Albany Quarterly Update – March 2022

Hello and welcome to our quarterly wrap up for real estate happenings in Albany.  I hope the festive season and the start of the year have been excellent for you.

A brief summary of what you’ll find in this post:

• Market update – stats for the March Quarter 2022
• What we are seeing on the ground – buyer behaviour, patterns etc
• Update on Market Buy (online selling platform)
• Elders supporting Hospice
• Five Talking Points from Corelogic’s Latest Housing Report
• Forecast – what are we reading in the crystal ball

A lot has happened since our last report.  Absolutely horrible, horrific scenes from Ukraine and our thoughts go out to the Ukranian community around the globe.  And Covid has finally got its teeth into WA…. We are seeing the impact in the local community through both illness and lots of isolations, but not too much in the way of serious illness reported so we will still count ourselves very lucky compared to most others around the world.

Just a reminder that all the statistics in this report are as published by the Real Estate Institute of WA (REIWA), and relate to the ‘Albany Urban Area’ comprising the main residential portion of Albany.

There were a total of 818 sales over the last 12 months, down 25% on levels observed at the same time last year.  This is heavily impacted by a 64% reduction in land sales, with a huge number of sales in 20/21 in response to government stimulus packages.  House sales have declined by 12%.

Listings are extremely tight.  Compare 125 homes available now to 567 in 2012 – that’s only about a quarter!

The median house price has increased by 7.7% to $420,000.  Although the median unit price has increased by almost 50%, stats can be heavily influenced by the smaller data-set and the real increase will be lower than this.  This is normal ‘supply-demand’ market response, low supply and continued high demand puts upward pressure on prices.  We are still seeing very strong activity from buyers coming into the area from Perth, WA and interstate, and in some cases internationally, with the net influx creating the extreme pressure in the market.

This graph is a bit of a mind bender!  Of note, DOM is extremely low across the board.  Of particular interest, average DOM in the $500k-$600k range is extremely low compared to the norm, which likely reflects the different demographic in the market and the rise in prices of 4×2 homes which have historically sat in the $400k range and are now very often in the $500k’s.

Median rents have increased nearly 20% over the last two years.  The number of rentals available is exceptionally low but strong returns have seen investors come back to the market in numbers, which will hopefully start to ease the extreme rental crisis seen over the last couple of years.  We have also seen several ‘family investments’ – parents buying a property for their kids to rent etc.  These reflect in the sales evidence but do not show up in the rental market.

Interesting to note here that the median price for a three bedroom home is now $395,000, a very significant rise, while four bedroom homes approach the $500k mark.

Looking over a narrower timeframe, we can see strong growth in price over the last 12 months.  Average DOM is very short at 17 days, this is however a marked increase to the 8 days seen at the end of 2021 but is still a decrease from last month.  This reflects exactly what we have seen with a decreased buyer urgency earlier in the year, which has increased again over the last 4-6 weeks as the market tightens again.

As expected we are seeing very strong pressure in the market.  Activity eased slightly in January and February, running against the typical trend in the Albany area which generally sees the strongest sale activity in the summer months.  Things have picked up again in March with more activity and competition strengthening for a very low number of listings.  In particular 3×1’s have performed extremely well, these have sold over the last 10 years in the general range of $300k to $340k, but we are now seeing many 3×1’s go in the high $300’s and even low $400’s.  In particular demand are appealing 3×1’s on level blocks, with sheds, which are attracting competition from retirees looking for the good life; these buyers have a strong budget and are happy to pay good money for a home in good condition which ticks their boxes.  We are also seeing very strong activity in the high end of the market, which is certainly atypical but is not unexpected given the influx of buyers from Perth and interstate, who generally have higher budgets.  There is also exceptional demand for lifestyle properties of 1 to 10 acres, these are very hard to find at the moment and are attracting very high prices, again largely in response to out-of-area buyers with higher budgets, looking for the ‘good life’, and the low supply in the marketplace.

We still believe that if you are selling, you are mad not to make the most of the competition available in the market.  It is unusual to see the current level of activity in the Albany area, and it is certainly something to take advantage of while you can.  If you can harness available competition you can get several buyers fighting over a property which ensures you get the very best possible from the market, and often an ‘above-market’ result.  Many agents continue to sell off-market, or within the first days of hitting the market, which denies sellers the benefit of exposing their properties to the extreme competition available.  Our strategy is to leave the property on the market for 1-2 weeks, collect interest, and then use the Market Buy platform to allow the buyers to fight it out in a transparent environment.  We have now used this process for over 20 sales and in every case sellers have achieved at least 4% above expectations, as much as 27%, and on average 10% above expectations.  Some recent results are detailed below.  Although employing this strategy is much more work for us, we are 100% confident that it does ensure sellers get every possible dollar for their property.

Elders love getting involved in fundraising for the Albany Community Hospice.  In addition to the annual Ray Norman Memorial cattle sale (which this year raised over $46,000) the Albany branch entered a team into the annual ‘spinathon’ in February, whereby the team kept a spin bike going for 24 hours straight.  The event was a great success raising over $26,000; the Elders team was the biggest fundraiser at over $6,000 with close to another thousand coming from a sausage sizzle on the Elders BBQ trailer.

Chris has produced a cracker of a short video summarising recent key findings from Corelogic.

So what do we think is happening?  First of all, forecasting is extremely dangerous, so don’t pay too much attention to what we say here!  Who would have thought in the COVID lockdown in 2020 that we would see the busiest market Australia wide, that perhaps has ever been.

There has been a bit of talk in the media about ‘housing bubbles’ and the market crashing as it is overheated.  Remember that the media is the media, and they like to sensationalise everything!  Certainly the Perth market has cooled off significantly, with DOM up compared to normal and in fact significantly higher than in Albany.  However, its important to remember that the market has been in decline here since 2008, and the growth seen since 2020 could be looked at as a correction instead of a bubble.  Even as agents we struggle to comprehend what buyers are paying for some properties, but at the end of the day Albany has become an extremely popular place to be. Even though things seem to be cooling off in general, we are still seeing huge numbers of people wanting to move into the area, and we expect that this will continue to keep reasonable pressure in the market, and therefore strong prices, for the foreseeable future.  Obviously things will cool off at some point but it is likely this wont be for some time.  Even the forecast interest rate rise may result in more buyers looking to move to the more affordable regional centres.  All in all, we think the market will stay very strong in the short term, and will likely stabilise in the short to medium term.  Some sectors of the market are likely to see prices slide when the market eventually weakens, but we are not game to say when this might be!

Thanks for your time once again.  We hope you have found this blog useful, or at least interesting (in parts!)  If you need anything real estate, please feel free to contact the team at any time.  All the best to you and your loved ones for a great Easter!