Latest Perth market forecast ‘very wrong’: Hayden Groves

Latest Perth market forecast ‘very wrong’: Hayden Groves

Following the release of ANZ’s property forecast for the final months of 2022, Hayden Groves said the numbers might not be what they appear.

In an opinion piece published on his agency’s website, the President of the Real Estate Australian Institute (REIA) urged industry insiders and consumers not to take economists’ predictions as the final word.

The Perth property professional used the bank’s outlook on the trajectory of his city’s market as a particular example of how many factors can be overlooked in the type of general property analyzes such as those recently published by ANZ.

“I think ANZ (and the other big banks) got their predictions for the Perth property market wrong,” the director of dethridgeGROVES said bluntly.

“In short, they estimate that property values ​​in Perth will inevitably follow east coast markets on a downward trajectory until the end of next year, predicting that house values ​​in Perth will fall by 7%. NAB estimates that Perth values ​​will fall by 11.4%, ”he explained.

“Unfortunately, this is another example of an East Coast-based bean counter, set up in a back room, tasked with predicting our local real estate market from afar.”

Mr Groves outlined several reasons why he thinks the Perth market could head in a different direction than some of the major financial institutions are predicting.

An expected spike in interest rates followed by a possible decline is one such facet.

“Interest rate hikes are widely predicted to stabilize over the next nine to 15 months, leaving a typical variable mortgage rate of around 5.8%; historically relatively low. At this level, it will add around $880 per month to the average Perth mortgage from its lowest point,” Mr Groves said.

He argued that at this rate Perth residents would fare much better than their counterparts in big cities, such as Sydney, who will have to contend with around $1,750 a month added to their mortgage. Where struggling sales could rise in the more expensive capitals, residents of Perth should be able to manage the rise.

“Perth remains Australia’s most affordable capital city with a median property price of $585,000. Adelaide is next on the list at $699,000. Our average of 26.6% of income going towards serving our mortgage lending is well below the national average of 37.3%,” he noted.

Migration, he said, is also going in the right direction.

An influx of new Perth residents was “keeping demand for housing strong in an undersupplied market”, Mr Groves said.

“Overall, listings for sale in Perth are 14% lower than the same period last year and 32% lower than the five-year average. At the same time, sales volumes here remain strong, up 52% ​​from the five-year average. »

Furthermore, Mr Groves believes that not only will Perth’s prices remain stable, but its low fluctuations relative to the rest of the country will further boost the city’s prospects.

“As east coast markets tumble, people will surely look west to take advantage of our enviable lifestyle and relatively inexpensive housing,” he said.

And for those who believe banks always know best, the industry veteran warns that it would be wise to learn from recent history.

“I remember when COVID-19 first hit all the banks thought Australian property values ​​would drop by an average of 20%,” he noted. “They were about 40% out.”

Latest Perth market forecast ‘very wrong’: Hayden Groves

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Last updated: August 22, 2022

Posted: August 23, 2022

Juliet Helmke

Based in Sydney, Juliet Helmke has extensive reporting and writing experience in business, technology, entertainment and the arts. She was previously editor of the New York Observer.

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