Perth's property market could be starting to slow, but that is not necessarily bad for the city's long-term prognosis.
Slowing, growing, or changing - that is the question. There seems to be mixed views on what exactly the Perth property market is up to these days, and what it might do in the immediate future. While some commentators believe growth is tapering off, others believe that is simply not the case.
After a sustained period of price growth, Perth's housing market continues to show signs of flattening, according to the latest APM Housing report. It notes that Perth’s median house price remained steady over the September quarter and its median unit price fell by 2.9%.
However, it also notes the median house price rose by 8.6% and the median unit price by 6.6% over the year ending September.
The September quarter sales figures did record a slight drop in turnover, REIWA president Dave Airey says. "But those figures even out over the year. Those September quarter months were cold and wet and that affects sales. Figures in both October and November swung back up strongly."
For example, there was a 9% lift in sales activity in October with an increased share in the central part of the Perth market. The 15% increase in more expensive near-city sales subsequently pushed the median price up by 1.9% to $520,000 for the three months to October. There was also a 7% lift in listings over that month.
Market strengths
Airey believes the fact that WA has the highest population growth rate in Australia - along with the lowest unemployment rate (3.7%) of all the capital cities - means property market activity will continue to be supported.
"WA's population growth puts pressure on the property market. It also reduces supply. This supply and demand issue will continue to affect property values and prices. There is, and will be, particular pressure on the under $600,000 market. Overall, I think there is slow, but steady, growth to come. "
Post [federal] election certainty is helping out the market too, he says. "With politics out of the way, and regardless of personal politics, there has been a definite change in confidence. You can see a bit of a zip in peoples’ steps. I think this is because the political uncertainty is over."
In WA there is also widespread relief that some of the more controversial legislation introduced [by the last government] will be reversed, Airey continues. “For example, the carbon tax was a big issue in WA. Reversing that will put confidence in the WA economy right back up and that, in turn, will have a positive flow-on effect for the WA property market."
The most recent Herron Todd White report supports Airey's overall view. Very approvingly, it describes "the transformation of the Perth into Melbourne" which "continues at a frenetic rate".
It seems Perth is going through a period of major transformation and development. This is a trend which should be interpreted as positive for the market generally. The report goes on to state that the market is likely to continue being active and is, once again, on the upwards swing of the property cycle.
Market weaknesses
On the other hand, Airey says first home buyer activity is slowing down significantly - largely due to a lack of stock, especially at the lower end of the market.
He also concedes the rental market may have peaked in 2013. By the end of the 2013 there was about 4,000 rental vacancies, as compared to 2,000 at the start of the year. This meant the vacancy rate was round 3%.
But the rental market is steady, Airey says. “Rents for corporate and expensive properties have dropped by about 10-25%. But rental prices on average haven’t been affected at all. So it is an area of investment still being held up strongly by investor demand, although there is likely to be a slower rate of increase."
New trends
A couple of trends in the WA market which Airey thinks are worthy of mention are:
• A sudden, but definite, increase in off-the-plan sales in developments not due to be finished until c 2015. This indicates that developers are getting back into the market and pre-selling to raise finances.
• A significant increase in financial advisors encouraging clients, particularly older people, to sell out of property investments and to instead put their money into high risk funds.
Suburb to watch: East Fremantle
Nook Property’s Andy McIntyre explains why East Fremantle remains a perennial tenant favourite.
East Fremantle is split into 2 halves by Canning Highway. The Northern side boasts large blocks with wide leafy streets and a mix of older homes and newly built homes. The Southern side has smaller block sizes and is dominated by character homes.
Selling points: Close to the magnificent Swan River, it’s a short drive to local beaches and there are some excellent schools. It epitomises the feeling of living in a village, with everything you need right on your doorstep.
Most sought-after properties: The character homes of the “Plympton Ward”, close to the George St precinct, are always snapped up quickly. Properties with views to the Indian Ocean and the Swan River don’t last long on the market either.
Top amenities: There is the lively atmosphere of George St, or the iconic Left Bank Bar Café & Restaurant. It is possible to stroll along the river’s edge all the way to Point Walter. Sportier people can even workout on the outdoor fitness equipment located by the river.
Local industry and business: East Fremantle town centre is being redeveloped. In the meantime, there is a healthy mix of businesses and a fantastic array of restaurants and bars.
Recent changes: East Fremantle Town Centre is getting a major face lift courtesy of the Richmond Quarter development. This will boast an array of commercial and retail space along with residential apartments.
Best streets: With its café culture and mix of shops, the George St precinct is one of the most popular areas of East Fremantle.
Getting around: There is excellent public transport to and from Fremantle. From Fremantle’s main train station, it is a 26 minute journey to Perth. Access to all major routes from Fremantle to Perth is good.
