Answering the question every real estate agent gets asked: How’s the market?

How’s the market? Well, the short answer is…

It’s like a pretzel

You see, right now the market tastes pretty damn fine, especially if you’re a real estate agent, property owner or builder.

Last week, agents across WA shared around $10,000,000 in commissions from the 1042 property transactions reported to REIWA.

That’s a pretty tasty morsel.

And property owners are licking their lips, too. Values in WA have risen for 9 consecutive months since August 2020. They’ve risen 5.9% in the first 4 months of this year alone.

These are decent numbers and they’re worth savouring.

But unlike their breadstick cousins, pretzels aren’t just tasty; they’re also twisted into appealing shapes; just like the current property market.

You see, government grants, including the Building Bonus and HomeBuilder grants, have created massive breadstick-into-pretzel distortions in order to create jobs.

And these distortions show up in some eye-watering numbers.

Here in WA, “the number of loans taken out by first-home buyers has increased by 664 per cent since May last year.”

That’s not a typo. But it is a staggering increase.

And loans to build a new house in WA surged 225% to the end of April.

Of course, some of this increase can be attributed to low interest rates and market confidence but much of the driver has come from temporary grants.

And with the unemployment rate falling, it appears that the government jobs growth strategy is working.

They’ve made the perfect pretzel and those with an investment in property are having a feast.

But what will happen when the grants and loan guarantee schemes and fiscal stimulus is wound back?

Well, when you remove the salt and the artistic twists from a pretzel you’re pretty much left with a bread stick.

And that’s my best guess as to where the property market is headed.

Increased banking regulation, increased interest rates and the winding back of government grants will impact the taste and shape of the property market in the months and years ahead.

Any of these, either alone or in combination, will tend to take the taste and appeal out of the property market.

If that happens, today’s pretzel will become tomorrow’s breadstick. Only time will tell if it’s a Coles Original or a Granforno Grissini.

How do you see the market? Which direction is it heading?

All the best.

Peter

Staggering: “…the number of loans taken out by first-home buyers [in WA] has increased by 664 per cent since May last year. Loans to build a new house in WA have surged by 225 per cent.”

Brokers and banks overwhelmed as Australians rush for a mortgage https://t.co/45bl8IGhDJ

— Resi Settlements (@Ressetts) May 6, 2021

As the federal government chase wages growth there are some significant economic distortions at play that are making the recovery look better than it is.

🤔📖🧑‍💼📈Our closed borders have turbo-charged the economy’s recovery https://t.co/Sbi1eRB3ZM

— Peter Fletcher (@peterfletcher) May 8, 2021

About the Author

Peter Fletcher

Peter began his real estate career in 1985 selling tin shacks and red dirt in Kalgoorlie. Moving to Perth in 1989 he quickly moved into agency ownership. By 2006, Peter had built a thriving agency managing over 600 rental properties. He then sold the business, taking time out of the industry to complete Honours in a Bachelor of Arts. Peter is now the Managing Director of Residential Settlements in Burswood and an active Army reservist. Peter has had just one hot shower since the 10th of May 2008.