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The flood of buyers in Perth purchasing land to build rather than buy an established property should begin to slow during the second half of this year due to an oversupply of new homes.
Perth has experienced a residential building boom over the past two years, with records broken for the number of new homes constructed. In some outer Perth suburbs, homes have been coming out of the ground almost as fast a mushrooms in recent months such as been the frenetic pace of building.
However, the reality is that buyers can now purchase established homes in newer suburbs for below replacement cost.
With the price of a near-new home in some new suburbs falling below the cost of building the same home in the same suburb, it is only a question of time before buyers start to buy these existing properties.
Even though first home buyers receive a $10,000 grant for building a home, the incentive may prove less attractive if the same buyer can buy a near-new home in the same area for $40,000 less than building a new home.
Also, some buyers are now finding it harder to secure finance to build a home, which will benefit the established housing market.
Buyers also have to consider that these near-new homes are fully finished. They also save money on not having to rent while their new home is being built.
In addition, buyers can save even more money if the established homes have features such as a bore or ducted air-conditioning.
Professionals are already recording a rising number of people attending home opens for near-new dwellings in Perth's newer suburbs as buyers realise they represent great value for money.
With interest rates expected to fall even further this year, the near-new homes will become even more affordable. As a result we expect an upswing in established property sales over coming months.
ABOUT THE AUTHOR
Shane Kempton
Shane Kempton is the chief executive of Professionals Real Estate. He is an experienced, well-respected real estate identity and chief executive committed to effective development of teams. His reputation is built on honesty, integrity, confidentiality and ethics, all highly valued traits of this influential leader.
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