Pricing key at the top end

Green shoots are beginning to emerge for high-end property transactions in Perth, but sellers need to meet the market to ensure inquiry turns into sales.

That’s the view of Caporn Young chief executive Richard Young, who says his agency is averaging more than one sale per day in the month of May across a range of affluent suburbs.

Mr Young said appropriate pricing was the most influential factor regarding whether a property sold or remained on market, with levels of inquiry and interest improving.

“There is a market there,” Mr Young said. “I wish I had 10 homes priced between $2 million and $5 million, we would sell them this weekend.

“There is a really good strong demand there but sellers have to realise where the market is.

“Even at 1 to 2 per cent above market value, they are getting passed over; days on market are blowing out.

“But there is a lot of pent-up demand and cashed-up people are sitting on the sidelines waiting to have confidence in the property market.”

Mr Young said the other predominant factor influencing sales was that prospective buyers were becoming extremely well educated thanks to the availability of transaction information online, putting pressure on sellers to get their pricing right.

“We used to be the gatekeepers of information,” he said. “If you wanted to know what a property sold for or how long it was on the market, you had to go to your local real estate agent.

“Now buyers are looking very closely at days on market, comparable sales evidence, what they’re competing with … and it’s all at their fingertips.

“Anything that’s slightly above market, they’re just disregarding straight away.”

Mr Young’s views closely reflect research by analytics firm PropertyESP.

Analysis by the Applecross-based firm of 13,000 sales from 1990 to 2015 in Dalkeith, Nedlands, and Cottesloe showed capital growth remained a possibility, despite widespread commentary of underperformance in the western suburbs.

PropertyESP director Samantha Reece said generalised statements about suburbs tended only to convey part of the property picture.

She said the research showed properties that were unchanged between sales achieved capital growth of 7 per cent per year in the three selected suburbs, while those that were renovated achieved price growth of 21 per cent per annum.

Just 2.6 per cent of properties sold below $1 million made a loss on resale, however, 54.5 per cent of properties valued at over $4 million were sold at a lower price than what was originally paid.

“As can be seen by the analysis we undertook, property gains and losses were widely affected by the type of property sold, whether it had been renovated or its price point,” Ms Reece said.

“While a number of companies just provide the median for the area, it is important that buyers dig deeper and really look at the intimate detail of a suburb which then shows anomalies and factors that could affect the overall market position.”