LOOK ON THE BRIGHT SIDE

It’s no secret that the Perth real estate market is no longer booming. Naturally, everyone is constantly trying to pick that silver bullet that will fix everything and make the tough times go away. Many were hoping an interest rate cut was the answer, unfortunately it’s not that simple.

But let me put things into perspective. Sure the market is not an easy place but the news isn’t all bad. If you’re a buyer, the news is actually quite good. The market is full of choice and affordability has made a come back. The cost of money is starting to drop as indicated by the first cut in interest rates and buyers have the time to make informed decisions. Put simply, right now there is an abundance of opportunity out there for buyers. The challenge for buyers maybe the availability of loan funds although the Federal Governments $4 billion initiative last week will greatly assist funds liquidity for housing.

We are truly witnessing a buyers market and to be honest, it is probably about time they had a fair go and actually good for market fundamentals. Boom time pushed the Australian Dream further and further from the reach of many people and while Perth is by no means a ‘cheap’ place to buy, prices have corrected and there is value to be had. I see this continuing well into 2009.

However like all things, this buyer friendly market won’t last forever. The fact is this is simply a normal part of the property cycle and in time things will again turn in favour of the sellers, it’s the way the cycle works. World economic factors may distort and prolong the cycle timing but it will re-align itself.

While things are not going to dramatically change in the near future, Perth is poised for change. The following factors indicate that a strengthening of the market is on the horizon.

1) The dropping of interest rates is always the first trigger – the first sign of the ‘curve’ in the property cycle.

2) Demand for housing continues to accumulate as people move into the state looking to capitalise on the employment opportunities.

3) Another key factor is employment, all signs point to continued employment growth in WA. Security of employment encourages buying confidence.

If you understand the property cycle, you will understand that what we are going through now is completely normal and somewhat predictable. Trust me, I have been in this industry for a long time and I have seen it all before.

New Realmark Corporate Website

I'm very proud and pleased to announce that our new realmark.com.au website has been launched this week. This new website has a fresh, contemporary look inline with the brand positioning of Realmark and introduces a number of key advantages for our clients.

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Buyers no longer fear auction

Here at Realmark we have seen a noticeable lift in auction activity over the past month. Realmark auctioneers held five auctions held over the past two weeks. All have had bidders, with one selling under the hammer, one selling on the day and offers written on the other three which are still pending negotiations. All auctions drew an impressive crowd.

So why is this? Well sadly I don’t think it is because all of the property markets woes are over. I am also certain it doesn’t have anything to do with the Reserve Banks announcement of interest rate cuts.

I think it all comes down to the buyers.

In Western Australia the idea of the auction is relatively new, us sand gropers have always been far more comfortable with the private treaty sale. Many thought the auction was reserved for the multi-million dollar mansions scattered throughout the western suburbs. The auction was something that normal West Australians simply weren’t used to.

However our eastern counterparts have a long history with the auction, believe it or not, they think the private treaty sale is a little strange.

So what has changed in WA? I think the buyer has changed.

Today’s buyer is far more calculated and knowledgeable than the buyers of boom time. Buyers today are well informed when it comes to price and they want to negotiate in an honest, transparent environment. They don’t want sales spin, they want the facts. The auction provides all of the above and hence, they seem to be coming.

Don’t get me wrong, it is not as easy as sticking up an auction sign and buying a hammer, auctions have to be done right. But I believe the current market has spurned a new breed of buyer, and they are not afraid of an auction.

So what is the morale of the story? Simple. If the buyer has changed, we as agents need to change too. Boom time is over, its time to adapt.

Let the facts speak for themselves

Spring – supposedly the “Nirvana” of the real estate year – is upon us once again. With temperatures on the rise, flowers blooming and much talk about an impending interest rate decrease, it might feel like the Perth property market is about to perk up. But don’t let emotion mask the facts – and the facts tell us that there is unlikely to be any radical “bounce back” in
the near future.

It is impossible to predict the future of the property market – unfortunately we don’t have a crystal ball! But according to Realmark principal John Percudani, we can use current data mixed with historical evidence to look at probabilities. And the most recent facts and figures tell us that no matter how much we might want to see a strong positive change, it is unlikely to happen this year.

“If you look at the recent REIWA figures, we can see that the volume of residential transactions or sales is down this June quarter (as compared to March quarter 2007) by 25 per cent,” says Mr Percudani. There are currently 17,500 properties for sale in Western Australia. This equates to about 5 months supply of property. In March 2007, we had only 3.5 months of supply.”

“Not only is there a glut of property, but they are taking longer to sell. The average days on market are 74 as compared to 55 days in March last year. This is an increase of 35 per cent. And we already know that this has had an effect on overall median house prices In Perth which are down approximately four per cent.”

Even with the likelihood of an interest rate drop, which has been touted by the Reserve Bank and the media in recent times, Mr Percudani believes it would unrealistic to expect an upswing in 2008.

“It’s not all doom and gloom – this current downturn is part of the overall property market cycle and with any price correction comes buying opportunities and increased affordability,” says Mr Percudani. “But I think it is important to understand the factors that lead to this downturn in order be realistic about any positive change in the property market ‘curve’.”

Mr Percudani points to a number of events that have influenced today’s market. Not only is there a global economic downturn which has created a general sense of unease and caution amongst buyers and investors, but also our major lenders are suffering from a global credit squeeze, forcing interest rates up. Even if the Reserve Bank lowers interest rates, there is no guarantee that this will be passed on by the banks and lenders who are finding it increasingly difficult to borrow money themselves in the global credit market place.

“All I’m suggesting is that it has taken a number of changes in the market to create the current situation,” says Mr Percudani. “So it would be unrealistic to suggest that only one change – such as a decrease in interest rates – will be enough to radically change the property landscape. We cannot expect one factor alone to influence such a major turn around.”

“Agents are intrinsically optimistic – they want the best price for their clients and themselves,” says Mr Percudani. “But advice that is not based on facts can be misleading and unrealistic. And the current facts tell us that a Spring upturn is unlikely. Agents need to be using transparent evidence on which to base their estimates. Otherwise sellers will be living with false hope.

Realmark Homes Come Online

Realmark have launched a new online marketing initiative which provides sellers to showcase their property with a customised website.

Each property specific website will use the actual street address of the property as the web address to ensure easy buyer attraction. Realmark is the first agency in Perth to offer this service to sellers.

Realmark Director John Percudani said the new initiative was just another way Realmark was leading in property marketing.

“The internet plays a very important role in selling homes and theses property websites are taking virtual marketing to another level,” Mr Percudani said.



“Buyers today are very different from those 10 years ago, they want to see and experience the property via their computer first before they make contact with the agent or decide to view a short list of properties that suit their criteria.

“It is for this reason that you need to give buyers the very best first impression of a property.”

Mr Percudani said that like most other industries, real estate had to embrace online marketing in a more proactive manner.

“Just as we have seen the print media move to creating an online presence, it was time for us to do the same for property consumers,” Mr Percudani said.

The websites will be created internally by Realmark’s team of professional web designers.



“The websites are a very affordable seller investment and are therefore suitable for the entire spectrum of properties, Mr Percudani said.

Realmark has been recognised for its excellence in marketing, winning the 2007 REIWA Communication Award.

Invest with the best

Finding the ideal investment property can seem intimidating. Done well, it requires research and an investment in time as well as a financial commitment. But the current market is well suited to buyers so if you’re thinking of investing in bricks and mortar, here are some things you might like to think about.

Buying an investment property requires a different mind set to buying a home to live in. It’s a business decision based on objective data rather than a subjective “feeling”. The property market works in well-documented – approximately 10 year – cycles. Most financial advisors will recommend a long-term investment strategy which means experiencing at least one “cycle” in order to maximise capital growth.

Rather than rushing in to an investment, take time to do your research and wait for opportunities that represent value and try to ensure your property will always hold tenant appeal. The rental market may be tight now, but what if things change? Will your property stand out from the crowd? Does it offer something that other properties don’t?

Realmark Property Management director Anita Percudani believes making an educated purchase starts with doing the research that identifies desirable locations and property characteristics that set up an investor to succeed with their strategy.

The Real Estate Institute of Western Australia (REIWA) agrees that is currently a buyer’s market with more than 17,600 properties for sale including more than 2,500 blocks of land.

“Despite these favourable circumstances, investors should still be looking for opportunities that offer good value for money,” says Mrs Percudani.

“As this will always help increase their rental returns throughout the investment period.”

When researching the market, investors should be mindful of the key characteristics of successful residential property investment.

”It is important to look not just at the rental achievable in this current high market, but also consider the fundamentals relative to the property that will create positive capital growth,” says Mrs Percudani.

According to REIWA, the better investments are generally in places where there is consistent population growth, such as the near city or the rapidly growing regional centres. The built up areas of a town or city where there are plenty of tenants needing rental accommodation are often good choices.

Tenants like convenience therefore investors should always look for proximity to the best amenities: access to main roads and public transport, close to shops, schools, tertiary institutions and other community infrastructure.

The ideal investment location is where demand for rental properties exceeds supply. In the current tight market this is almost everywhere, but it won’t always be the case. Do your homework to gain a long-term view of local conditions. The Australian Bureau of Statistics has census results illustrating areas of high tenancy rates.

Look for properties that are affordable, generally at or around the median price and which have reasonable prospects of good growth in values.

Historical median house price information for suburbs and major regional areas is available from REIWA.

This information is useful to discover patterns in values.
Usually one part of the market will be experiencing high growth rates that eventually influence neighbouring areas, particularly if they have similar characteristics. This ripple effect can be well worth exploring. Are there undervalued houses in a suburb next to one that is currently doing well?

Choosing a property with redevelopment potential can also be worthwhile. An investment property that can be subdivided into smaller lots for home units will be popular with some developers and can bring long term rewards.

Compiled with the assistance of REIWA

Buyers Aren't Liars

As the Perth property market continues to correct itself with prices easing and supply outstripping demand – something positive is finally occurring: affordability is currently increasing. Buyers hold the majority of power in the real estate equation and it’s time for sellers and agents to respect their needs.

Recent figures released by the Real Estate Institute of Western Australia confirmed what most of us already knew – median property prices in Perth have dropped for the second quarter in a row.

This price adjustment is not good news for sellers who are after high, short-term capital growth. But according to Realmark director John Percudani, it is all part of the property market cycle and has a healthy effect on housing affordability. But it also creates uncertainty – and buyers, sellers and agents alike are all feeling a little unsure.

“When people are feeling unsure in the market place, sometimes they go about things the wrong way when trying to find solutions,” says Mr Percudani.

“Right now – and for the foreseeable future – we are seeing a significant adjustment in the property market. Suddenly agents need to focus on buyers and making sure their needs are looked after.”

Instead we have seen an increase in selling solutions – including hybrid selling methods such as “expression of interest” and “price ranging” – that only confuse the buying public.
According to Mr Percudani it is a buyer’s market, and buyers’ needs must be addressed. So what does this mean?

“What buyers need now more than ever is clarity, simplicity and transparency around the buying process, “ says Mr Percudani.

“The way some of the property industry is trying to address market uncertainty is counterproductive.”

Mr Percudani believes a buyer’s needs must be met on several levels – from marketing through to the transaction of selling a property – to ensure the process is a success for everyone.

“Sellers entering the market must work with their agent to establish both desire and value. This should be done by showcasing their property to ensure it stands out from the rest. It also means attaching a pricing strategy that has integrity in the current market.

“When it comes to transacting, buyers need to feel comfortable and have confidence in the process. They are looking for forthright answers and transparent processes. If they don’t see these things, they are not going to be engaged in the process.”

Now is not the time to be trying out hybrid selling methods, he says. Recognising that the majority of property in WA is sold by Private Treaty, Mr Percudani warns against using techniques that confuse or distract buyers. Don’t put a “dream” price on your property and see what the market says.

“Similarly, putting a wide price range which starts well below the seller’s desired or realistic price is also going to create false expectations which can damage the chances of a successful result.”

Mr Percudani recommends using recent sales data to develop a truthful and realistic pricing strategy that makes a seller’s expectations clear to potential buyers.

“No matter the market cycle stage, buyers are the most powerful force in the property market place and should always be shown respect. As a seller, take the time to ensure that both you and your agent approach the process the right way. This is a time when informed advice from a real estate agent could be of high value in achieving a favourable sales result.”