Perth property market update

When will the Perth Property market return to growth?

With so much focus on the NSW and Victorian property in media it is important to understand Australia has many individual property markets and Perth has been doing it tough for many years now.   

You may recall way back in 2006, Perth's median property prices were the highest in Australia.  On the back of a record breaking mining boom with high medium incomes and strong population growth, our property market had a higher median value than every capital city in Australia.

Fast forward 13 years and the Perth property market is now the cheapest of all capital cities, so affordability is not really our issue.

How is the current market going?..... Really?

So if you visit a home open on the weekend and ask the reale-state agent this question you will probably get the same response they have been providing for the last few years and that is "The market is heating up, better get in soon".  Perhaps now that may be starting to ring true with rental vacancy rates extremely low and early indications weekly rents are increasing again.   This often is one of the lead indicators to growth in property values as would be renters turn their sights on purchasing.

Election time, will the sky fall in?

In the weeks leading up to the election both major parties loaded up on promises and reasons to vote for them.  The Labor however, had a number of property related policies threatening to unhinge the fragile national property market and this uncertainty provided plenty uncertainty and newspaper headlines.

With the surprising election result and a win to the Liberal Party, the expectation is with certainty we will see confidence return to the Perth property market as we swing from the bottom of our long suffering downcyle.

So we are now finding almost all clients who obtained a loan 2 or more years ago are on the older smaller loan discounts and higher interest rates.
About home loan interest rates and investment loans

After the GFC and the following restrictions on bank lending for interest only and investment loans, the banks were given a clear run to increase their margins on loans.  So what happened was both new and existing clients looking for a loan that was considered higher risk (interest only or investment loans) received a small "package discount".  This higher interest rate soon flowed to owner occupied loans with the banks margins over the cost of their funds reaching an all time high.    In recent months with a number of restrictions lifted and competition heating up this is now reversing, with discounts increasing particularly for investment lending and fixed loans.

So we are now finding almost all clients who obtained a loan 2 or more years ago are on the older smaller discounts and higher interest rates.  Sometimes over 1% higher than the rates new clients are getting.  Occasionally these are with the very same bank, with "new to bank" clients being offered these much lower rates.

So at Focus Property Wealth we have initiated a full review of all our existing clients and also a quick review process for new clients that contact us to quickly determine if a lower rate can be obtained and how much money can be saved.  It is fairly common to save $3,000 per year of interest on an average loan size of $450,000.

So what is next for Perth?

It looks like it might be our time to shine again, albeit a slow (hopefully long) recovery.   Buying a property is exciting and rewarding but there are a lot of things to remember and you need to check in on your costs regularly.  In terms of finance, we’re here to help you including reviewing your current financial needs and keep on track with your future investment goals.  We’ll sit down, work through your plans and help set you up with a plan that ticks all of your boxes, so please get in touch today!

Regards Glenn Biggins.

This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances. Your full financial situation will need to be reviewed prior to acceptance of any offer or product. This article does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.