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The flood of property buyers in Perth purchasing land to build a new home rather than buy an established property should begin to slow during the second half of this year due to an oversupply of new homes according to Shane Kempton, CEO of Professionals Real Estate Group.
Mr Kempton said that Perth had experienced a residential building boom over the past two years with records being broken in terms of the number of new homes being constructed.
“In some outer Perth suburbs, new homes have been coming out of the ground almost ‘as fast a mushrooms’ during recent months such as been the frenetic pace of new home building.
“However, the reality is that buyers can now purchase established homes in newer suburbs for below replacement costs.
“With cost of buying a new near home in some new suburbs now falling below the cost of building the same home in the same suburb, it is only a question of time before buyers start to buy these established properties.
“Even though first home buyers receive a $10,000 grant for building a home, this incentive may prove less attractive if the same buyer can buy a near new established home in the same area for $40,000 lower than building a new home.
“Also some buyers are now finding it more difficult to secure finance to build a new home which will benefit the established housing market.
“Buyers also have to consider that these near new homes are fully finished and they also save money on not having to rent while their new home is being built.
“In addition, buyers can save even more money if the established homes have features such as a bore or ducted air-conditioning.
“Professionals are already recording a rising number of people attending home opens for near new established homes in the newer suburbs of Perth as buyers can now see that they represent great value for money.
“With interest rates expected to fall even further during the coming year, these near new homes will become even more affordable and as a result we expect an upswing in established property sales over the coming months especially in the newer areas of Perth,” he said.