"Western Suburbs Market Update"

I recently attended a REIWA breakfast and saw a presentation by Stewart Darby. I found the presentation interesting and thought that I might share it.

POPULATION GROWTH DRIVING HOUSING DEMAND

 
• All components reaching record levels as peak hits 78k
(3.2%) in 2011/12 – up from 53k (2.3%) in 2010/11
• Migration surging – WA taking greater share of O/S (22%) –
average 1,100 people migrating to WA every week
• National intake (207k 2011-12) projected to increase to
232k by 2015-16 & maintain housing pressure

GROWTH PUTTING PRESSURE ON SUPPLY THIS TIME AROUND

• Last population surge in 2008 absorbed excess supply –
FHOG Boost absorbed some stock as vacancy rate hit 4.7%
• This time round - vacancy rate at 1.8-1.9% & first home
buyers withdrawing supply as listings fall to sub 12k 

2012 IN REVIEW

• Turnover – highest level in 3 years
• Market shifting as first home buyers have
soaked up stock & trade-up buyers are pushing
median up
• Seller sentiment rising as discounting falls
2012 IN REVIEW
• Listings – fell 32% & hovering ~9,000
• Rental market remains a pressure point but .....
• Land sales rising as new build outlook improves
• Regional markets showing variable signs 

PERTH DWELLING MARKETS

Source: Landgate/REIWA

HOUSE SALES
• 19% sales increase but
9% below 15 Yr Ave
• Annual Median $485k
• 5 yr AAGR = 0.8% pa
• 10 yr AAGR = 9.7% pa  

  
MULTI-RES SALES
• 21% rise in sales but
22% below 15 Yr Ave
• Annual Median $410k
• 5 Yr AAGR = 1.1% pa
• 10 Yr AAGR = 9.3% pa

PERTH HOUSE MARKET

Source: Landgate/REIWA

• Dec. Qtr sales – highest for 2012 (+3% on Sept/18% on Dec)
• Increased sales in higher priced coastal sub-markets lifted
market median to $495k (+3% on Sept & 5% on Dec 2011)
• Despite strong FHB activity sales fell in outer SE Corridor
• Lift in upper end sales evident in sales distribution 

OOPS... IT'S HAPPENED AGAIN!

 Preliminary Dec Qtr Landgate median ($495k) has risen to
$500k – not because of price rises but market shifts

INCREASED SALES LIFT THE MEDIAN 

Source: Landgate/REIWA

  

Latest Landgate data has median ($500k + 4.2%) rising due
to increased activity across the board above $450k
Upper quartile has only risen 4.0%
Lower Quartile has been dragged up 4.8%

QUARTILES - PRICE SPREADS

• Quartiles introduced into REIWA data tables
• Quartiles = median of the median
• Quartiles provide price spread of 50% of sales
• Tells us more about the market
• UPPER QUARTILE = price of the 75th % record
• MEDIAN = 50% or middle record in value order
• LOWER QUARTILE = price of the 25th % record
• PRICE FINDER provides quartiles (Q1 & Q3)
• See E-xpress Edition 147 on 1/2/2012

PERTH MULTI-RES MARKET

Source: Landgate/REIWA

 • Steady rise in activity from Sept 2011 low (lowest since
Sept 1988) but still reflects weak investor confidence
• No discernible trends in sale price distribution with
median sitting in a $398-415k band for 2.5 years 

LISTINGS – SUPPLY IS TIGHTENING

Source: reiwa.com

  
• 9,200 (-32%) has not rebounded due to strong activity
• Below 12k equilibrium & sales returning to average levels
• Pockets of over & under supply still exists
• Listings to Dwellings ratio – 1.1% (2.2% April 2011)
• Land listings down (1,700) from June 2011 peak (3,500)

FIRST HOME BUYERS RAMPAGING...
Source: Office of State Revenue

• WA was nation’s leading first home buyer state in 2012
• Since Sept 2010 - strongest non-stimulatory growth phase
• 30% of market in Dec Qtr – up from 25% in March Qtr
• But applications for established grants may be topping out
• New build trending up but applications also peaked in Nov.

WHAT’S HAPPENED SINCE DEC QTR
YOUR DATA TELLS THE STORY

• Strong reported sales in February after New Year rebound
• Based on reported sales for Jan-Feb, March Qtr will
exceed Dec Qtr as market moves back towards average
turnover levels BUT median price is quite stable at present

WESTERN SUBURBS HOUSE MARKET
Source: Landgate/REIWA

Dec Qtr sales ~+40%
• Median - $1275k (+7% qtr/+2% yr)
Notable sales increases
Floreat
Mosman Park
Nedlands

 2012 sales up 21% but down 17% on 15 yr ave
• Annual Median $1.24 M (-6%)
• 5 Yr AAGR = -1.8% pa
• 10 Yr AAGR = 8.9% pa

WESTERN SUBURBS
MULTI-RES MARKET

Source: Landgate/REIWA

Dec Qtr sales ~+23%
• Median - $452k (-3% qtr/-3% yr)  
Notable sales increases
Cottesloe
Subiaco   

2012 sales up 22% but own 30% on 15 yr ave
• Annual Median $485k (-1%)
• 5 Yr AAGR = 1.1% pa
• 10 Yr AAGR = 9.3% pa

LATEST LANDGATE DATA
Source: reiwa.com 

 LOCAL LISTINGS & SELLING DAYS
Source: reiwa.com

LISTINGS
• Followed overall market down but increased 6% in Dec Qtr
• Listings to Dwelling Stock Ratio – 1.5%

SELLING DAYS
• Western Suburbs tracking market as overall activity improves  

SELLER SENTIMENT IMPROVING
Source: reiwa.com

All measures of sentiment improving incl. Western Suburbs
PERTH WESTERN SUBURBS
• Vendors discounting 55% (-13% pts) 69% (-18% pts)
• Ave. Discount 5.5% (-1.5% pts) 7.6% (-2.3% pts)
• O’ll market discount 1.9% (-2.3% pts) 4.3% (-4.3% pts) 

 LOCAL RENTAL MARKET
Source: reiwa.com

ASKING RENTS
• Seasonal dip recovery after local listings rose sharply across Dec Qtr
• Multi-res dip also across other areas 

• Peaked at 311 (Dec) now trending down with local demand
• Represents 7-12% of Perth’s rental listings –currently 10% 

REIWA’S OUTLOOK FOR 2013 

• Households are adapting to post GFC housing environment
– ongoing housing crisis talk is neither helpful or accurate
– supply exists but not at everybody’s price point/location
• Expecting 10% increase turnover to long term average
levels with gradual change in the buyer mix
• Market composition will influence overall median but real
price growth is likely at lower end as supply tightens
• Expect first home buyers to peak as prices rise – increase
shift to new build as supply reduces
• Rental market to remain tight through to 2014 should
stimulate investors but not speculators
• Softening economic outlook is the downside risk & further
rate cuts may not be an adequate catalyst