From The Desk of the CEO - September 2020

Wow, there certainly has been a number of challenges presented to our local and global economy this year and rather than enter the political debate, it has been interesting to observe how each state and country has handle the challenges Covid has presented. Sadly, lives have been lost but we have been very fortunate here in Western Australia. Our natural isolation has been our greatest benefit plus, as a population, we have worked together to resolve the challenge put before us. Collectively, we should be quite proud of ourselves. Sadly though, Victoria is still going through a tough patch and interesting to see New Zealand has a spike in cases which is a reminder of what can happen. Now how has it affected our real estate is an interesting one. In late 2019 we were seeing positive signs in terms of activity in the market and in January that trend was continuing. It seemed to be building momentum until Covid hit then naturally there was a lot of uncertainty and things slowed as did many sectors of the economy.

Western Australia, South Australia and Northern Territory with smaller populations moved in the right direction quicker followed by Queensland. New South Wales and Victoria with higher traffic of people returning to their state and having overall larger population have faced much larger challenges, keeping in mind they also attract more overseas tourists etc so their start position with this situation was going to be harder. When we had our lock down which lead to no home opens, everything in terms of real estate regarding properties for sale came to a halt. But, once that was lifted we changed gears again with May, June and July showing larger volumes of sales occurring, plus the incentives offered to help the builders kicked along and land sales spiked quickly. Sales had dipped down to nearly two hundred sales a week in Western Australia in low times and spiked as high as over one thousand three hundred including a lot of land sales which had been a very quiet part of the market previously. We are seeing currently around the seven hundred and fifty sales a week consistently which is a healthy market, but, we also have seen there is a decline of properties on the market, a decrease of twenty four percent on over a year ago.

So you have been seeing more sold stickers but now seeing less for sale. We are starting to see multiple offers on properties and increased buyer activity overall. We have also seen an increased activity of people moving into rental accommodation as well so we are now seeing some of the lowest vacancy rates for a number of years and pressure is on rents to go up as by-product of demand.  This same expectation will flow to sales prices as well and as we are all aware, supply demand governs most markets. So in other words if you want it and so do others, you have to pay more to get it.

The mining industry has been the back bone to our economy again during tough times and now with Western Australia being one of the states which recovered quickly, we may see a move in population towards our state in the future. Our state is recognised by many as a safe place to live but now may also see it as one of the healthiest places to live but time will tell. There are still plenty of twists left in our economy as we will see when businesses come off job-keeper including  the other handouts the government has given. There has been activity for sure in terms of real estate which was coming before Covid hit, then side tracked for a while. Our market had been down for a considerable period and coupled with the interest rates the market was re-booting, I think many of us expected 2020 to be a big year in a different way. The job recovery is going to be our main measure of success going forward and our market will be linked to it for sure. Confidence creates business activity which flows to all of us in different ways. There are many businesses needing  to recover and there has been, no doubt, plenty of lessons for us learnt in terms of how we control our finances personally and in business which will benefit us in the future.

After every winter comes spring and like you, I am looking forward to the spring for my business and personal life as well. I think there are small positives happening now and those who identify them early will flourish going forward.

Written by Milton Rendell, CEO – Real Estate Plus Group