Strong growth fundamentals await Western Australia's property market next year as its economy continues to improve, according to the latest analysis by the Real Estate Institute of Western Australia (REIWA).
Market conditions this year have been fairly mixed — sales activity has fluctuated while rental affordability has improved incrementally, said REIWA president Damian Collins.
However, there is a high likelihood that the rising consumer levels, improved housing affordability, growing population, and low interest rates could translate into higher sales volumes.
"The full impact of the rate cuts and tax reforms put in place during 2019 have not yet made its way to WA. However, it is expected that the onset of these initiatives will be seen later in 2020," Collins said.
This could also lead to a rise in Perth's median house prices over the next twelve months. However, the uptrend might not be consistent across all sectors of the market.
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In terms of the rental market, the upward trajectory is poised to continue through next year, supported by strong population growth and a reduced housing supply.
Collins said Perth’s rental market led the way in 2019, with stable median rents, reasonable leasing activity levels, declining listings, and a plummeting vacancy rate that currently sits at 2.3%.
In fact, Perth's overall median rent price has held at $350 per week since April 2017 — the longest period of stability it has experienced since 2001.
"We're at 32 months and counting of stable median rent prices in Perth. If listings continue to decrease, new build stock continues to decline and leasing volumes remain healthy, we should see the overall median rent price gradually increase," he said.
And while Perth has the lowest median house value amongst capital cities, its strengthening rental conditions open an opportunity for investors to snap up a great deal.
"We are already seeing competition for good, quality stock, which means we can expect this to pick up at the start of next year, and continue to gain momentum later in 2020," Collins said.
Over the regional markets, conditions are also set to improve given the boost in the mining sector.
Karratha is an ideal example — it has already witnessed increased rental demand and sales activity during the latter part of the year.
"In addition to Karratha, Port Hedland and Kalgoorlie are areas to watch in 2020, with the new mining projects going a long way to restoring confidence in these regions. These projects are expected to create thousands of new local jobs, which should continue to support population growth, improve demand for housing and aid recovery," Collins said.
The state government's push for tourism also spurs a positive outlook for regional suburbs.
"After a prolonged period of turbulent conditions following the slowdown in the mining sector, the WA market appears to be stabilising," Collins said.
However, a rapid recovery over the next year should not be expected even if the worst appears to be over, Collins said.
