The seasonal slowdown is already over: Auctions are back for 2022
The property market has had an earlier than usual jumpstart in January 2022. ...
Robust activity in Western Australia’s popular suburbs has caused property prices to skyrocket, yet buyers are still willing to pay the price. Here’s why:
Experts at Herron Todd White’s (HTW) recently released Month in Review for December 2021 has coined a term for this phenomenon: the “nearology” factor.
Chris Hinchliffe, Western Australia director at Herron Todd White, explained that suburban properties in coastal locations that are near schools and facilities demand higher price points, which buyers are keen on buying. And despite housing values rising significantly, vendors are still trying to keep up with overwhelming demand.
For example, two similar mid-80s four-bedroom, two-bathroom properties situated on a 700-square-metre block in and the other in Willetton both sold in June 2021 but with a significant value difference. The house in Parkwood was sold for $560,000, while the one in Willetton was sold for $820,000. The $260,000 difference between the two properties is the “nearology” factor, Mr Hinchliffe explained.
“The difference in value is due to the different school catchment zones of both properties,” he pointed out.
In Mullaloo, a beachfront community further north, the housing market experienced a significant 21.9 per cent rise in annual growth, resulting in a $144,000 median house price increase. Mr Hinchliffe reported that this double-digit growth was also observed in the apartment and unoccupied land segments, which recorded 60.4 per cent and 74.9 per cent increases, respectively.
The HTW Western Australia director highlighted that the “nearology” factor has been replicated in some of ’s western suburbs, which has resulted in sharp rises in median prices during the last 12 months.
To illustrate growth, Mr Hinchliffe mentioned a four-bedroom, two-bathroom home in City Beach, just one block from the shore. In March 2020, the property was bought for $1.85 million and was resold for $2.45 million in August 2021, resulting in a 32 per cent increase in the property’s value with only minimal renovations done by the owners.
Another remarkable example cited by Mr Hinchliffe is a stylishly renovated circa 1940s four-bedroom, two-bathroom home on a 759-square-metre block in Cottesloe. The property was purchased for $2.025 million in July 2019 and, after renovations, was listed seeking for offers in the mid to high $3 million range. The property sold for $3.8 million in July 2021 after 36 days on the market, showing a sharp price rise of 88 per cent.
As a final example, Mr Hinchliffe noted that in Nedlands, a four-bedroom, two-bathroom two-story home on a quarter-acre property was purchased for $2.9 million in February 2020 after 11 days on the market. It was resold as is for $3.28 million in July 2021 after just 10 days on the market, resulting in a 13 per cent price increase in just 17 months.
In summary, Mr Hinchliffe stated that low stock levels in Western Australia made the market more competitive, with house sales and values consistently on an upward trend throughout the year.
“If anything, we underestimated the depth of demand in the market which shows no signs of abating,” he said.
Property refers to either a tangible or intangible item that an individual or business has legal rights or ownership of, such as houses, cars, stocks or bond certificates.