The Perth property market has entered a recovery phase: by tightening housing supply, high affordability and a strengthening labour market are tipped to draw buyers back into the market, according to a new report from Momentum Wealth, a Perth-based property investment advisor.
Entitled Residential Property Spotlight: Perth, the report analysed the key demand and supply indicators that influence property prices in the WA capital. The report concluded that the worst was behind the Perth property market, following a three-year downturn in which supply outweighed demand amid record-high housing construction and slower population growth.
Damian Collins, managing director of Momentum Wealth, said supply and demand were beginning to rebalance, which would help buoy property prices moving forward.
“The research report concludes that the Perth market has bottomed and it’s now in a recovery stage,” Collins said. “On the supply side, the report shows that the number of properties for sale has hit a two-year low, meanwhile the amount of new properties being built has returned to average levels after dwelling starts hit a record high in 2015. After three years of an imbalance, this tightening of housing stock will allow demand to catch up to supply and subsequently will help underpin property price growth going forward.”
The record high housing construction achieved in 2015 was driven by favourable government incentives for first-home buyers. These incentives encouraged first-home buyers to build rather than buy established stock, while demand was weaker following slower population growth in the aftermath of the resources construction boom.
According to the report, this created a significant imbalance, with supply outweighing demand; however, this is now starting to equalise.
Population growth is starting to pick up as well. “The research report explains that although Perth’s population growth has slowed following the end of the resources construction boom, it’s expected to rebound as the city’s labour market continues to strengthen,” Collins said, adding that Perth’s unemployment rate had recently dropped to a 12-month low, in line with the national average.
“Add to this the city’s encouraging housing affordability, which is the second-best in the nation only behind Hobart, and the report explains that more buyers will increasingly return to the market as job stability firms and the economy continues to gain momentum,” he said.
Related Stories:
Perth On The Verge Of An Investment Boom
Check Out The South West’s Hidden Gems
