29 Nov WA breathes a sigh of relief – Milton Rendell
We are hearing reports that there are early signs of improvement in the West Australian property market or ‘green shoots’ as our expert from WA, Milton Rendell, tells us. We agree with him that it is about time.
Kevin: As we look at the different markets around Australia it’s always good to get someone on the ground who has a great knowledge and that certainly is the case with my next guest, Milton Rendell.
Kevin: Owns five offices in that tough market of Perth in WA. His offices are called Real Estate Plus. He joins me. Hey, Milton. How are you, my friend?
Milton: Good day, Kevin. How are you?
Kevin: Good. And in the west. The reason I wanted to talk to you is because you were telling me the other day that there are some green shoots emerging and certainly that’s coming out in the latest report that we’ve picked up in this show from Louis Christopher as well. So that’s good news.
Milton: Yes it is. So we’re certainly been waiting a while I can assure you.
Kevin: Yeah, okay. Well, tell me what you’re seeing and just to paint the picture here in Perth, all of your offices are … What area of Perth are you in?
Milton: Yeah, we’re in Eastern Corridor, so-
Kevin: Eastern Corridor, yeah.
Milton: So it’s what they call Swan Hills area so you drive through it, through us to get up to Kalgoorlie but-
Kevin: Where all the gold is, my friend. Is that, so have you been gold panning lately?
Milton: I’d love to mate, but I’m trying to make a quid the normal way.
Kevin: Okay. Well, I want to talk about a couple of things. But firstly the WA market. Do you feel there’s a bit of consumer confidence coming back, in other words are seller is now saying “Well, maybe this is a good time for me to sell?”
Milton: I think it’s two parts. The first part is that the owners are under the realisation that they can’t wait forever. So I think they’ve been conditioned pretty well over the last two and a half years.
Milton: The other part about it is confidence is everything and there’s been a fair bit of negativity over here. And our employment rate once got over about six percent. Everyone was getting pretty nervous. So there’s certainly, there’s talk of more employment over here, of projects being landed in West Australia and there’s talking of mining improving which has already started to happen.
Milton: So there’s been some positive news in preference to the negative stuff we’ve had probably for the previous couple years.
Kevin: Some of the key indicators, how long is it taking for stock to sell and how much stock have you got on the market right now?
Milton: Yeah, it looks … some levels are certainly, have come back. Now part of that’s just in rentals and the rental market dropped right back. But people are leasing properties now, so that’s encouraging.
Milton: Investors are back I think linked to that – rents dropped so they’ve certainly got to what people perceive as affordable as to fair prices.
Milton: So probably in terms of stock some numbers are coming down now, so that’s usually an indication that more’s happening. And that creates great competition and we’re seeing that. Our immediate area, one of my offices in Midland, that’s still fairly quiet but our surrounding offices are seeing more activity. And they’re seeing less stock.
Milton: On the market, things are going slightly quicker. So we have seen sales within 30 days now which we haven’t seen for a while.
Kevin: Are you seeing evidence of much distress with home owners of having to sell and maybe take a loss?
Milton: Yeah, look, basic sales, there was talk here a while back that they thought the levels of pricing had dropped back to 2007. So in other words, in my book between sort of 2008 up until recent times it really was probably taking a loss but that will depend on the location.
Milton: The heavily developed areas where people took large mortgages, there are losses being incurred and we’ve seen that certainly here. Seen probably price drops in around 15%. Some a little bit higher but once again that varies from property to property and circumstance to circumstance.
Milton: So we are seeing some mortgage stress. We’ve probably seen more mortgage resales in the last couple years than we’ve probably previous 10 years. But that seems to be slowing, which is encouraging.
Kevin: That’s good. Let’s talk about negative gearing for a moment now. I’ve tried to canvass as many views on this issue as I can. Have you got a thought on what might happen if Labor win the next federal election and then start to play with negative gearing?
Milton: Yeah, look, regardless of which party if anyone starts playing with negative gearing the whole market gets scared. I’ve been here 31 years, Kevin and every time it gets talked about things seem to slow. Investors don’t like it being played around with. Having said that, in West Australia prices have come back a bit.
Milton: So we probably don’t have a lot of negative gearing, not as much as there was before. But having said that, once you start talking about not so much penalising investors but altering the game, people do get out. And you also got to remember at the end of the day does the government want to be the ones creating the real estate to be able to lease out or do they want it to self fund itself? In other words, the public do it for them.
Milton: And you know, you gotta encourage investments. So I really think negative gearing has gotta stay. I think if it goes away or if they play around with it too much and they scare investors out of the market the government’s gonna be stuck with a new problem. It’s gonna have to find the housing for all these people looking for property.
Kevin: Well certainly you’re finishing on a positive note, Milton. Milton Rendell has been my guest. Some good news coming out of WA and I think you guys have had it so hard for so long now. So let’s hope it continues.
Kevin: So Milton Rendell has been my guest from Real Estate Plus. They have five offices in that Perth area. Milton, it was great talking to you, my friend. Thanks for your time.
Milton: No, it’s good to have a chat Kev.