When it comes to real estate, we generally discuss facts which are measured historically. The median price is now $520,000 – down from $530,000 in the March quarter 2016. First home buyers made up 19.4% of all sales – down from 20.2% in the March quarter 2016.
The facts do tell a story about where we have been and what is happening now but are the facts largely driven by feelings and vice versa?
It is the ongoing dance that goes on in most of the economy. The facts and, particularly, the story being told that affects our confidence and sentiment as consumers , buyers and sellers and how we act.
Sentiment and feelings within any market and, particularly, the real estate market plays a huge role in what happens and how much happens.
It has been widely reported the real estate market has been flat and in fact, in decline for the best part of three years.
Medium price February 2013 $550,000 with 2,500 sales made.
Medium price now $520,000 with 1,700 sales made.
Medium rent March 2013 – $470 – vacancy factor 3%
Medium rent now $370 – vacancy factor 6%
There is no disputing these facts, but as Brian White (Chairman of our network) once told me …“when things are going well, people expect them to continue to go well and when things are not going well, they expect them to continue not to go well. Both are wrong”.
So, at what stage does the tide turn? For many buyers now who would like to buy, need to buy, they are waiting until buying conditions are premium. When they feel that buying conditions are unlikely to improve they jump in.
In my 26 years of real estate, I have not seen buying conditions to be this good. Home prices; number of properties for sale and interest rates, all of these factors are helping to make these conditions really great to buy real estate.
So, why then do we lack confidence to take the plunge? Unemployment figures might be a good lead on that. But maybe things are changing.
Westpac Melbourne Institute published Consumer Sentiment Index, WA versus National, and reported that consumer sentiment in WA continued to rise in June following a large rise in May. I am not sure how you would measure sentiment, but I do know that consumer confidence and sentiment is vital to our collective economic well being.
Perhaps this Westpac report is a sign for the real estate market to pick up? I am sure the facts will reveal that shortly and tell us all how to feel or is it the other way around?