There is no conspiracy in REIWA market commentary: David Airey
This article is a response to Terry Ryder's piece 'Caution - inhaling real estate agent's words may be dangerous to your financial health'.
There is no conspiracy in REIWA market commentary. We pride ourselves in ‘telling it like it is’, contrary to the cynical perception that many members of the public often have towards agents.
The fact is the Western Australian property market is very cyclical (usually counter-cyclical to the east coast), and very closely linked to the fortunes of the mining and resources sector. That has taken a dive, with as many as 25,000 jobs having gone in the last year.
After solid market growth through 2005 – 2007, market correction and the global financial crisis in 2008, followed by full market recovery in 2009, the WA housing market has bumped along for the last five years with modest growth and patchy sub-markets. First home buyers have been very active.
However, we are now facing a year in which our population growth rate is slowing, consumer sentiment is weak, job losses continue, people are moving house less often and a significant number of new dwellings are coming to market or planned for next year.
There are some 24,000 homes under construction, of which 8,300 are multi-residential. While this level of output is not so unusual, it has not previously occurred at a time when population growth was slowing. There is increasing concern about how this oversupply will impact across all markets as it comes to fruition.
Listings for both sales and rentals have spiked and continue to climb. Days on market have stretched out to 63 and the number of vendors discounting has increased to 57% with the average discount climbing to almost 6%.
The message we are hearing loudly and clearly from our agents and property managers is that many sellers and owners have unrealistic expectations and seem to have a mind-set that views that market as unchanged from a few years ago. This is wrong.
REIWA believes it has an obligation to advise the public about changing market conditions if sellers and owners want to achieve the best asking price or rental return and in a realistic time frame.
This is not to suggest that people shouldn’t buy or invest in the Perth market; far from it. But engaging in the market requires good research, good timing, realistic expectations and a long-term outlook. And it must be said that some sub-markets and regional centres are doing much better than Perth overall.
Current indicators point to a weaker market in 2015 across our metropolitan area for the reasons outlined above. Growth will be negligible. Sellers and landlords will find it a more challenging year and we don’t resile from speaking this truth.
It will be interesting to revisit this topic in the December quarter, and I invite Mr Terry Ryder to return to this column about REIWA and Perth later in the year. I am confident our commentary will be proved accurate and prescient.
David Airey is president of REIWA.
