For yet another week the Perth property market is showing strength and resilience. Despite Sydney and Melbourne being in lockdown, the Perth market is shaking its hair like it just don’t care. Agents and sellers alike are enjoying a party sponsored by property buyers who just can’t or won’t stop shelling out money at the Good Times In Property Bar.
And, as with any party where the drinks are free, there are always opportunists, this time in the shape of sellers who haven’t enjoyed a free bar tab since 2105-16. Selling now is their way of downing the free drinks and sneaking off with a cheeky roady. Their strategy is to take the free drinks and run.
But, as evidenced by the ridiculously low stock levels, there are plenty of other sellers who have decided to play the long game. These are the sellers who love nothing more than to sit back and watch everyone else drink themselves silly. They know that doing a runner with the free drinks is a recipe for waking up next morning with nothing more than a knowing smile and a hangover.
They know that parties come and go and would prefer to sit back and sip the fine red wine of long-term property ownership.
As for the buyers shelling out their hard-earned, there are some that really do take a line out of the Sammi Smith playbook: Let the devil take tomorrow ’cause tonight I need a friend. Paying 50 or 100 grand over the asking price on their dream home is tomorrow’s problem.
For now it’s pay day, there’s money on the credit card and there’s a party to enjoy.
And look, these buyers may well be right. Unlike most of the other capital cities in Australia, Perth’s property values are lower than they were back in 2016. Right now the Perth median price of $515,000 is lower than it’s all-time peak of $520,000 in December 2016.
At the level of city-wide median prices paying over the odds seems justifiable. But at the individual property level paying too much is paying too much. Every dollar that you pay over the actual value of the property is eating into tomorrow’s capital growth.
The trick for home buyers is to figure out how much a home is really worth. Agents have years of practice and owners, especially those who are thinking of selling, spend countless hours walking through neighbour home opens and analysing the latest sales in their area. Buyers, on the other hand, have to make a decision and make it fast. And they have to make a decision in a highly competitive environment where they’re competing with other buyers.
It’s a crowded party and pretty much no one wants to miss out being served.