THE fall in demand for properties in WA and the traditional summer surge of home listings has prompted Gavin Hegney, of Hegney Property Valuations, to suggest to home sellers not to list their homes for sale until next autumn.
As Mr Hegney sees it, the WA housing market faces a surplus of houses for sale and a further downward pressure on house prices unless demand picks up strongly.
This is depressing news for a market that has been in the doldrums for quite a while.
The GST-induced decline has been massive.
“Home buyers have largely fallen away from the established housing market from around March/April 2000 as a result of rising interest rates and the impending introduction of the GST,” Mr Hegney said.
“It has taken around six months for this falling demand to impact on prices, which showed a slight fall in the September quarter.
“Significantly, 61 per cent of all Perth suburbs recorded a slight fall in median house prices over this period.”
The interest rate cut that most people are suggesting will occur next week is being eagerly awaited by the housing market in this State.
Most commentators are hoping that the rate cut will be around 0.5 per cent.
The housing industry must be hoping for even more. The RBA doesn’t appear inclined to cut rates much above the 0.5 per cent mark in general.
Whichever option the RBA decides to choose, there is little or no doubt that the housing industry needs this to restimulate the demand and bring back some balance between supply and demand.
“However, the home buyer market still remains subdued and will continue this way until interest rates begin to fall, perhaps later in 2001,” Mr Hegney says.
“Home sellers who place their home on the market for sale during the summer months will therefore be competing against more sellers for a small number of homebuyers.
“As a result they run the risk of having to lower the price of their home to attract buyers.
“The price of a home is primarily the function of supply and demand. With an over-supply of homes and an under-supply of buyers, home prices have to fall if they are to attract buyers.”
So we continue to see doom and gloom for the housing market.
