties are located within a 15 kilometre radius of the CBD.

Suburbs with the highest concentration include East Perth, Karawarra, West Perth, Northbridge, Highgate, Bentley, Glendalough and Victoria Park. Rental properties can account for up to 70 per cent of all dwellings in these areas.

Surprisingly, most tenants live in houses and not flats or units. Census result continue to show that up to 60 per cent of tenants live in traditional houses, although it’s true that around half of all strata dwellings exist as rental properties.

In WA the most common age group for renters is between 20 and 34. Typically, these are people in transition to home ownership. Not surprisingly then, the most common home ownership and buying age group is around 34 to 44.

Most tenants prefer a short lease, with the more common lease being six months. Tenants clearly like the flexibility of a short lease, however more than half of all such leases are renewed for a further six months when the initial lease expires.

The median rent for accommodation in Perth is now $450 per week if you include units, apartments, villas and houses in the equation. Houses alone are generally higher with a median of around $460 per week.

Darwin remains the most expensive capital with houses renting for around $650 per week, while Canberra and Sydney are similar to Perth at around $450. Adelaide is the cheapest at $330 per week.

The average rent for three bedroom homes across all eight capitals is around $405 per week. Seen in this context, Perth is about 15 per cent above the overall Australian rental average for a house.

However, rents in Perth have been slowly coming down since 2013 with the median weekly rent dropping $25 from $475 around this time last year.

This is due to a slow-down in population growth but also from large numbers of renters having taken advantage of very low interest rates to buy a home of their own, enabling them to leave the rental system.

This in turn freed up more properties for rent and is a key reason why Perth’s current vacancy rate is now a third higher than average, sitting at 4 per cent or 5,600 properties.

 

SOURCE: DAVID AIREY - REIWA NEWS

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Budget Threat to First Home Owners

by Administrator 29. April 2014 00:11

There is a lot of pressure on the Barnett government to cut costs and raise revenue in the state budget this May.

Those of us who work in the property sector are particularly concerned that property taxes might again be targeted. In last year’s budget the government increased land tax by 12.5 per cent.

This year it might be very tempting for the Treasurer to cast his net more widely by increasing stamp duty across the board for all buyers as well as scrapping the stamp duty exemption for first home buyers.

The Real Estate Institute of Western Australia has cautioned the State Treasurer against considering such moves. The property market in WA is only just stabilizing after several volatile years and current REIWA data indicates a market downturn for the second half of this year.

It’s critical that current policy settings remain in place and property taxes are not increased, distorting a fragile market.

Typical stamp duty on a median priced home in Perth is now $20,000. Bracket creep alone has pushed this up by $4,280 over the last five years.

The stamp duty exemption for first home buyers was raised to homes under $500,000 by the Labor Government in 2007 and along with the first home owners grant has been extraordinary successful at nurturing the market.

Cost of living and housing affordability is much tougher in WA than other states, but removing the stamp duty impost from first home buyers saves most of them around $14,000 and helps them into a home of their own.

In combination with low interest rates, first home buyers have flourished in WA but the signs are that they are now trending downwards and it would be devastating if they soon get hit with stamp duty.

Getting rid of first home buyer relief or increasing stamp duty across the board would also hit the housing construction sector through the increased cost of land.

The clear evidence from NSW, which recently scrapped its tax concessions for first home buyers, is that first home buyer activity collapsed and hasn’t recovered.

It has been a similar experience in Victoria where other concessions for first home buyers were removed or diminished.

First home buyers are critical to the overall health of the property market because they help nurture construction and facilitate the trade-up market.

Data from the Office of State Revenue show activity by first home buyers has been falling for several months, slipping from 1,974 applications in July last year to 1,540 in March.

For a sustainable, affordable housing market, it’s terribly important there is no rise in stamp duty for all buyers or that tax relief for first time buyers is abolished.

This article was originally published on reiwa.com.

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Strata Levies

by Administrator 17. February 2014 19:21

What must happen before a levy is raised?

The Strata Titles Act (WA) says that the strata corporation has to pass (at a General Meeting) the amounts and due dates of levies before they can be charged to owners. If the levy has not been passed at a general meeting, the strata corporation is not permitted to raise any levies past the last date of approval at a general meeting.

Levies are only due and payable once passed at General Meeting. The strata company will send an AGM agenda to all owners including special business such as financial statements for the year passed, insurance, council nominations, proposed budget and proposed levies.

The motion to set the levies must show the amount for each fund and can be approved by a majority vote. The minutes record the meeting, motions passed, levies due and payable. These minutes form the basis for payment of all levies. A levy notice is not an invoice; it is merely a reminder and not required under the Strata Titles Act WA.

 

So what’s this invoice I have received?

Why then, might you receive an invoice for the strata levy for the first quarter of the new financial year?

It’s because there is often a lag time between the end of the previous financial year and the next AGM – The Act states that not more than 15 months shall elapse between the date of one AGM and that of the next – Schedule 1 By-law 11 (1). This means the next AGM might potentially be a few months into the new financial year – after the levies collected for the previous year have run out.

The practical truth is that a certain amount of funds are required to run the scheme and these are raised throughout the year, typically every quarter. So a levy will be due for this period. If it’s not charged because of the time lag before the next General Meeting, then the strata corporation may run into a cashflow problem.

 

Why do they need the cashflow?

The administrative fund into which normal strata levies are paid is used for day-to-day recurrent expenses. The amount in it must be enough for the strata company to pay expenses, including:

  • Maintaining common and personal property of the strata company
  • Payment of insurance premiums
  • Any other recurrent expenses other than amounts covered by the sinking fund or by a special levy.

 

Is it legal to charge this next quarter levy?

If another quarter’s levy is not included from the previous financial year’s General Meeting, the extra levy cannot be charged.

Typically the motion relating to budget and levies is in order to raise funds for the next financial year. However, to ensure there are sufficient funds for cash flow purposes it is best practice to include a quarter or even two on from this, allowing time to hold the next AGM. It will simply carry over for the first quarter of the new financial year and can be adjusted using “extra: Levy” once the new budget is accepted.

(Sourced by REIC.com.au)

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The selling market

by Administrator 24. January 2014 21:20

 

Current data from the Real Estate Institute of Western Australia show that sales turnover lifted during both October and November pushing Perth’s median house price to a new record.

 

The data show sales had returned to normal levels and indicate that for the three months to November Perth’s median house price climbed to around $530,000 - $535,000, up from the previous peak of $525,000 on the June quarter.

 

REIWA President David Airey said the main reason for the big rise in sales was that Perth was coming out of a big slump in turnover in the September quarter and had returned to more normal conditions.

 

“The quarterly median for the three months to November was up by almost 4 per cent and due mainly to the composition of sales during this period after strong first home buyer activity pulled the median house price down to $510,000 in the September quarter. 

 

“While first home buyer activity is still very evident, there was a solid increase in sales within a 10km radius of the CBD and a softening of activity in outer areas, particularly along the coastal sub-regions north and south of the city.

 

“This shift in sales composition towards more expensive properties selling pulled the median upwards,” Mr Airey said.  

 

The data also show that in some of the coastal sub regions, such as parts of Wanneroo, Joondalup and in Rockingham there was a weakening in sales activity that had emerged through the month of November.

 

“While this retraction is sales is only modest at around 2 to 3 per cent on the previous month, it is accompanied by a drop in listings also in these areas which suggests that the fall in sales activity has nothing to do with oversupply.

 

“It is more likely that first home activity in areas away from the coastal strip has been the focus of buyers in more recent times,” Mr Airey said.

 

The number of properties on the market continues to recover from below average levels over the last year to now reach its highest point for the year. REIWA data currently showing 8,656 dwellings and 1,199 land lots for sale.

 

Mr Airey said that the rental market continued to turn in favour of tenants, with the number of available rentals growing and median rents coming down once again.

 

“The median rent in the metropolitan area has dropped by just over 2 per cent over the last three months to $460 across the board. This now breaks down to typical rents for houses coming in at around $470 per week and for units and apartments at around $450 per week,” Mr Airey said.

 

Current REIWA data show rental listings lifted by 2 per this week alone, to 4,419 properties on the market while the vacancy remains above average at around 3.2 per cent. 

 

 

Market Feel

Traditionally property sales pickup as we go into February through to the beginning of April when it slows down a bit. Once the kids go back to school normally we start to see more potential buyers coming through home opens. Like many other agents we have only opened a few homes in January so whilst home numbers have been good we are yet to see any increase in home open numbers but what we are seeing along with many other agents is website enquiries increasing. Low interest rates are continuing to inspire buyers to act sooner rather than later and whilst rents have slowed property seems to be gaining more interest from investors as it might well be a safer place to invest than the share market at this time with shares having grown well in value during 2013

 

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Converting your family home to an investment

by Administrator 22. January 2014 23:03
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Is it better to buy then rent ??

by Administrator 13. January 2014 16:00

REIWA has reported recently that housing affordability has improved over the last year and that median rents have climbed by 12 per cent.

So, for many people renting a question they are asking themselves is, “Would we be better off to buy?”

Current data show the median purchase price for first home buyers is around $420,000 while metropolitan rents are around $470 per week.

Not everyone is in a position to borrow and meet loan repayments, but for those singles and couples who can afford around $580 a week at current variable interest rates, a mortgage of $373,000 will buy a very suitable unit, villa or house with its own land.

(In this example I am assuming a deposit of $20,000 and eligibility for the $7,000 First Home Owners Grant, so the purchase price would be $400,000. However, there are many cheaper properties throughout WA including the metropolitan area. Some house and land packages are accessible at $300,000 or less and fixed rates can be more affordable than variable rates).

In other words, by paying around $100 more each week on a mortgage as opposed to paying rent, many tenants could transition to home ownership if that suited them and banks approved the loan.

Naturally, the bigger the deposit the smaller the loan and it’s important to keep in mind that renters don’t pay council rates, annual utility charges, building insurance and maintenance which home owners do. Buyers need to factor in about $50 per week to cover this.

The real cost of renting is not the fortnightly payments, but the loss in savings compared to accumulating equity in a home.

There are also good financial reasons to support ownership, but two key factors illustrate its benefit.

First, home ownership can be a stepping stone to increased wealth and long term financial security. Property is highly regarded by financial institutions as security for borrowing to fund a property investment, a business venture or a holiday.

It’s more difficult to borrow against other assets.

Second, home ownership opens up lifestyle opportunities. With your own place you can design and mature the garden, paint and decorate as you wish, have pets (with some strata exceptions), and generally create a home with the liberty and security that can bring.

Households which experience financial difficulty in retirement years are more likely to be living in rental properties, so investing in a home can be a better way to secure your retirement circumstances.

The early decisions you make around real estate can affect your long term outlook, but it’s strongly advisable that you discuss your plans with competent financial advisers, banks and lenders before making a decision and then approaching an agent.

This article was originally published on reiwa.com.

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