A fork in the road for Perth property…

Real Estate Vlog Episode 2 with James Priestly, Melville Real Estate Agent

Transcription

Hi, guys. We’re back with our VLOG series. Welcome to Episode 2.

I’m titling this one Fork in the Road.

See, the other day, I’ve opened the Google app on my phone, and literally, every article we’re headlined with house prices in Australia to plummet.

I’m reading this thinking, what rubbish.

If you actually read the articles, you would have learned that they were really only talking about prices in Sydney and Melbourne.

Like I said in the first episode, you cannot buy in to the media’s narrative without understanding what is really going on.

This brings us to the left side of the foot. Unfortunately, the narrative can have a serious impact on consumer sentiment and that sentiment can have a real impact on the market.

Now, the right side of the foot, the fundamentals of the WA market. Are they strong? And if they’re strong, shouldn’t prices continue to grow?

They certainly should. But the power of consumer sentiment shouldn’t be underestimated.

Let’s check in on some of the core fundamentals in the WA market:

• Mining, record sales, record employment, tick.
• Population continues to grow, tick.
• Unemployment, still near record lows, tick.
• Still the most affordable capital city, tick.
• 1 % vacancy rates, tick.
• 8,500 properties for sale and we need 12,000 to hold steady? Tick.

In any other time, there would be no question that this would result in price growth. But what will prevail? The media’s narrative or the WA fundamentals pull through?

Maybe we look to interest rates. Good place to look, considering that inflation is what sparked the media narrative over us to begin with.

Yes, there was a sharp rise in rates. However, from historically low levels, where do they stop?

If rates rise too far, eventually they will have a real impact on growth prices, even in the face of our strong fundamentals.

But here are four things to consider. The RBA doesn’t want you to go broke. They know our economy is sensitive to rate changes. They know interest rates will slow our spending. And the RBA also knows about 60 % of economic growth comes from household spending.

And so, many analysts predict it’s likely the interest rates don’t rise nearly as much as some suggest.

I can tell you one thing for certain, though. If the country does go into economic decline, the RBA will start to drop rates again.

If anything, maybe WA gets a very short and very soft decline. But if that happens, my money is on a huge growth spike after.

As for the rest of 2022, no change in my forecast.

I think we get about 10 % annual growth.

For the next episode, I’m going to give away some of the tricks that agents are using to sign you up. This one cannot be missed, I promise you, so stay tuned.