The Real Estate Institute of Australia has released this media release:
Real Estate Institute of Australia (REIA) CEO, Ms Amanda Lynch says the Government has failed to introduce any new initiatives to address housing affordability in this year’s Budget and has instead passed all responsibility onto the Reserve Bank.
“The good news is the Budget retains conditions where further rate cuts are possible. But as we have seen last week, there is no guarantee cuts will find their way to borrowers,” Ms Lynch said.
The Government has said returning the budget to surplus sends a very clear signal to the world about our strong economic fundamentals, and gives the Reserve Bank flexibility to cut interest rates further if it thinks that is needed.
Since peaking in the early nineties, home loan affordability has been trending downwards to alarming levels. Ms Lynch says first home buyers have been very cautious in early 2012, with the number of first home buyers as a percentage of total owner occupied housing commitments decreasing to 17.2 per cent in February, down considerably from the long-term average of 20.2 per cent.
“We had hoped the Government would recognise the need to directly intervene and not leave housing affordability dependent solely on the whim of the banks,” Ms Lynch said.
“One of the most effective housing policy instruments in assisting first home buyers is the First Home Owners Grant, but it has been allowed to lose more than half its value relative to purchase prices since it was introduced in 2000,” Ms Lynch added.
“The Budget might fund new cost of living relief for Australian families but it fails to address what most Australians see as a priority – housing affordability,” Ms Lynch concluded.
Image by Michael Dawes via Flickr.
House prices up, sales up, rents tight.
The March quarter results released today by the Real Estate Institute of Western Australia illustrate positive news right across the state for the first three months of this year.
The median house price in Perth has risen for the second time in six months, up by $2,000 on December to a median price of $467,000.
Perth has now experienced two consecutive quarters of growth following seven quarters of decline.
The median house price isn’t the only measure of the market, but when we look at the other indicators from the quarter we find it’s generally a pretty good picture.
In the metropolitan area the median price of grouped dwellings such as units, apartments and villas also grew, in this case, by 2.5 per cent to a median of $400,000.
The total number of properties on the market increased 6 per cent since December, however the total number of dwellings sold jumped by 13 per cent; the highest turnover in two years.
The number of sellers who are dropping their asking price can be a good barometer of the market, and March quarter data show this has fallen 3 per cent to 65 per cent of sellers in the market.
The gap between the asking price and the selling price in Perth has also closed further, dropping to 6.4 per cent from 7 per cent in December. This trend suggests that more sellers are meeting the market and that pricing is being done with greater confidence as the median price levels out.
In the regions, the median price for houses grew much more strongly than in the city, lifting by $15,000 or 4 per cent to a median of $380,000, although units and apartments in the regions remained steady at $335,000.
The metropolitan rental market has seen some of the strongest movement in the quarter.
The median rent in Perth lifted by $20 to $400 per week, or 5 per cent from the end of last year. This has been prompted by a tightening of the vacancy rate to 1.9 per cent, well under the accepted equilibrium of 3 per cent.
REIWA property managers are still reporting strong interest in rental accommodation at home opens, with many people looking through properties to secure a place to live.
I think over the last eighteen months many potential buyers have lacked the confidence to purchase, as they watched the median price coming down in weak national and international economies, but now that things are picking up and the housing market has bottomed out, they are returning.
For this reason, I believe that as many renters make the switch to being homebuyers and as investors return to the rental market as yields improve, the pressure is likely to come off the rental system for the remainder of this year.
The strong activity from first home buyers has been a great help to the overall market, ensuring many trade-up buyers had the opportunity to sell an existing property and then move on.
It was notable that during the March quarter there was a marked increase in the number of sales above the metropolitan median price as trade-up buyers got moving.
All up, the March quarter results are encouraging and give me reason to believe that the worst is now behind us. There is often a slump in the market during the winter months, but I’m confident that for the remainder of this year we will see sales turnover increasing and the median price gradually lifting as our state maintains its good economic growth and positive population trend.
It’s not a boom but it does look like a welcome return towards more normal market conditions.
This article was originally published on reiwa.com
Image by Christian Ferrari.
Below you will find the latest reiwa.com graphics of weekly listings and sales data from January 2011 to April 2012.
Sales reported by members each week in REAL FACTS shows there has been a dip in activity since the Easter break (521 sales), with sales for this week down 13% since the peak in March 2012 (896 sales).
Since the Christmas downturn in 2011, listings have continued to hover around 14-14,500 for the first 3 months of 2012 and since the Easter break have stayed below 14,000 throughout April. By comparison there were approximately 18,000 listings in the same period for 2011, a 22% fall over the year.
Furthermore, the effect of the latest cash rate announcement may be seen in the coming months and the impact on sale volumes across Perth.
Preliminary data from the Real Estate Institute of Western Australia on the March quarter show a strong upturn in sales activity in Perth and regional WA.
The Institute’s reiwa.com sales figures for January, February and March illustrate a return of consumer confidence.
Turnover in metropolitan Perth is at its highest point in two years and most regional centers are showing strong upswings as well.
The Institute’s data show turnover in Mandurah up by about 40 percent, while Bunbury and Geraldton are up by around 15 per cent.
Interestingly in Perth, the strong area of buying has been with multi-residential dwellings such as apartments and villas. Turnover for these is up by 20 per cent on December which is quite exceptional given that just six months ago in the September quarter of 2011, turnover for multi-residential stock was at its lowest point since 1998.
The upturn in sales for flats, units, villas and townhouses can be attributed to an increase in investor activity and pre-sales from new developments.
REIWA data show the Perth median house price to be stable at around $467,000, indicating that house prices have now stopped sliding for six months.
I think many potential buyers are coming to realise that the market has bottomed out and now might be the time to move. Particularly seeing as rents have increased to the point where the difference between renting and paying an affordable mortgage is not so great.
The Perth rental market is still showing a tight vacancy rate at 1.9 per cent, with the median rent resting at $420 per week.
Our members are also reporting very tight vacancy rates in some regions including just 0.9 per cent in Kalgoorlie and 1.1 per cent in Broome.
The rental situation is better in Mandurah at 2.9 per cent, Bunbury at 3 per cent, Geraldton at 2.5 per cent and Albany on 4.1 per cent.
REIWA will be releasing its full and final data for the quarter on Friday 4th May.
This article was originally posted on reiwa.com.
Image by Caro Embrey via Flickr.
New data from the Real Estate Institute of Western Australia show that overall sales in the March quarter reached its highest level since March 2010, just after the Rudd government’s FHOG Boost ended.
The latest WA data on First Home Owner Grants (FHOG) from the Office of State Revenue show that first time buyers have been a key part of this recent market recovery.
The latest FHOG data on grants paid for established dwellings surged in the March quarter reaching 2,933, just short of the quarterly average since the grant was first introduced 12 years ago. The number of grants paid for new dwellings in the March quarter turned down marginally to 938.
8 out of 10 first time buyers purchased an existing dwelling, which is good news for trade-up buyers who need the opportunity to sell their existing home before being able to move on.
The strong activity from first home buyers has been a tonic to the market and we can see from current figures that as a result of this activity, trade-up purchases also improved during the March quarter for properties above the current median of $465,000.
Despite the surge in grants paid, REIWA expects the proportion of first home buyers to the overall market to decline over time because the increased level of trade-up activity was contributing to higher turnover and the market was becoming more balanced.
This return to a more balanced market has seen the overall median house price remain stable between the quarters.
Current FHOG application data indicate that the level of first home buyer activity may have reached its peak, with applications for established property levelling out at 3,054 in the March quarter, just above the 2,968 recorded in the December quarter.
At the same time, applications for new dwelling grants have risen for the second quarter to 1,045 as the influence of recent house and land package marketing campaigns flow into the data.
According to the OSR, in March the median purchase price for a first home was $420,000 in the city and $327,000 in the regions.
This article was originally posted on reiwa.com.
Image by Emily Murphy via Flickr.
The latest data on First Home Owner Grants (FHOG) in WA from the Office of State Revenue indicates that first home buyers have been a key part of the recent market recovery. This recovery has seen turnover in the March quarter, according to reiwa.com data, reach its highest level since March 2010, just after the FHOG Boost stimulus finished.
The latest data on grants paid for established dwellings continued to surge upward in the March quarter reaching 2,933, which is just short of the quarterly average since the grant was introduced in July 2000. This quarterly average has been heavily influenced by periods of stimulus such as the FHOG Boost and State Government stamp duty relief. Grants paid for new dwellings in the March quarter turned down marginally to 938.
Despite the surge in grants paid, the proportion of first home buyers to the overall market is expected to decline over time with the increased level of trade-up activity contributing to higher turnover as we return to a more balanced market. This is evident in the limited movement in the sales distribution between the December quarter and March quarter according to reiwa.com data. This return to a more balanced market has seen the overall median house price remain stable between the quarters.
FHOG application data indicates that the level of first home buyer activity may have reached its peak with applications for established property plateauing at 3,054 in the March quarter, just above the 2,968 recorded in the December quarter. At the same time, applications for new dwelling grants have risen for the second quarter to 1,045 as influence of recent house and land marketing campaigns flow through into the data.
April, May and June can be a busy time for property investors as they organise portfolios before the end of the financial year.
There haven’t been too many investors in the West Australian market over the last year, but they are certainly starting to re-emerge as the housing market stabilises, the state’s population grows, vacancy rates fall and the rental yield increases.
Many potential investors who have been waiting and watching the Perth market, in particular, following the decline in prices since 2010, now sense that it’s an opportune time to look at entering the market.
Those in a position to buy are finding good value and great long term prospects.
Currently there are around 14,300 properties for sale in the metropolitan area, down by at least 3,000 properties on the same time last year.
If researching the market, investors should be mindful of the key characteristics of successful residential property investment.
The better investments are generally in places where there is consistent population growth, such as near the city or some of the rapidly growing regional centres.
Tenants like convenience and the better investment choices tend to be those which are easy to maintain, have access to arterial roads and public transport and are located close to shops, schools, cafes, tertiary institutions and other community infrastructure.
Of course there can be exceptions to this too and you should talk about these things with your agent.
The ideal investment location is where demand for rental properties exceeds supply, but investors should always balance the entry costs of a new purchase with the return on investment through rent.
Investors ideally look for properties that are affordable, generally at or around the median price and which have reasonable prospects of good growth in value.
Historical median house price information for suburbs and major regional areas is available from REIWA. This information is useful to discover trends in values.
Often one part of the market will experience higher growth rates that eventually influence neighbouring areas, particularly if they have similar characteristics. This ripple effect can be well worth exploring. Are there undervalued houses in a suburb adjoining one that is currently doing well?
Choosing a property with redevelopment potential can also be worthwhile if that suits your strategy.
An investment property that can be subdivided into smaller lots for strata title will be popular with some developers but will have to be weighed up in the context of construction costs, rental returns and anticipated resale value.
Property investment is not especially difficult or daunting if you do your research, talk to agents about opportunities and always discuss any plans you have with your bank, mortgage broker or financial planner firstly.
This article was originally published on reiwa.com.
Image by Huangjiahui via Flickr.
Preliminary March Quarter data by the Real Estate Institute of Western Australia show that the vacancy rate for rental accommodation in Perth has stabilised, but that rents have risen slightly over the last few weeks.
The Institute’s data show the metropolitan vacancy rate at 1.9 per cent for the first three months of the year, but during the months of February and March alone it dropped to 1.6 per cent.
This situation created upward pressure on rents during the quarter lifting the median rent for a house by $5 per week and for a grouped dwelling by $20.
The overall median rent for Perth is now $420 per week, which breaks down to $425 for a house or $400 for a unit, villa or townhouse.
This represents a rent increase of 10 per cent on the same time last year.
The good news for tenants is that the vacancy rate does not appear to be dropping any further and seasonal demand is levelling off.
REIWA data show that the stock level for rental accommodation has improved by 12 per cent since the start of March, in sharp contrast to the 28 per cent fall during January and February.
There is still reasonable demand for accommodation but Perth will avoid the rental crisis it experienced in the March Quarter of 2007, when long queues of hopeful applicants were commonplace.
As the market slowly improves more people are deciding to buy a place of their own and investors are now contributing more to the housing stock as well.
I think it’s safe to say that the rental market should balance out for the remainder of the year.
Image by Shane Adams via Flickr.
This article was originally published on REIWA.com.
The vacancy rate for rental accommodation in Perth has dropped below the long term equilibrium of 3 per cent. In February it fell to just 1.6 per cent.
Demand from tenants outweighs the supply of stock and at some open-homes to view accommodation, hopeful applicants are offering more than the asking rent to improve their chances.
REIWA generally discourages property managers and landowners from choosing tenants based solely on their capacity to pay more. That can often be a false economy.
Wealthier tenants are not necessarily more suitable tenants if the dwelling is a wrong fit for their needs. They may not have verifiable references and background checks on their character may reveal little or nothing.
This is where the experience of trained property managers can be invaluable.
Property managers know that what landowners are most looking for is reliable tenants who will pay the rent on time, look after the property and not disrupt the neighbours. These attributes should always take priority over dollars.
Having to remove a bad tenant and start again will quickly cost landowners more than they gained with the extra rent.
This is not to suggest that those who might offer more are unworthy applicants.
In periods of high demand it’s wise to be organised. Simply having your bond money, completed tenancy application and references ready to submit is attractive to property managers who are struggling to cope with large number of applicants at a difficult time in the rental market.
Being organised gives you the best shot, particularly if you approach an agency directly and leave your details with them.
Not all agencies keep a register, but those which do welcome the approach from keen applicants and it means that when a property comes into their care which might be suitable, you’ll get a call right away rather than having to look online or attend a viewing.
When signing a new lease owners cannot ask for more than two week’s rent in advance, however they can accept additional payments if offered after the first two weeks. The bond is generally not more than four week’s rent.
Owners cannot increase the rent during a current fixed-term lease, unless the contract stipulates that rent reviews can occur during the period of the lease. When this happens it cannot be less than six-monthly. The increase, or a method to calculate the new rent after six months, is agreed to in the lease.
For a tenancy with no agreed termination date (periodic tenancy), rents can only increase every six months and sharp increases in rent cannot be used as a method to remove existing tenants.
A good tenant should be respected and valued. Wise owners wouldn’t dream of losing them for short term gain.
Image by Sean Dreilinger via Flickr.
This article was originally published on REIWA.com.
Not surprisingly, reported sales in this week’s Real Facts took a dive due to the Easter break, down 38% on the previous week. However this was nowhere near as severe as the fall we saw due to the Easter break in 2011 which coincided with Anzac Day when sales fell 57% and the market was heading into its winter hibernation. The extent of last year’s fall was very evident in last week’s 15 month weekly sales graphic. The fall in activity is also very evident in the Top Performing Suburbs, none of which reported double digit figures
Preliminary rental data has the vacancy rate for the March quarter sitting at 1.9% as the sharp monthly declines over the past 3 months has been arrested with the monthly figure for March currently sitting at 1.6%, the same as February. The stabilising of the vacancy is also evident with the properties available for lease rising 12% since early March after falling 28% in the first two months of 2012. The declining vacancy has seen the overall median rent rise to $420, up 10% for the year with the latest median house rent for March quarter now sitting at $425 whilst the multi-residential median rent has risen to $400.
In other news the latest Housing Finance data is out today indicated loan commitments fell 2.5% seasonally adjusted nationally whilst in WA they increased for the seventh month by 0.8%. All loan categories – construction (1,017, up 17%), newly erected (216, up 3%) and established (5,144 up 7%) increased in original terms in WA but refinancing which is part of the established loan figure also increased by 7% and still represents a very high 38% of all approvals and 47.5% or nearly half of all established approvals. First home buyer loan approvals fell 2.4% to 1,247 with the proportion of first home buyer loans excluding refinancing falling from a spike of 35.5% in January back to 31.7% in February.
