How is WA Property Market Performing Currently?
???? There are many conflicting reports currently about Australian property market. One news outlet might say overseas buyers are out, that property price will drop up to 30%, etc, while other news outlet reports an increase in the number of people attending home opens and auctions. I just read news yesterday whereby an auction in Victoria has fetched $120k above reserve.
This has made me wonder how everything will pan out especially after a lot of businesses have gone under, and people losing jobs front-right-center due to the virus. As a Buyer's Agent who is specialising in WA property market, I would like to share my on-the-field experience and my prediction of what might happen.
DISCLAIMER: This is purely my personal opinion and is general information only, and does not constitute of what will actually happen. Please do your own due diligence before purchasing any property.
In 2019 I have purchased more than 10 properties for my clients and I must admit, it was very easy to put a below-market offer. 9-out-of-10 it would be just me who was putting down an offer. No competitions, nothing. When I attended home open, there was just me most of the time. If anything, there might be 1-2 more other groups. It was literally a blissful moment in buying property because you could literally bargain as hard as you can. Many of the Seller's Agents were desperate in getting their - of what could have been several-month-old listing - sold.
Fast forward to 2020, things changed! Starting in January, when I attended home open, there were at least 5 groups coming. And when I was putting down offer, there were always competitions! To this day of writing this article, I have not had a single property offer which I do not have competitor for. 10-out-of-10 there will be multiple offers on the table which my buyers had to put their best foot forward in.
I have lost 4 offers to date: 3 private sale and 1 auction. All of these offers had competitions. In fact, one of them was lost to a buyer who offered $10k more than asking price. I mean...for a long time, this scenario has been very foreign to me. I have not heard (to date, especially after the mining down turn) a buyer offering more than asking price. Mind you, the price range of these properties is in the mid-$200s and lower.
This makes me wonder now of where the property market is heading. So far, all I can see is, Buyers are out buying! Properties which we could have low-balled in 2019 have now been a lot more difficult to bargain for. As soon as you see a deal, most likely there will be other offers on the table. I am almost led to believe that the market has now turned into Seller's Market.
So, are we going to see a crash or what? Or has property price gone up? Well, all the properties that I bought very cheap last year for my clients, if you look at the comparable sales currently, many of them have gone up in price. There was one 3x2 renovated sitting on 1042sqm land that I purchased in December 2019 for $225k for my Buyer, which currently (May 2020) valuation is in the $225-$275k. Safe to say, price would have increased by $10-$20k for my client. While it not might sound much, it's almost 10% increase from the purchase price in just few months. PS: This property is currently rented at $320/week positive gearing.
CONCLUSION
This is my personal opinion and prediction of WA property market: market is hot for $250k-and-less properties. With rentals that are very tight at the moment, finding tenants will not be an issue. And if you are a buyer of this range, you have to get in quick before price starts moving. Current financial climate shall not affect the owners of these properties much because like I said, the rental alone would have made it a positive-gearing property and covered all the running costs. Unless you are forced to sell early (which you wouldn't), I can't see how price would drop.
With multiple competitions that are currently present, at this price range I start to think that it has now turned into Seller's Market.
Now, I must admit, I think Australians are currently drawn out by the string of good news surrounding COVID. With many of the restrictions are starting to be lifted, many of us look forward to celebrate this achievement. However, behind the scene, people are still losing jobs. Businesses have closed down. The JobKeeper has certainly helped, however, I wonder what might happen when it has to be stopped.
$250k-or-less properties that rent for $350 or less will weather the storm. It is those expensive properties $400k+ that need to be rented $400+/week that I think will be hit hard. The reason is, as soon as, either the owner or tenant losing their jobs or experiencing reduction of income, the holding cost of these properties become expensive. And I will not be surprised if sellers of these properties will be very motivated to sell early.
So, here comes the dilemma. Would you buy the lower end which might have turned to a Seller's Market, or will you buy the mid-up motivated properties? All I can say is, when it's a deal, it's a deal regardless of price range. Instead of getting bogged down into the news and the market and all, do train yourself to find property deals instead. Money is to be made in any market if you apply the right strategy.
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