Perth was Australia’s weakest capital city in the most recent quarter, as its depressed economy continues to hold it back
The national property market is picking up again following a prolonged period of decline, but while Perth is seeing some benefits, its weak economy is still keeping it down. According to the CoreLogic Home Value Index for August 2019, this capital was the worst performer among its peers over the quarter, edging out Darwin with 1.8% negative growth.
“The ongoing weakness in the Western Australian housing market can be attributed to a mix of weak economic and demographic conditions overlaid with a tight credit environment,” explains Kate Forbes, the national director of Metropole Property Strategists.
“Perth values are now amongst the most affordable across the capital cities.”
BIS Oxford Economics’ Residential Property Prospects 2019 to 2022 report shows that price growth is also being limited by oversupply and low migration inflows.
Nonetheless, there is some positive news as Perth’s performance in the August 2019 quarter gives some hope for future growth. Findings of the CoreLogic Home Value Index indicated that the rate of decline slowed in that period, and Perth’s upper-quartile market recorded growth.
“We have consistently heard that housing market confidence has improved, and the data since then continues to confirm the improved sentiment,” says CoreLogic head of research Tim Lawless.
“A key contributor to the housing recovery has been the increase in buyers, but also a lack of advertised stock. As stock levels continue to rise throughout spring, we will get a much better understanding of the depth of the current recovery.”
Overall, rental rates dropped in Perth, but there are a few standout suburbs. Notably, Katanning made it into CoreLogic’s Top Rental Performers list for September 2019; in fact, it ranked fifth out of 100 suburbs.
The suburb, which is highly favoured by couples, has a very affordable median house price of just over $150,000, and its median rent comes in at $250 a week. Landlords also gain a high average yield of 9.1%.
Mortgage lending rates have been on the up as well – CoreLogic data suggested that in July the value of lending to owneroccupier first home buyers rose by 17.4%, hitting its first peak since November 2018. Meanwhile, the value of lending to investors increased by 14.1% from July to August 2019.
SUBURB TO WATCH
MORLEY:
Part of the City of Bayswater LGA, the suburb of Morley is only about 10km from the Perth CBD. However, its location has not saved the market from strong decline.
Unit prices nosedived by 24.9% in the 12 months to August 2019, while house prices dropped by 6.9%. This continued the persistent negative trend observed since 2014. While rental rates for houses were steady at an average of $370 per week, unit rates fell sharply by 11% to an average of $325 a week.
This certainly doesn’t spell good news for landlords, even though the average rental yield for units was a high 6.2% as of June 2019.
Location: Morley is around 10km from the Perth CBD in the Bayswater City LGA
Rent: While the average unit rental return is high, weekly rents are low
