Discounting at lowest levels in decades

Perth’s real estate market has seen a shift as the number of sellers discounting their homes has reached its lowest level in 20 years, according to the Real Estate Institute of Western Australia.

From the beginning of the year to June 2024, just 12.6% of houses sold in WA went for less than the listed price. Previously, this rate had been as high as 46.3% in 2014.

This marks a departure from previous trends where sellers frequently adjusted their asking prices to secure a sale.

Why are sellers holding firm?

Several key factors are contributing to the reduced discounting in Perth.

First, the city is seeing very strong population growth driven by strong economic prospects. There is also renewed investor interest, as seen by the increase in the number of new home loan commitments to investors, which was up 53.2% in WA between May 2023 and May 2024, according to the Australian Bureau of Statistics.

This has created a seller's market, where sellers may feel less pressure to lower their prices to attract buyers.

Second, the increase in demand for housing comes at a time when supply is limited. This imbalance has reduced the need for significant discounts as sellers are more likely to find buyers willing to pay their asking price.

Both new and established homes have been unable to keep up with demand. Total listings were down 32.2% year-on-year in June in Perth, according to SQM Research. Building commencements, although up in the 12 months to March 2024 according to the ABS, are still around half the number of their last peak in 2021.

Third, this imbalance between supply and demand has put upward pressure on prices, leading to a surge in property values. With properties appreciating in value, sellers might be less inclined to offer discounts, anticipating that they can achieve their asking prices or even higher.

What does this mean for buyers?

The current market conditions do present some challenges for buyers. Competition for available properties is high and securing your desired property can be difficult.

With limited discounting, you may need to adjust your expectations and be prepared to pay closer to the asking prices.

It is also important buyers act quickly when a suitable property becomes available. Delays in making offers or gathering paperwork can mean you miss out.

How can a buyer stand out?

Here are some tips to increase the chances of your offer being successful:

1. Get pre-approval. Getting pre-approved for a mortgage demonstrates to the seller that you are a serious buyer with the financial capability to go through with the purchase. It also means you have done a lot of the legwork so that your transaction can go quicker.

2. Make a competitive offer. While it may be tempting to offer a low price, consider submitting a fair offer that reflects the value and current market conditions. Speak to your buyer's agent about current conditions in the location you are buying in.

3. Be flexible. Offering flexibility in your settlement agreement can be advantageous. This can include adjusting the settlement date to suit the seller or asking for fewer contingencies.

Interested in buying a property in Perth? As an expert Perth buyer’s agent, Resolve Property Solutions can help. To discuss your options, book a free discovery call with a Resolve Buyers Agent.