Newspaper headlines have been flying around recently touting "run away markets", "Perth market hot" and today’s "Perth median price soars over the $500,000 mark". Have we not learned our lesson from the previous boom? The higher the rise, the harder the crash? Is the market running hot, or is this just print media's love for exaggerated headlines to help sell papers?
We thought we would cut straight to the chase, and ask some real estate Principals how they saw it. They are, after all, out there in the field every minute of the day.
Interestingly, rather than perhaps the predictable "it's all great, hurry up and buy/sell with me", we received some very level headed replies…
Chris Shellabear, Principal of Shellabears based in Nedlands, makes the point that "general market comments generally do more harm than good". Indeed, "people must understand that these [property sales] statistics are a bit stale by the time they are touted – there is a time lag. An Agent 'at the coal face' can give you a far better feel for the market than a Commentator and it is relevant to you as it relates to your Suburb or area."
Agents have indeed seen turnover increase (up from some pretty torrid lows) but this "is not to be confused with price increases". Chris Shellabear predicts a "traditional steady as she goes" property market. "Markets only go HOT when there is excess money supply – with the events of the last 2 years this is clearly not the case." That said, "certain sections of our market place have been active, the $1-2 million bracket has been very active and, as some shortages there have occurred, recently you have seen a little bit of upward [price] movement. The confidence created here has also crept upwards and we have seen turnover increase at higher price levels".
Another Chris, Chris Jonker of Nexus Real Estate (who operate 5 offices in the northern suburbs) also predicts "modest but stable growth throughout 2010 … a return to a normalised market with a 'happy medium' between buyer & seller". Chris sees "good buying opportunities" in oceanfront and riverside locations ("Prices still below what they were 2 years ago"). 'Satellite cities' on the metropolitan fringe with "solid" infrastructure in place are also worth looking at, and investors (as always) should have a "5 to 10 year trend" in mind before investing.
"Overall", says Chris Jonker, "the property market has improved from early 2009, however we are still seeing caution from buyers at the top end, with many 'front row' properties … remaining on the market unsold. There have been 36 properties offered for sale on West Coast Drive in the last 12 months with only 6 selling."
Chris Shellabear agrees: "real estate is a long term commitment and rarely suitable for a short term trade so if you are a short term trading type of person you should look elsewhere for your fun. This is a market for people doing all the normal things with their property, upsizing, downsizing , retiring “tree changing” etc , or keeping an eye out for that long term investment – I know I am."
We’ll be posting regular comments from our real estate clients in the coming weeks and months, and we’d be interested to hear from anyone who has a view on what they see out there in the property market…