Some people might be worried about the slow down in the Perth property market, but not me.
If you have been on the sidelines watching the tremendous growth being achieved in the past 2 years, you may have been sad and desperate to jump in to get your share.
The reality was that it was almost impossible to find any property available as the incredible pace of the market meant that any property offered for sale was snapped up in no time, leaving offshore investors usually missing out.
Sop even if you wanted to invest, you just couldn’t get in to the market.
There simply was no time to consider if the investment warranted pursuit, so this high level of urgency will no doubt lead to some investors being disappointed when they discover that their rush to buy may have lead to an overly generous entry price. One that may be subject to potential correction.
Growth in House Prices in Perth to the year to 31st March 2007 was a staggering 32.1%, on top of the previous years 28.8%, so anyone that was lucky enough to buy a year or two ago would be rightfully ecstatic, however grow in the 3 months to march 2007 slowed to just 2.1% according to the ABS House Price Index.
The result of this means that most people have already entered the market and therefore there are less buyers now than before.
This is great news for true long term investors as the speculation days are nearing an end, and the availability of stock is on the improve.
We will shortly move into a period when the buyer has the upper hand and can look to negotiate pricing with more aggression than has been available over the past 2 years.
Some speculators may also be very keen to exit the market prior to settlements on the property they have signed up on as they may well not have the financial capacity to meet the settlement obligation. This is a great opportunity to seek price reassessment and possibly pick up a better price for the astute investor.
Quality property is still at a significant shortage in the market and the continuing strength of the Western Australian economy will ensure that the market remains strong and positive, and prices should continue to rise due to the true demand in the market.
The coming year or two will just see a slowing of the growth experienced in the past two years, back to more normal growth rates.
The recent State Government announcement to expand the First Home Buyer concessions will be very welcome in the market as they can now get full Stamp Duty exemption for purchases up to A$500,000, from the previous $250,000. This should keep the markets active at the lower levels which will have a small flow on effect up the property ladder.
In all Perth may well have experienced the greatest price surge ever in Australian property market history, one that I feel will be difficult for anywhere to replicate.
A lot of the growth was catch up from a quiet few years, some from speculation and some from the underlying economic strength, so that is good news for investors as genuine price rises will always be kept.
Perth still represents true value for money when you look at what you get for your money, so as long as you are sensible with your assessment and undertake proper research on the property, you can feel confident of continued price growth in the coming years.
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