1st Two Months: House Sales Numbers Plummet but Prices Stable

In the first two months of 2012 house sales numbers in the Perth metropolitan area have plummeted by almost 40 percent compared to the first two months of 2011; and they weren’t exactly high back then either. This sort of indicates to me that buyers are being very cautious and are waiting to see how the property market is going to develop over 2012.

Investors are also probably waiting to see what the Reserve Bank and the “Big Four” banks are going to do with interest rates because there are numerous articles appearing lately that the banks are likely to increase rates a little further yet over the next couple of months.

On the upside—so far this year—house prices are not falling; although they have not gone up either.

For people looking to rent the news is not quite so good. Average rentals have increased by almost two percent in just two months. If this trend were to continue for the remainder of the year the average rental will go up by about 12 percent by the end of 2012. This outcome would have to be seen as highly unlikely; though not impossible because if investors stop buying and building properties for rent then the pressure on the existing stock of rentals will obviously keep increasing.

What I don’t understand, and I have written about this before, if rentals are getting so scarce, and hence rental rates are getting so high, then what is it that is keeping investors—both private and institutional investors—out of the property market?

BarryMark