27 Dec The fall and rise in the West – Milton Rendell
We go west to catch up on the latest from Western Australia as Milton Rendell speaks to us from Perth about what is happening there.
Kevin: Of all the good news we’ve heard in 2018, probably couldn’t top off the good news we heard out of western Australian. Just the emergence of some green shoots in the market there. Joining us to talk about that, Milton Rendell. Milton is from Real Estate Plus, covers most of Perth and has a really good feel for what’s happening there. Milton, thanks for joining us on the show again.
MIlton: No, that’s no problem, Kevin, thanks for having me on.
Kevin: Yeah, let’s look back at 2018. It was a tough year, a real tough year for western Australia, for Perth, but you seem to have come through it okay, Milton.
MIlton: Yeah, there’s been some positive vibe certainly in the marketplace particularly this last quarter and we hope that will flow into early next year and certainly the second half of next year we’re expecting to see some definite movement for sure.
Kevin: What have been some of the big challenges for you as a real estate agent. Is that, you know communicating with people who’ve, looking at negative equity in their property?
MIlton: Look we had a situation, anyone who’s bought in say the previous four years were looking negatively equity situation in a number of suburbs. Not all suburbs, but those less demand suburbs, as you get out of the city, and sort of, you know particularly once you get about 15 Ks out it’s certainly dropped off. The building industry in west Australia has really dropped off. In fact I received an email from someone in the building industry and they would say they had 52 consecutive months of declining market in construction in west Australia. So that gives you a guide of where we’ve been.
Kevin: Yeah, well lets look at Perth firstly and then we’ll look at north and south of Perth. But in the Perth market itself, there was a lot of development happening down around the Foreshore. How’s that progressing?
MIlton: Yeah look it’s a very different market to a general market, but the oversees buyers who had been sniffing around had slowed down. I know around the south Perth area that some of these had dropped off slightly, but not hugely, but I know the demand had softened. Those sort of areas were getting snapped up probably five/six years ago, anywhere sort of close to the city was really was red hot, but there’s been a lot of unit development and there has been all around Australia and those have certainly slowed down. There’s certainly a few developers who have struggled to finish their projects.
Kevin: Are there many developers who are sitting on development sites not willing to develop many and mothballing them?
MIlton: Yes, yeah we’re seeing quite a bit of that. Probably in the area that we are, we’re only 14 K’s out of the city and there’s a couple of government projects which sort of were supposed to start at the beginning of this year were put into mothballs probably ’til the latter part of 2019 so when you see government projects decide to slow, it’s a pretty good indication what’s going on.
Kevin: The western Australian market just outside of Perth goes north and south and pretty much hugs the coast. Is there much of a difference between north and south? Has there been more development in one or the other?
MIlton: Oh look. Joondalup, which is north following the coast, there’s been a lot built, and this is in areas north of that, say areas like Butler and areas like that have really struggled. There’s a lot of negative growth there, but there’s a lot of new construction in the last five to ten years and those areas really came off quite a bit. South of the river, a bit of a mixed bag. And once again, once it gets beyond about probably that 6 kilometres of Perth outside where it’s north and south, we’ve suffered a pretty similar fate. But if you go down to areas like Mandurah, which was true south, they’ve had a lot of development there, it was probably over developed. Prices there for the last couple of years have really struggled, but having said that I’m hearing there are some sales ticking through now and people are starting to look at that again for holiday living, etc.
Kevin: And the tourism industry in WA, how’s that holding up?
MIlton: Yeah, look it had slowed considerably, but now that Qantas has announced direct flights to Europe and I feel it’s encouraged a few easterners have started to come back through, and also up north in Broom, they’ve got some cheap flights going up that way, ’cause that was becoming quite expensive to get up to those. I think what we’ve seen in the last three to six months from what I’ve been told from people in the tourism and the travel industry, they’ve certainly seen improvements. I mean not huge, but certainly heading in the right direction.
Kevin: For investors wanting to look at the WA market for specifically Perth, where would you suggest they should be looking and what sort of stocks should they be looking at, Milton?
MIlton: Oh look I think, you always follow the government. Wherever they’re spending money, that’s pretty general. So if [inaudible 00:04:54] and there’s some government money spent out there, so Midland is obviously in there. We are in and we’re delayed, but around south Perth is always very good. Subiaco is good proximity to the city. Certainly Yokine, areas of that nature, you know they’re very good proximity to the city, good infrastructure in terms of public transport, which is really, really important and the rental returns in those areas have held pretty well. Through the corridor that I have, the rents has come off, but so have the prices. So we’re almost in a positive geared situation through our corridor, which is for investors very attractive.
Kevin: Yeah, very attractive indeed. We’re looking at new house land packages or are these more established houses?
MIlton: This is more established homes. New house and land packages at the moment are very slow, that’s a very slow part of it. Having said that, probably in the last two months, there’s been good feedback in terms of first home buyer inquiry. That’s definitely on the improve and we have a finance broker now and we’re seeing that the general inquiry about finance is improving and I’d say we’re probably up in inquiry about 20%. So if that was across the market, that’d be sensational, but look to where we are to get that sort of inquiry improvement would definitely indicate that things are heading in the right direction.
Kevin: All the best my friend. It’s great to hear your voice and tremendous to hear that you’re you know ticking along, I know it’s been a tough year for you, but all the best for next year. All the best to you and your family of course also for Christmas, Milton. I look forward to talking to you next year.
MIlton: Thanks, and same to your family. It’s certainly been an entertaining 2018, but we’re looking forward to 2019 like I said earlier, I think we’ll see a slow trickle at the beginning. I think the second half of 2019 is probably where we’re gonna see more shift. But investors, you need to get on your bike now, I think, because we still, inquiry for rentals is up as well, so that generally brings rents up as well. So I think 2019 could be a good one for us.
Kevin: Yeah, I think investors will probably want to get on a plane rather than a bike, it’s a hell of a long way across to Perth.
MIlton: Good point, good point.
Kevin: Good on you, Milton. Great talking to you mate. Talk to you soon.
MIlton: Thanks. Good on you Kevin.