Agents caught short in off-the-plan boom

An eclectic mix of new suburbs and a change in housing preferences is pushing demand for properties across Perth, but estate agents believe some may not be tooled up to sufficiently handle the change in buying patterns, preferences and property demands.

Perth-based agents and industry representatives believe light industrial precincts and the ‘notionally’ called blue-collar areas have had a lot of residential activity and are now sneaking into the million-dollar market.

President of the Real Estate Institute of Western Australia David Airey said within the new growth market in Perth will be properties for sale between the $800,000 and $1.5 million mark. Mr Airey said this price range will be the new growth market for the next year or so.

“Things are just creeping over the million-dollar mark and this is in what’s been a relatively quiet market for the last three or four years with relatively low growth,” Mr Airey said, adding to what he describes as the ‘wave’ effect.

“Cheaper properties start to jump in value, and cheaper properties always move up in value more quickly percentage-wise - for example, $400 becomes $450 and then $500 a lot more quickly than $1 million becomes $1.2 million.

“The jump in lower property values, particularly properties under $1 million or under $800,000 has been quite steady and that’s pushed more traditional suburbs … they’ve just snuck into the million-dollar market.”

Perth-based property director for MLG Reality, Cindy Lee, considers the Perth market one that very few experts, speculators and commentators know thoroughly, said there is serious pressure on housing prices in Perth and parts of Western Australia.

Ms Lee said the pressure on the Perth market is coming neither from economic stability nor the mining boom but the recent desire of people to move into apartments in or close to the city, and only until recently have residents embraced the apartment living mentality that other states moved to some 20 years ago.

“Perth has a lot of traffic congestion, our roads were not designed for a big city and you can queue in traffic for up to three hours a day, so many are relinquishing the dream and choosing to be close to social networks and beaches and the only way you can start to consider that is with the apartment lifestyle,” Ms Lee said, adding that a high percentage of apartment sales are off-the-plan, leading to a new set of problems for estate agents.

“A lot are selling off the plan and many buyers are not patient to wait and settle for what’s left over.

“The agents need a change in mentality because when you are selling a lifestyle that does not yet exist there are so many different strategies for getting potential buyers to part with money for something they have never seen.”

Perth-based agent Scott Swingler from Space Real Estate, ranked in the top 5 of highest sale average in Top 100 Agents 2014, said the Perth market is very solid at the moment. Mr Swingler said they have not received as much development as the east coast has, but a lot is in the pipeline.

“We are finding demand across all price brackets, even from the million-dollar upwards market everything is selling in between four to six weeks,” Mr Swingler said.

“The Perth apartment market has many large-scale developments in the planning process, which to me may suggest there might be an oversupply but the development has been a long time coming.”

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