Perth Real Estate Rocks!

The question many people are asking me as we return from holidays and the Christmas break is “What will real estate do in 2012?” It’s a fair enough question following the depressed market of the past two years.

In fact the Perth property market has been trending down since the peak of the boom in early 2007 when the median house price reached $505,000 making Perth the second most expensive city after Sydney.

Towards the end of 2007 prices had started to fall and we were starting to see evidence that something was seriously wrong with the banking system in the US following the sub prime mortgage collapse.

In October 2008, in response to the collapse of Lehman Bros Bank in the US and the seizing up of the wheels of finance which led to what became known as the Global Financial Crisis, the Labor Government under Prime Minister Kevin Rudd injected billions of dollars into the Australian economy in the form of cash handouts and government funded projects, to ensure that Australia did not fall into recession, like the rest of the major OECD economies.

The Government also increased the First Home Buyers Grant from $7,000 to $14,000, the idea being that it would stimulate the building industry and therefore saving possible job loses.

What happened then was that, rather than stimulate new home construction, first home buyers opted to buy established homes, which did not create any new jobs, except in the real estate industry, but instead resulted in the mini-boom of 2009. This pushed up the price of established homes as First Home Buyers competed with each other for an established home in order to receive the extra $7,000 gift from the government.

This is an example of the ‘Law of Unintended Consequences’ and what happened next?…

Subsequently in 2010 and 2011 we had a major housing slump in Perth and values continued their decline to a point where the median house price in Perth today is $450,000.

So what about 2012?

I am happy to report that since Christmas buyer activity has increased markedly and, better still properties are actually starting to sell.

We have had our best start to a new year for many years and now find we are short of stock to offer for sale to the increasing number of buyers in the market place.

It seems a 4 year downturn in the property market is long enough for most people and, especially in Perth where there has been an increase in wages and where unemployment is very low. People now seem more confident to be entering the market.

In addition we’ve all had enough of the gloomy news about the economic situation in Europe and it has become clear that the Europeans will continue to muddle along and procrastinate and life will go on. Nothing new there.

There are hundreds of billions of dollars worth of resources projects in the pipeline for Western Australia and the likelihood of a major economic downturn is quite remote.

Personally, I feel consumer sentiment has turned in relation to the Perth real estate market and whilst property may not increase in value in the short to medium term, it looks like the market has probably bottomed.

If interest rates continue to fall and rents keep increasing as they have been, it will become more economically viable to buy rather than rent and more first home buyers will enter the market.

If you are buying a home to live in for the next ten or fifteen years, you are fairly safe. If you are buying to invest, do your homework and don’t borrow too much.

Welcome to 2012.

Thanks for tuning in, and let me know what’s on your mind …. ->

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Easter Special!

As an extra special thank you between now and Easter, if you are thinking of selling and you list your property for sale with Bernie Kroczek Real Estate, we’ll give you 10 cents a litre off your petrol for a year*.

Or if you are looking for a good Property Manager to look after your investment and appoint Bernie Kroczek Real Estate to manage your property between now and Easter, the same deal applies. We’ll give you 10 cents a litre off your petrol for a year*.

All you need to do is choose us as your agent when you come to sell your home, or rent out your investment, between now and Easter, and we’ll reimburse you 10 cents per litre of your fuel consumption for a year*. All we need are your petrol receipts bought into the office on a monthly basis, to receive your refund.

So if you are thinking of selling or renting and need a good agent, be sure to call Bernie in for a chat, between now and Easter.

* Maximum of 50 litres per week.

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