Despite recent improvements in the Perth housing market, don’t expect prices to soar in the next few years
The WA property market is finally in a state of recovery following several years of steep decline, but investors shouldn’t look to it for capital growth any time soon.
The strong restrictions on credit are a factor, as is the fact that Perth’s economy is still not particularly strong, limiting the potential for population growth and demand to soak up the existing housing stock.
BIS Oxford Economics’ Residential Property Prospects 2019 to 2022 report foresees growth on the horizon for Perth, but not at significant levels.
“Total median house price growth of 7% is forecast in the three years to June 2022, with a corresponding rise of 8% for median unit prices,” reports Angie Zigomanis, associate director at BIS Oxford Economics.
“With conditions unlikely to improve in the immediate term, notable price rises are not expected to return until 2021/22 as the economy shows stronger signs and excess stock is absorbed.”
Nonetheless, steps are being taken to improve job availability in the state. Construction activity in WA is low, according to the latest CoreLogic Cordell House Index Price report, with the state’s annual growth rate in terms of construction costs falling from 3.2% to 2.9% in the year to June 2019. However, there are more mining sector and construction projects being approved, and this is helping to signal a boost in jobs growth.
Over the 2018/19 financial year the decrease in property prices has also led to a corresponding increase in the share of affordable properties sold in WA. CoreLogic research analyst Cameron Kusher points out that 31.2% of house sales were made up of properties priced under $400,000, compared to 28.7% last year; meanwhile, 55% of units sold were priced in the same range. This proportion is a considerable step up from the previous year’s 50.2%.
Even with low-priced properties selling like hotcakes, Perth’s million-dollar market has not taken a significant hit. Sales of million-dollar houses still made up 10% of all house sales in the capital, while 4.1% of all unit sales were of premium properties in the upper quartile of the market.
Despite a lacking performance over the past few years, Perth has retained a place in the Knight Frank Prime Global Cities Index for Q2 2019 at number 32.
SUBURB SPOTLIGHT
ROCKINGHAM: Property prices still on a downward trajectory
Western Australia may be in a state of recovery, but the suburb of Rockingham near Mangles Bay has yet to feel the effects.
Both house and unit prices have been freefalling since July 2014, and the 2018/19 period has not produced encouraging results, as values fell by 5% for houses and 6.5% for units. Nonetheless, there was some positivity to be observed in the unit market as rental rates went up by 5.4% in the 12 months to May 2019, bringing the weekly advertised average up to $295. This was coupled with an average rental return of 5.4%.
As a primary centre in the southwest region of Perth, Rockingham has a range of amenities, including schools and a campus of Murdoch University.
Education: The public Murdoch University has a campus in Rockingham
Rent: Unit rental rates rose 5.4% in the year to July 2019
