With the latest decision to keep the official cash rate on hold at 1.5 per cent, market conditions in WA remain very accommodative to those looking to purchase property.
With the latest decision to keep the official cash rate on hold at 1.5 per cent, market conditions in WA remain very accommodative to those looking to purchase property. In fact, this latest downturn has improved affordability significantly for first homebuyers and those looking to ‘trade up’.
In the last couple of years, dwelling values have decreased to a more affordable level and in terms of new land opportunities, developers not only offer a diversity of choice to suit most budgets, they are also providing attractive incentives to buyers.
When looking at the current median dwelling values in Perth, the latest CoreLogic RP Data figures show that median dwelling values have decreased by seven per cent in the year to September 30, 2016 and they are down 10.4 per cent on the December 2014 peak.
This means the current median dwelling value of approximately $480,000 is back to around 2007 levels. What sets current conditions apart from those in 2007 is the fact that the standard variable mortgage rates were around eight per cent in 2007 compared with just 3.5 per cent to four per cent now, meaning repayments are much lower.
Turning to the land market in 2007, prices were pushed up dramatically due to the high demand that was fed by rapid population growth and a shortage of supply. It took years for developers to manage to bring enough land to the market as they navigated lengthy planning and approvals timeframes.
Now developers have managed to get supply pipelines more in line with demand, which means the demand vs. supply ratio is such that prices are more reasonable.
Looking at UDIA’s latest land sales figures, we see the average price of lots in Perth and Peel is around $237,300; this is a 3.9 per cent decrease year to date. In the height of land supply shortages in 2007 the average price of land was up to $311,346.
For first homebuyers, new land is a smart choice given the First Home Owner Grant (FHOG) has been cancelled for established homes and now only applies to new.
On top of the grant, developers are offering incentives to buyers such as cash back offers and discounts, fencing and landscaping packages and sustainability packages.
Furthermore, and maybe most importantly, the range of lot sizes and locations available make new land a very attractive choice for buyers with differing lifestyle needs from small, compact product right through to semirural, larger land parcels.
While it might be difficult to find exactly what you are looking for in the established market to suit your current and future lifestyle needs, there is likely to be a new development project that is just right.