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Historic growth in the Perth property market
The last 12 months have seen historic growth, and with the state of WA connected to the rest of the country again since the borders re-opened, many are predicting the property crisis is only going to get worse.
But the definition of crisis and worse are key to understanding they are both connected with strong capital growth.
The reality is simple, supply far outweighs demand. Building new has never been harder. Builders won’t lock in final prices and can’t commit to completion dates given they can’t even guarantee when they can get certain materials in order to complete builds.
Questions we get a lot in the fast-paced property market are… Are we in a cycle, are we paying too much and when is this bubble going to burst?
Who would have imagined, or guessed, that 40 years ago house prices would increase by over 1,200% by the year 2022?
Well, that’s exactly what has happened, and we are all in this together now. They have continued to increase since then and will continue upwards through time…
They have shot up faster now than before when our parents were paying 18-20% mortgage rates!
Are we in a housing bubble?
So the logical question that everyone is asking is: are we in a housing bubble?
Before we cover that, there’s something we want you to understand. When new trends in property start to push the boundaries and exceed the limits, people get sceptical.
They start to think that it is something that’s not sustainable. Therefore, it is not possible. It certainly can’t be the new normal… Right?
But it can, and is this it? This reminds me of Roger Bannister’s story.
Do you know the name? If not, you’ll surely know his story!
Breaking records
He’s known as the first man to run the 4-minute mile… does this “jog” your memory??
Before this happened, no one thought it was possible to achieve such glory… until it was, when Roger did.
But what happens next? His record only lasted for 46 days… under 2 months! Once people saw that it was possible, they pushed themselves to go above and beyond what they thought not possible! Thousands more have broken this record since then, so what is normal? What is the new possibility?
This is an example of how people quickly jump into something when they see that it’s possible.
What does this mean for established housing?
Should you buy a property in 2022?
In short, it means there is a greater demand which will no doubt see prices continue to rise as the demand is so much stronger than the supply.
With a combined 35 years+ experience, we have never seen a market quite like this. This is an amazing time for everyday Australians to set up a strong financial future through smart investing.
End of hard borders in Western Australia
The borders have been open since early March 2022.
We have seen migration begin and locals look to travel abroad. Read the article about buying Perth real estate interstate.
Stephen Rowley on the Perth property market
Stephen Rowley is the director of Curtin University’s Australian Housing and Urban Research Institute.
“Obviously there will be some people coming, but also there will be some people leaving,” Professor Rowley said.
“Nobody talks about the net impact … nobody can accurately forecast that. It could be a lot less.”
However, he said there was certainly an existing issue with rental stock and any positive net flow into the state would put further pressure on that.
“I don’t think we can call it a catastrophe yet,” he said. “But clearly the market is in a serious situation.”
Professor Rowley said people would not move to a new city for work without securing accommodation first, meaning WA could struggle to fill all the jobs going begging.
“The lack of available properties will make a big impact on the number of people who come here for work – and we mustn’t forget the employment market is strong in the rest of Australia too.”
When is a good time to invest in Perth property?
As a property investor, you don’t want to be following trends, but you also don’t want to miss that boat! Instead, you want to anticipate a trend and get on it early!
Real estate has seen a massive change in the last 40 years, with a 12.5x increase in median prices. It’s a trend we can see, it’s historical data. Not to mention the compelling evidence is right in front of us. And still, it’s easier to think that we are in a housing bubble.
A bubble that will eventually burst, so house prices will eventually return to normal. Now, this doesn’t mean that you should blindly jump into everything that glitters.
Great opportunities with established homes and land
The best thing without a doubt that investors and homeowners alike could be buying right now is land with old/older homes on the land. Rent return in many areas are above 4.5% and with low interest rates investors and home owners could build significant wealth over the next 12-24 months with relatively low risk.
Reduce risk with property investment
The key to winning in PROPERTY has always been minimise risk, maximise reward (Savings, interest rates, ability to repay without tenants, low rental vacancy, low supply and strong demand).
That’s why using a buyer’s agent to buy a property is a smart way to make sure that the investment is the best it can possibly be. As experienced and local Perth buyer’s agents, we will guarantee a great investment and ensure a stress-free journey.