Our mortgage brokers are elated by recent news that the number of properties for sale in Perth is higher than at the same time last year. Why does this make us happy? Because higher supply means less demand and lower prices for the time being.
According to SQM research, there are currently 23,658 properties for sale in the Perth market, which is a 21.1% rise over the same time last year. Darwin only has 1,830 properties for sale, but they were up 37.1%. The rise in housing availability is attributed to the contraction of the resource industry in both markets.
What This Means to You
More supply means lower prices: for now. However, it is very likely that prices are going to rise again soon, as they always do. A few years from now, when the median house price in Perth is around $625,000 and the RBA interest rate is back up to 3% or higher, a lot of people are going to look back and wish they had bought a home while the interest rate was 2.25% and the median was around $550,000.
For the September 2010 quarter, the median home price was $460,000. Now it is $550,000. Prices rose 5.5% in 2012 and 9.6% in 2013 before leveling off at only 0.6% in 2014. Economist Dorian Wilson is predicting a rise of 2.0% in 2015. His estimate is in line with the current consensus.
Even in a situation of high supply, Mr Wilson still predicts a slight rise in prices, as most economists do.
What to Do Now
Because housing always rises, it is almost always accurate to say that “there will never be a better time than now to buy real estate.” But with the current situation of high supply, stagnant prices and record low interest rates, there is a great chance that we have a “sweet spot” that comes around may be once every ten years.
To learn more, call (08) 9453 8888.