After a run of negativity, confidence in Perth has jumped to the second highest in the country as economic expectations improve
The outlook for Perth is highly positive for once, following the prolonged period the city has spent at the bottom of the market, according to the ANZ/Property Council Survey for the September 2019 quarter.
“Across the board, the results from this survey paint an encouraging picture of the outlook for property in WA. Our run of four quarters of declining confidence has come to an end, and all the key indicators are now pointing back in the right direction,” says Sandra Brewer, executive director of the Property Council WA.
Consumer confidence in the market has risen to 134 index points from 125 points in the June quarter. This figure is higher than the national average of 128 index points and just behind that of SA. Brewer notes that capital growth expectations are also on the rise in Perth.
“In the residential sector, we’ve seen a much more moderate but nonetheless important shift in expectations for capital growth in house prices in the coming 12 months, which have also returned to positive territory.”
This confidence in the property market has been accompanied by a boost in economic expectations across the country.
“We have also seen a marked turnaround in expectations for national economic growth, moving from negative territory to be firmly back on positive ground,” Brewer adds.
"Falling expectations of WA state economic growth in the June quarter have also rebounded, shooting up to now be the highest of any jurisdiction for the year ahead.”
The turnaround in industry expectations regarding debt finance availability in the coming year are a significant factor contributing to this improved outlook, and it is anticipated that this could in turn generate more employment opportunities for WA residents.
The positivity surrounding Perth could be bringing more potential residents into the state, causing vacancy rates to fall.
“Perth’s vacancy rate was around 6.0% in January 2017. Today it is sitting at 3.0%. That’s significant for investors looking at Perth,” says OpenCorp director Matthew Lewison.
“As vacancies trend down below 3.0%, the market starts to favour landlords again. Rising rents improve rental yields for investors, which makes it more attractive to buy and will therefore put upward pressure on prices.”
SUBURB TO WATCH
GERALDTON:
With WA lifting itself out of its years-long slump, the coastal suburb of Geraldton is seeing better days as its unit market recorded strong growth in the 12 months to June 2019.
The median unit value is a very affordable $224,528 after increasing by 11.3% following a hint of positivity glimpsed in 2017. However, rental yields are quite low at an average of only 2.8%.
The opposite is true for the house market, where value growth has been in the red over the past fi ve years. The median price of houses is actually lower than that of units, at below $200,000 after values plummeted by 14.5% in the past year.
Affordability: Geraldton’s biggest perk is its low property prices, with houses selling for just $188,525
Growth: Considerable demand for units is refl ected in sharp increases in unit prices and rents
