Perth's ultra-tight property market is being squeezed even further by cash buyers

perth's ultra-tight property market is being squeezed even further by cash buyers

Buyers like Craig Townsend are being beaten for homes by bidders with no need to rely on finance. (ABC News: Dominic Briggs)

If you want to get a sense of the "insane" nature of Perth's housing market right now and the breakneck speed at which properties are selling, look no further than Craig Townsend's experiences last week.

Mr Townsend, who's himself involved in the commercial real estate industry, thought he had all his ducks in a row.

He found a house he wanted to buy, his finances were healthy, and his bank had given him the green light.

"They [the bank] have said to us, they love it. You guys are ready to roll," Mr Townsend said.

With a combined income of $350,000, he and his fiancee already had conditional approval for a $1.2 million loan.

But they've lost out twice on bids to offers from cash buyers in the last month.

They were in a bidding war last week for a four-bedroom, two-bathroom house in Greenwood, in Perth's north.

The agent was taking offers from $830,000 and Mr Townsend and his fiance ended up bidding $962,000.

With 10 minutes left to go before the bidding closed, the agent called them.

"They said, 'Mate, you have 100 per cent got this. I can guarantee you've got this, because your offer is the same as the next person down, but you're only subject to finance — they're subject to finance and the sale of their house'," he said.

"We thought, fantastic. And then he rang us with one minute left to go on the bidding, and said, 'Nah, you've lost it, because he's come back with a new offer of $975,000 not subject to finance, not subject to sale of his house'.

"He's gone and got family members to front him $975,000 cash."

'Insane'

It's not only cash buyers people have to contend with, but also people buying homes without even seeing them.

Mr Townsend was recently beaten to a house on the market in Ellenbrook by a Pilbara FIFO worker in Karratha.

"He's only seen the photos and he's put a $980,000 bid on it, so $80,000 more than the asking price, without stepping foot into the property," he said.

"Not only is it insane in terms of what people are offering over and above the asking price, but it's also crazy in terms of the speed that the market is moving."

A house typically takes eight days to sell in Perth, four days faster than a year ago, according to the Real Estate Institute of Western Australia (REIWA).

It's 10 days for a unit, 12 days faster than a year ago.

There were 3,253 properties listed for sale last week, which REIWA said was a very low number with a fast turnover.

That's compared to 5,269 properties listed in May 2023.

It's an incredible tightening of the market, amid significant population growth in a resource state hungry for skilled workers.

Perth was the fastest-growing capital city in 2022-23, with 81,300 people moving there over the year, Australian Bureau of Statistics figures showed.

'A-grade sh*t show'

REIWA president Joe White said not nearly enough homes were being built.

"It's an A-grade shit show," he said, not mincing words.

He estimated 30,000 homes needed to be built to keep up with demand last year, but only 15-16,000 were.

"The problem we have in housing, both in total supply and diversity, we are simply failing dismally in delivering enough supply to the market to meet the needs," he said.

It's driven up Perth's median house price to $650,000, a 32.5 per cent increase on five years ago, when WA was at the end of a long downturn.

Mr White argued for medium-density infill of two to three-storied apartment blocks.

"The solution's in that medium to high density, not the high density," he said.

The Cook government regularly promotes urban infill to address the housing shortage.

On Tuesday it announced 363 new apartments would be built as part of eight projects across Perth, which received funding from its Infrastructure Development Fund.

The fund seeks to promote new builds by covering costs of up to $10,000 for each residential apartment to connect water, wastewater and electricity services.

The government fund has contributed to 57 projects, which the government said could add 3,700 more apartments.

Planning and Lands Minister John Carey said the government was "committed to supporting projects that help accelerate and broaden the availability of accommodation supply".

No price adds to confusion

Adding to buyer frustration is a practice in the real estate industry where a sale price is not put on a home.

Elisha, who did not want her second name used, said she was told an apartment did not have a price because it was a unique property and could not be properly evaluated.

"That's rubbish, because they have property data," she said.

"I truly feel the agents are driving this ridiculous pricing of houses in the housing market by doing this."

REIWA's Joe White acknowledged the practice frustrated buyers but said in a fast-moving market it could be difficult to provide an accurate sale price.

He said the most important thing for buyers was to have their finances in order.

"That's a must-do," he said, as well as being prepared to live further afield.

"You might not be living in the ideal suburb, but if that's getting out of your price range, look at the neighbouring suburbs. I still think there's good value out there at the moment for older-style units in good areas."

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