Published on November 22nd, 2012
Real estate growth ‘slower than some say’
The Australian residential real estate market is not seeing the growth that the media would have the public believe.
That's the assertion of Phil Melville, Elders Real Estate (WA) Operations manager, who feels that the market is stable but there is an acceptance that there will no huge turn around.
He commented: "There is a level of realism amongst sellers who acknowledge that they won't see the huge capital growth that was seen five years ago.
"They're being realistic that a reasonable price is probably as good as it's going to get and therefore turnover is improving. Things are stable at the moment, but we're not seeing the growth that others would have you believe."
It stands to reason that this improving transaction rate will have long-term benefits, but the evidence just simply isn't available to at this time to suggest a trend has begun, Phil points out. Perhaps over the long term, there will be an indication to surmise the effect it is having on the market and the wider economy.
Economic factors aren't having the impact that people would suggest, particularly with interest rates. The cuts of a quarter or half a per cent aren't helping as much as hoped, Phil said, as there is timidness and a lack of confidence among potential buyers to part with their hard-earned money as global issues pose a threat to long-term prosperity.
Phil doesn't particularly agree that government grants are a sensible way to stimulate the property sector, believing that the real estate industry should be self-regulated rather than subject to government intervention through grants. Manipulation of supply and demand may bring a short term gain, it is not sustainable and the market has to deal with the correction when the stimulus is removed. In the current economic climate Phil is of the view it is not warranted.
Ultimately, Phil says that while the market is stable and there is some small growth, the property boom that was present four or five years ago clearly isn't going to occur again for a number of decades. The unsustainable profits that were being made on real estate aren't something the market will be able to produce again in the short or even medium term.