RECENT COMMENT
22 November 2008 Market Update
Comments by Simon Moore, Head of Research
Hegney Property Group extracted from article in
"The West Australian - Real Estate - Property Report"
The time is right to bag a bargain
With recent reductions in interest rates, the Perth property market was no longer suffering because of affordability but rather, a lack of confidence. The combination of falling values in outlying areas, increased government assistance and lower interest rates meant affordability for first homebuyers was now at levels not seen since before WA's 2005-06 housing boom.
In trade-up suburbs, falling rates have placed a ceiling under values in some areas as homeowners no longer feel they need to sell as their loan reapyments reduce. In the upper end of the market it is the large increase in listings and lack of interest from buyers that is causing the softening in the market. Over the past 12 months, listings have more than doubled in a number of suburbs while sales rates have fallen.
Hegney Property Group figures showed listings in City Beach were 162 per cent higher than they were in November 2007. They were 155 per cent higher in Cottesloe, 150 per cent higher in Mosman Park, 112 per cent higher in Dalkeith and 67 per cent higher in Subiaco.
In the next 6 to 12 months some of the best buying opportunities would be in traditional trade-up suburbs where prices were between $500,000 and $900,000.
18 October 2008 Market Update
Comments by Simon Moore, Head of Research
Hegney Property Group extracted from article in
"The West Australian - Real Estate"
Western suburbs homes set for 10pc fall: analyst
Home owners in the western suburbs could expect a 10 per cent drop in property values next year, which could wipe $350,000 off the price of an average home compared with the heights of early this year, a real estate analyst says.
Hegney Property Group head of research Simon Moore said that because the fortunes of the western suburbs were closely linked to the global sharemarket crisis, he did not expect property prices to recover until the financial meltdown abated.
"That means a $4 million property could sell for $3 million by the end of next year," he said.
Mr Moore said the best buys in the immediate to medium future would be in the mortgage belt areas in the northern suburbs.
"With the Federal Government dishing out higher grants to first homebuyers - now $21,000 for new homes and $14,000 for established properties - all the buzz in the next 12 months would be centred on first homebuyer territory, Mr Moore said.
He nominated Craigie, Padbury, Kingsley, Hamersley, Beldon and Greenwood in the north and Parkwood, Ferndale, Riverton and East Victoria Park in the south, all with decent houses under $500,000, as short-term value.
Mr Moore said upbeat first homebuyer activity would inevitably seep through to the mid and top-tier market by 2010.
He said there was undiscovered potential in the northern suburbs, while the gloss had slightly worn off the southern suburbs which soared because of the Mandurah railway.
"A lot of these northern suburbs weren't particularly fashionable during the boom and had less growth but now people are starting to realise that they're probably undervalued," he said.
4 October 2008 Market Update
Comments by Simon Moore, Head of Research
Hegney Property Group extracted from article in
"The West Australian - Real Estate"
Time for a BIG rethink.......
The number of typical four-bedroom, two-bathroom homes being built might also decrease. According to Hegney Property Group's Head of Research, Simon Moore, WA developers and subdividers would need to carefully consider the type and size of dwellings they built as demographics changed.
"Currently 44 per cent of families are a couple with children and 42 per cent are couples without children. By 2016, it is projected this will shift to being 36 per cent couples with children and 46 per cent couples without children."
"Over the next eight years WA was forecast to have a net gain of more than 100,000 households with only 16.5 per cent of the increase comprising couples with children, 36 per cent couples without children, and 32 per cent lone persons."
"This major shift in households will require us to modify the size, style and location of new dwellings being built. In future, people could expect to see more two and three-bedroom dwellings built on smaller lots, with higher density around train stations and transport nodes, as well as more energy efficient and smaller homes on cottage and terrace-style lots."
"We will need to see a shift however, we are yet to fully embrace apartments. In the long term, we will need less resistance to multi-storey dwellings in order to cope with our increasing population without placing unsustainable infrastructure demand on our city."
20 September 2008
Market Update
Comments by Simon Moore, Head of Research
Hegney Property Group extracted from article in
"The West Australian - Sharemarket Special Report"
"The Crash of 2008"
Property market could benefit from share chaos.......
"Some areas of the property market, such as established homes, were still subdued and would be for the next year" according to Hegney Property Group's Head of Research, Simon Moore.
"The continued bad news from the US is causing concern among some potential buyers, leading some consumers to shy away from residential property, uncertain of what the future may hold."
"While the bad news from the US was likely to affect sentiment for some time, the outlook for the Perth property market towards the end of 2009 was positive. Should the broader WA economy remain insulated from the global issues and employment remain stable, then the Perth market is due for a recovery."
"Falling interest rates, a rising population and a market which appears undervalued in some areas, points to an increase in activity by mid 2009."
19 July 2008
Market Update
Comment by Stewart Kestel, Managing Director
Hegney Property Group, Perth, Western Australia
While WA investors were looking interstate, speculative residential investors from the Eastern States were looking to buy properties here in Perth. This was because of strong growth rates in Melbourne, Queensland and New South Wales. As a result, interstate investors were looking at opportunties in WA that seemed reasonable and affordable in comparison.
Investors were also noticing rental returns were starting to increase. This is starting to lessen the disparity between the Eastern States rental yields and ours.
WA residential investors ha been primarily investing in Queensland and Victoria. This was down to clever marketing techniques and what was perceived to be affordable property compared with WA. However, WA was still seeing active investment from within. Expats were also looking back into WA in order to secure a property in a desirable location before prices increased.
We predict that WA would see a lot of residential investment activity in the next 18 months due to the strength of the economy.
4 July 2008
Petrol at $2 per litre will re-shape our housing market
Comment by Simon Moore, Head of Research
Hegney Property Group, Perth, Western Australia
If the average price of petrol increases to $2 per litre, our housing market will be significantly affected, according to Simon Moore, Head of Research at Hegney Property Group.
Mr Moore states “The average price of unleaded fuel in Perth has increased from 129.9 cents per litre in June 2007 to 156.6 cents per litre, according to fuel watch. This increase equates to an extra $620 per year in fuel costs for the average Perth household, or the equivalent of a 0.25% increase in interest rates for the average Perth home loan.”
“Should petrol increase to $2 per litre in the latter half of 2009, this will equate to over $1,600 per year in extra fuel costs, or just under three 0.25% interest rate rises in 18 months.”
Mr Moore believes that as fuel prices rise, people change their behaviour. “We are already seeing this with the increased usage of public transport, particularly evident with overflowing train station car parks and crowded trains during peak hour.”
“If fuel prices continue to rise, we will see a drastic increase in the use of public transport as people tighten their budgets, particularly given simultaneous interest rate rises.”
“Over the longer term, this change in behaviour will become a change in the vehicles people drive, and then a change in where people choose to live.”
Mr Moore states that real estate prices near public transport, particularly rail stations will benefit significantly. “This is because in the past, close proximity to rail stations has not been seen as desirable as the higher valued locations. There will be a turnaround in these areas especially given the State Government promise to make the best use of existing infrastructure and the likelihood of increased zonings within areas located near train stations to maximise their impact.”
“We are already seeing some of the affects on housing, with 17 of the 20 suburbs with the lowest percentage of homes for sale either located within a 10km radius of the CBD or within close proximity to a train station. Conversely, of the 20 suburbs with the highest percentage of homes for sale, none are within 10km of the CBD, and only 6 are within close proximity to a train station.”
“When fuel prices increase over the short term, people change their cars. If they increase over the long term, people will change their houses”.
“People need to look at the long term trends given that property is a long term purchase. Anyone buying a home today should consider the prospect of higher fuel costs and ask the question, How different will our housing market look if petrol is $2 per litre?” he said.
4 July 2008
Perth Market Update
Comment by
Hegney Property Group, Perth, Western Australia
Current housing stock levels are at 24,959 (3.69%) properties for sale as at 1 June 2008 (source: 'Home Open'). As a guide, 14,000 to 16,000 (approximately 2.0%) properties for sale are considered a normal market. Combined with the current high stock levels, there is a range of factors having a negative impact on sentiment, confidence and the capacity of people to enter the property market. These factors include: continued concern for the global financial markets, pressure on interest rates, increasing fuel costs and a general increase the cost of many goods and services. With this in mind, the property market across the Perth metropolitan area is flat.
Anecdotal evidence from valuers and real estate agents indicates a fall in property prices ranging from 5% to 15% over the last 6 months. As more sales data becomes available, greater scrutiny will enable actual falls in specific locations to be determined.
In contrast to the factors affecting the current market downturn, there are also ongoing underlying pressures on demand. These factors include strength in the Western Australian economy, continued population migration to Perth (approximately 900 people per week) and reduced building activity. Currently these factors are placing upwards pressures on rents and at some point will impact on attracting a greater number of people to enter the property market.
28 May 2008
Sell your property first
before buying
Comment by Gavin Hegney, Executive Chairman
Hegney Property Group, Perth, Western Australia
On average, 100,000 people change homes in Perth each year.
In the market that currently exists in Perth, now more than ever, anyone looking to change homes need to adopt a different approach to the traditional method of buying another property first and then selling your existing home.
Gavin Hegney, chairman of Hegney Property Group in Perth, strongly recommends buyers to SELL THEIR PROPERTY FIRST and because of the high stock levels of properties for sale in most areas, it is critical to NEGOTIATE HARD on the new property to achieve the right price in line with today's values and the right sale conditions to suit your circumstances.
"Only after you secure a sale on your property should you then submit offers to purchase on another property. When marketing your property, don't look at the asking prices, but importantly look at what's currently under offer as it will be more accurate than looking at sale prices of recent weeks/months - this is how quickly our market is changing", says Mr Hegney.
"This plan of action is a very different story of how to play the market as against say 6 months ago, because in today's market you cannot afford to take the risk of securing a property and then being in a position of having to accept less for yours", he said.
According to Mr Hegney, many people still have an over-inflated expectation on what their property is worth however more than half the suburbs in Perth have now dropped in value. It is critical for both buyers and sellers to seek an accurate assessment of their property's value in line with today's market.
Negotiating tips in today's market:
Ask how long the property has been on the market. This should be the first question asked because if a property has been on the market for more than two months, then it is over-priced.
Establish if the vendor has purchased elsewhere.
Play one property off against the other - high stock levels allow for this.
Be prepared to walk away as there will always be another property.
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