The downturn in our city’s property market has been the talk of the town this year, but we have to ask ourselves, were we really that surprised?
They say that all good things come to an end – a booming property market is no different. Property markets move in cycles; house values rise due to strong market growth, remain steady, then typically decline during certain phases of the cycle.
Our state’s mining sector has been uncertain for some time, population growth has been leveling off and unemployment rates were always going to rise as a result of many state projects coming to an end. It was only ever a matter of time before our property market would be affected also. Put simply, it has taken the property market a little while to catch up and adjust to these softening economic conditions. So what we have seen this year has been normal and anticipated.
If you are a home owner reading the media headlines; don’t fear- our property bubble is not about to burst. Why? There is no bubble! We are in a perfectly normal downward phase of a property cycle. You’ve got to expect this after such a strong rate of capital gains previously. Rents are also moving backwards, transaction activity has slowed down and the yields are showing some downward pressure- all very typical.
We are now in a market particularly skewed towards buyers and the great news for many West Australians remains – it’s a perfect time to sell your property and buy the one you’ve been dreaming of. Low interest rates continue, allowing upgraders to buy a new home while retaining their existing property for long term rental purposes.
Of course, personal circumstances will differ, and for many, trading up will mean the sale of their existing home first. The biggest concern for these upgraders will be the fear that they won’t achieve the price they want for their current property in this market. If I’m being honest, this will most likely be the case. The reality is that upgraders will need to have realistic expectations and be ready to accept less on their current property, but they need to remember that their new purchase will more than make up for it. My tip is not to look at buying and selling in isolation- view the process as a package deal.
So a look to the future- what has the market got in store for 2016? As Christmas draws nearer, we are seeing a much slower rate of decrease on prices, which is a positive indicator for the New Year. If this rate of decrease continues, we should see market conditions improve throughout next year.