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Excess stock in the WA property market gives first home buyers something to smile about
June 27, 2011
It seems that the property market in Australia has softened and Western Australia is no exception. According to the Real Estate Institute of Western Australia (REIWA), the median house price for Perth in the March quarter declined by around $18,000 to $472,000. Whilst the median house price for regional WA was stable at $375,000.
With market conditions becoming more favourable for buyers, the question is when is the market likely to bounce back and is now the perfect time to buy?
What’s happening in the market?
REIWA anticipates that 2011 is a great year to buy. “The market is bottoming out; there is a lot of stock for sale and good bargains are to be had with the stable interest rates,” said REIWA President Alan Bourke.
“Due to excess stock, most vendors are reducing prices by around 7.5 percent, to get the deal done, while those who need a quick sale, drop their expectations and asking price before even going to market,” he said.
With Perth property now said to be the most affordable it has been since 2007, there are several local and national issues contributing to a softening of the market. In particular, the city’s costly properties have caused many investors to lose interest in the local market, which has resulted in less buyer competition, forcing property prices downward. The construction industry is also producing new and more affordable housing giving buyers a wider range of choice. On a national level factors such as interest rate uncertainty and living cost pressures are also having a similar effect on the market as it has across the nation.
Whilst the market however has softened it seems current conditions are still attractive for some segments of the market, particularly first home buyer segment.
“First home buyers seem to be relishing in the favourable market conditions, with the sale of property to new home buyers accounting for 23 per cent of buyers during the quarter,” Mr Bourke said.
Current market conditions and tempting house and land packages make it the perfect time to buy. The gap between existing high rental rates and mortgage repayments for a home may not be as wide as once was, presenting an ideal opportunity for purchasers.
“The market still contains a lot of stock which may take at least 6 – 9 months to clear as we retract to a better balance between supply and demand,” says Mr Bourke. “However, we expect things to settle and the market may see modest growth next year.”