In the December Quarter there were 7 Sales (now settled) 3 Houses and 4 Blocks of land, which means at this rate of sale that there is over 3 years supply of properties on the market.

 

Whilst the REIWA statistics have shown that Swanbourne prices have increased by over 25% for the 12 months to the end of the December Quarter 2008, the reality is very different. It is more like a drop of 25%-30%.

 

The main reason for the discrepency is the unusually low volumes of sales.

 

Examples of this are;

3  properties in Wright Avenue sold around January 2008 for $1,5m to $1,645m a very similar property in now on the market for from $1.15m.

A block of land in the Old Swanbourne Primary School Site bought for $1.2m in May 2007 brought back on the market for at $1.55m then eventually sold for $1.01m

A property in South Cottesloe had a cash offer of $2.85m early 2008 (which was rejected by the owner at the time thinking that the market would offer more) just recently sold of $2m.

 

There are many other examples which would suggest that an adjustment of 25%-30% has occurred across the market, particularly at the upper end.

 

In the Western Suburbs turn over (number of sales) have been dropping steadily since 2005.

In the December quarter the volume of sales was down approximately 80%.

 

Since my time in real estate, over 15 years, I have observed that Swanbourne sold 80-100 properties per year as a rule.

This is not all bad. If we can block out what we believe our properties would have sold for in 2007 and early 2008 then we would be very pleased with the sale prices we could achieve today.

 

We recently sold a property in Floreat for $1.32m for people who paid approx $650,000 four and half years earlier. Initially we all were disappointed because the expectation was greater than $1.6m, but doubling the value in less than 5 years is still a very good result.

 

What we need to understand is the real estate market in recent years has been driven by people speculating - purchasing properties using the equity of their family home and gearing up, expecting to be able to turn them over quickly with a tidy profit. Expectations of 20% to 30% increases year after year, were unsustainable!

 

Since the start of the year enquiry rates have increased, buyers are still tentative and the lower end of the Western Suburbs market is performing well, with units $500,000 or lower holding their price and selling relatively quickly.

 

David Fear