Perth real estate: Property buying survival guide for 2019
The national property market is in freefall and while Perth fared better in 2018 than Melbourne and Sydney, median prices still dropped for a fourth year and are now down about 15 per cent from their peak.
While the rate of decline is slowing, it remains anyone’s guess when the market will finally bottom out and begin to turn.
One thing, however, is certain — property is at its most affordable in more than a decade.
But does that mean now is the time to jump in? We spoke with the experts to compile your guide to 2019.
IS IT A GOOD TIME TO ENTER THE MARKET FOR FIRST-HOMEBUYERS?
The biggest winners out of the long decline in Perth property prices are those who don’t yet own any.
With the median house price to income ratio at its lowest since the early 2000s, an increasing number of people are taking the plunge and entering the market, and the latest available data reveals a quarter of all owner-occupier finance commitments were for first-homebuyers.
“With further value declines expected in 2019 coupled with little competition from investors, we expect first-homebuyer activity to remain strong,” CoreLogic research analyst Cameron Kusher said.
“Of course, it is important for first-homebuyers to consider that with values falling the value of the property they buy will, at least initially, be reducing in value.”
REIWA president Damian Collins said WA was currently the most affordable State in Australia and he expected a recovering rental market, and rising rents, would nudge more young people into buying.
IS 2019 A GOOD YEAR TO TRADE UP FOR THOSE ALREADY IN THEIR OWN HOMES?
Selling now might mean taking a hit on your own home, but the same discount also applies to your next purchase, and in percentage terms often represents a bigger saving.
REA Group chief economist Nerida Conisbee said those looking to trade up into blue ribbon suburbs were best advised to do so in the next 12 months.
“We are finding that premium suburbs in Perth are starting to see decent price increases — Claremont and Subiaco, for example, are already seeing double-digit price growth,” she said.
Mr Kusher said the biggest challenge would likely be securing a loan under the current restrictive credit conditions.
WILL HOUSES OR UNITS REPRESENT BETTER VALUE FOR BUYERS?
Apartments continue to flood on to the Perth market in high numbers keeping their value down, a trend that does not look like slowing, according to the experts.
“While units are cheaper, Perth remains a very detached house-centric market and longer term that is probably a better option for buyers,” Mr Kusher said.
Mr Collins agreed, and advised looking to inner-city and riverside suburbs if you are in pursuit of price growth.
“Typically the established suburbs with limited stock have less supply and are more likely to increase in value sooner than the newer suburbs,” he said.
SHOULD I WAIT TO SEE IF PRICES FALL FURTHER?
“It certainly is, however, it is notoriously difficult to pick the bottom of the market,” Mr Kusher warned.
“If you are comfortable with the price and feel you are getting a good deal there is no reason to hold off purchasing.”
Ms Conisbee agreed, saying market could shift quickly and finding the right home can take a long time.
“My advice is to take your time but if you find a home that suits what you are looking for, now is the time to buy,” she said.
“Provided you are not looking to buy and sell quickly, you should be fine. You are also in a much better negotiating position and hopefully will get more house for your money.”
Mr Collins said property should be viewed as a long-term investment.
WHAT IF I ALREADY OWN AN INVESTMENT PROPERTY, OR I’M LOOKING TO PICK ONE UP?
It comes down to fundamentals for investors, with no return to anything approaching the rapid price gains of the mining boom on the horizon.
Well-located properties in popular suburbs are the best choice for those after capital gain but buying for rental yield rather than betting on value growth is a safer option at this point.
“We expect to see rental prices increase throughout 2019 and beyond, so it should be a better few years ahead for investors than it has been in the past few years,” Mr Collins said.
WHAT IS THE OUTLOOK FOR REGIONAL WA?
The days of million-dollar fibro shacks in the Pilbara are a distant, and in some cases extremely painful, memory but there is a glimmer of hope for those in the bush who have done it even tougher than Perth over the past few years.
More than $100 billion of resource projects are in the pipeline, which should return some activity and interest to certain regions.
Mr Collins pointed to Port Hedland, Karratha and Kalgoorlie as areas where confidence was rebounding.
“These projects are expected to create thousands of new local jobs, which should continue to support population growth, improve demand for housing and aid recovery,” Mr Collins said.
Ms Conisbee said not all mining towns were the same, but agreed there were some opportunities on offer.
“South Kalgoorlie has seen 20 per cent price growth over the past 12 months and is definitely worth looking at.”
source: https://www.perthnow.com.au/lifestyle/real-estate/perth-real-estate-property-buying-survival-guide-for-2019-ng-b881098257z
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