With listings in Perth falling below 4,000 homes, interstate investors are capitalising on the affordable real estate market, according to a Perth real estate agent. Peter Vetten from Raine & Horne Mandurah, said the heat in the Perth property market is exacerbated by many properties selling off-market.

“In the Perth metro region, there’s normally around 13,000 to 14,000 listings, and at the moment we’re under 4,000 listings. We’ve got a serious supply and demand situation that has contributed to Perth’s prices climbing by almost 17% over the last year,” he said in a news release.

Vetten added that if you are looking to buy another property, you should look to sell and buy in that same market. Otherwise, you will be caught out buying something at a higher value as prices continue to climb and competition shows no signs of subsiding. 

One option to consider in this instance is taking out a bridging loan, which is set up to cover the gap if you buy a new home before you have sold your current home. Being approved for a bridging loan will largely depend on how much equity you have in your current home.

Vetten added that homes under $700,000 are selling exceptionally fast due to a serious supply and demand situation.

It is expected that Perth’s property market will continue on this trajectory for at least the next 12 months. If you are in the market, it makes sense to work with a mortgage broker in Perth who knows the market and can assist you in putting forward a strong offer based on what you can afford.

Here’s some other tips for getting your offer accepted in a volatile real estate market.

Interstate buyers dominate off-market sales

According to Vetten, eastern state investors are purchasing WA properties before they even hit the market.

“They’re essentially being sold prior to open houses; if the prices are reasonable and within the appropriate range, they’re selling rapidly,” he said.

Paul Curran, from Raine & Horne Rockingham, said that around 60% of residential sales in the Rockingham area are being purchased by interstate buyers, often sight unseen.

“Generally speaking interstate investors might represent 25-30% of our buyers,” Curran said. “If you have a budget of under $500,000 and are looking for a gross yield of 5%, it’s hard to ignore suburbs to the southwest of Perth such as those in the Rockingham LGA.”

He suggested the demand is being is fuelled by strong rental yields of 5%, coupled with an increase in buyer’s agents searching for Perth properties on behalf of their eastern states clients, resulting in many homes being sold quickly.

Perth’s rental market driven by high demand

Perth’s rental vacancy rates stayed below 1%, keeping the market tight. Vetten reported that it is not uncommon to see up to 60 people at rental home opens.

“Within three or four days, we get at least a dozen applications, and it’s just a matter of cherry-picking through them,” he said.

We’re speaking to more and more clients who are reaching the point of rental affordability in Perth, and as rates start to come down they might find that it makes more financial sense for them to purchase their own home.

Interest rate market update; lowest variable rate at 5.69%

Canstar reports the following interest rate update for this week: 

“Following last week’s rate adjustments, the average variable interest rate for owner occupiers paying principal and interest stands at 6.90% for loans with an 80% LVR. Meanwhile, Australian Mutual Bank boasts the lowest variable rate at 5.69% (intro rate), regardless of LVR.”

According to Canstar’s database, there are now 22 interest rates below 5.75%, an increase from 20 the previous week. The lowest interest rates are available at Australian Mutual Bank, HSBC, LCU, People’s Choice, Police Credit Union, RACQ Bank, and Regional Australia Bank.

What can we expect to see for future rate movements

Steve Mickenbecker, Canstar’s finance expert, shared his opinion of future of interest rates following the Reserve Bank’s decision to hold the cash rate at 4.35%.

“With the Reserve Bank decision at its March meeting to sit tight on a 4.35% cash rate, all of the speculation is now about when, not if, the cut will come,” Mickenbecker said.

He also highlighted that the average fixed home loan rates for owner-occupied borrowers are now around 0.5% below the average variable rate, signaling an expected downturn in interest rates.

Mickenbecker said that the timing of a cash rate cut hinges on upcoming economic data, with the monthly Consumer Price Index (CPI) and retail sales figures serving as critical indicators of the economy’s direction.

“The Reserve Bank is likely to wait on two favourable quarterly CPI numbers, for the June and September quarters, before cutting the cash rate, and this week’s releases will indicate whether the economy is on track for that,” he said.

How can a mortgage broker help?

Using a mortgage broker to assist with your home loan is crucial in a market like Perth’s that is experiencing growth. A broker can help you with so much more than finding the lowest interest rate. At Base Home Loans, we liaise with real estate agents every day, and we have access to current pricing information to help you make an informed decision about how much you will offer based on sales data, as well as what you can comfortably afford. We can also evaluate whether it’s now time for you to consider purchasing a home instead of paying increasing rent. We can also assist in arranging a bridging loan or at the very least, by applying for a pre-approval with the right lender.

If you’re ready to get started, contact us today to arrange a discovery call.

All lending subject to status and lenders criteria. Terms & conditions apply. This document contains general information only. Your own personal circumstances have not been considered and you should seek independent financial advice prior to making any decision on a financial product.

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