25 Dec The impact on prices of a flood of similar properties – Milton Rendell
During the week we heard from Paul in WA, who owns several properties in that state and, through council rezoning, has the opportunity to subdivide but he wants to know the impact of a flood of similar properties onto the market. We talk to a WA agent who gives us the lowdown. Milton Rendell from Real Estate Plus in Perth is with us today.
Kevin: We’re going to answer a question in the show now that came in from Paul. Paul is based in Perth. Thanks for your nice comments about the show, too, Paul. Lovely to have you listening.
“Over the last ten years,” Paul writes, “I have been buying a few properties, all of them in the area of Perth that’s now set to be re-zoned. I suspect that when this re-zoning is approved, likely in a couple of months’ time, that a number of homeowners in the area will be taking advantage of this, at the same time, creating possibly an oversupply of battle-ax-type properties for sale. Have any of your panel of experts experienced this in other parts of Australia, and did they notice if it had any impact on potential sale prices?”
We can probably go one better than that for you, Paul, and joining me on the line now, Milton Rendell from Real Estate Plus in Perth.
Milton, you heard there what Paul had to say. What’s your view about that amount of stock coming on the market, and particularly for battle-ax-type properties? Is it going to impact prices?
Milton: I don’t think so, Kevin. I think some of the areas are low-demand in any market, and you have to be mindful you’re not talking about an area like that. But through the northern corridor, I know there’s still a lot of development still happening.
The northern corridor, for those who know Perth, is in areas like Yanchep, which is pretty well at the top of that corridor, is seeing new activity. There’s certainly been a lot more activity or hype around that area in the last 18 months, which may surprise a few people. The area that I’m in, which is the eastern corridor, our whole town is zoned for unit development, yet we have buyers still coming through, still inquiring.
I think the key to anything is following the government money. I know through the corridor that I’m in and certain bits of the northern corridor, there’s still a lot of government money being spent.
Will there be a bit of pressure on prices? I think more realistically, the boom has certainly been over for a while, we know that. Prices have softened slightly, but I wouldn’t say to the extent some people have expressed. I think there’s been more people who just got pressure through losing jobs and probably over-committed more than anything that’s softened some of the prices in some of the areas.
Kevin: Yeah, Milton, Paul especially mentions their battle-ax blocks. Are they fairly popular in Perth, or are they relatively new?
Milton: They do exist. They’re not uncommon. There’s certainly been a corral for where I am, and I know that within an eight-kilometer range from Perth there’s been quite a bit of it. So it’s nothing new. It’s pretty common, to be honest. We’re getting used to living on smaller lots of land now, and I know there have been government proposals to having blocks of less than 200 square meters and even lower than that.
No, it must be there because they’re approving them. It’s just the developers have to get their heads around what’s the best routine for them. Building has been a little bit slow, so they’ve been taking that opportunity to capitalize on that, as well.
Kevin: What would Paul be better off doing here, getting the approvals to do it, or selling the lot as it is?
Milton: Look, it’s an interesting one. Obviously, I’m not knowing where it is. I’m always one of holding as long as you possibly can. Do I see the market flying in the next 12 months? Probably in Perth, we’re talking about being steady rather than an explosion.
But you have to be mindful, we’ve been quieter over here than they have been on the east coast for probably the last two and a half years, so we may work against the trend of the east. So I think at this stage, if he can afford to hold on, I’d be holding on for a little bit longer.
Kevin: Okay. Good. There’s an answer to your question, Paul.
Milton Rendell from Real Estate Plus in WA, thank you so much for your time, mate. All the best.
Milton: Happy to help, Kevin. Any time.