As seen in The West Real Estate
Earlier this month we published our August market report, noting that active listings in Perth had fallen to a record low of 2,981. This figure reflects a significant imbalance between supply and demand.
While properties were coming to market in reasonable numbers in the past couple of years, this Winter we saw a large decline in new listings. It was the lowest level of new listings in Winter since 2019. As a result, we have seen active listings fall, days on market tighten, and the return of the Fear of Missing Out (FOMO).
Last year there was a surge of new listings in Spring and we saw some of the frenzy in the market ease. While we are expecting more new listings as we head into Spring this year, we may not see an easing of FOMO.
Demand remains very strong and is likely to increase, following the Federal Government fast-tracking its revised Home Guarantee Scheme to October 1. This scheme allows first home buyers, and those who haven’t owned a property in Australia in 10 years, to buy a home with as little as a 5 per cent deposit. The Federal Government will guarantee the remaining 15 per cent, allowing the buyer to avoid paying Lenders Mortgage Insurance (LMI).
There will be no longer be a limit on the number of places available and the income caps will be removed. Previously only buyers with a taxable income at or below $125,000 (individuals) or $200,000 (joint applicants) could apply. In addition, the property price caps have been increased from $600,000 to $850,000 for Perth and from $450,000 to $600,000 in the rest of WA. The changes open the scheme up to many more buyers.
Next year the Federal Government is set to launch its Help to Buy shared equity scheme. This will see the Government take up to a 40 per cent share of the purchase price of new homes, up to 30 per cent for existing homes.
There is no denying rising prices have made it more challenging for first home buyers to save for a deposit and buy a home. It is also very difficult for those who have been out of the market for some time to re-enter it.
It is important to remember the unintended consequences that the Home Builder and Building Bonus incentives had on the building industry. The Home Guarantee and Help to Buy schemes will boost demand. Unless we get an incredible surge in new listings this Spring, we can expect competition to remain high, homes to sell extremely quickly and prices to continue to rise strongly.
Suzanne Brown
REIWA President
