Perth may still be a while away from stabilising, but there are seeds of hope in the market.
“Positive sentiment has been growing in the WA property market as we reach the bottom of this market cycle,” says Allison Hailes, CEO of the Urban Development Institute of Australia (UDIA) WA.
“Sales activity and housing values declined in WA over the past two years; however, [these figures] have shown signs of steadying in the last six months with little to no change in the median price of homes in recent months.”
While there continues to be debate on how much longer Perth’s down period will last, UDIA notes that new land prices went up by 3.9% year-on-year as of September 2017. The Real Estate Institute of Australia also reported a fairly steady median house price over the September 2017 quarter.
“Anecdotal evidence from a number of property developers supports the positive sentiment moving into 2018, with many experiencing an increase in general enquiries and interest from buyers. Record low interest rates are also providing accommodative conditions for buyers,” Hailes reports.
Moreover, ABS data indicate that housing finance commitments for owner-occupiers increased slightly by 0.3% in September 2017, marking the fifth straight month of upswing in this regard. However, the number of total dwellings approved for construction rose as well, which could dampen the market given the already-high levels of supply.
Resales and rentals up
A lot of factors are on the up for Perth, but there is still much doubt surrounding its prospects.
“The volume of resale and rental stock is still well above 2013–2014 volumes, the last time that property prices grew in Perth,” says Simon Pressley, managing director of Propertyology.
“On face value, the unemployment rate might suggest that the economy is going well again, but it’s worth noting that 11,000 people left WA for an interstate location over the last 12 months, and the real rate of job growth is tracking sideways against the national average. It’s Propertyology’s view that Perth property prices will hold a neutral price position for the foreseeable future.”
Angie Zigomanis, senior manager for residential property at BIS Oxford Economics, also believes the positive talk on Perth may be premature.
“There’s not much prospect from an investment point of view for rental growth, so I think [that] market will still be tough for at least another two to three years.”
SUBURB TO WATCH
CLAREMONT:
The decline in WA seems to have missed the house market in the premium suburb of Claremont, as prices have increased there by 26.1% over the past fi ve years.
The median house value is now just over $1,450,000, and investors are looking at a strong capital growth market on this side of Australia. However, from a cash fl ow perspective, yields are quite low, at just 2.5%.
On the fl ip side, units are not doing too well, with prices beginning to drop. Over the most recent three-year period, apartment values have fallen by 9.5%.
Situated on the Swan River, Claremont has a busy shopping hub in the St Quentin Avenue precinct, a private hospital, and several schools.
Amenities: Claremont can easily meet residents’ shopping, school and entertainment needs
Accessibility: Stirling Highway runs through the suburb, and there are several railway stations
