Perth is showing improvement in many respects – but not in the property market.
“2018 saw the lowest number of dwellings constructed in WA since 2008, and [Perth] is the only capital city to show an improvement in the unemployment rate (seasonally adjusted) over the last 12 months. Moreover, it is showing signs of increasing population growth,” says Matthew Lewison, director of OpenCorp.
“The Australian Bureau of Statistics data released in September 2019 showed that the March 2019 quarter had the best population growth WA had seen in five years. Things may be finally turning the corner, with the rate of people leaving the state slowing down and more jobs being created.”
Indeed, the resources sector has bounced back following the mining downturn and seems to be on the right track. Thus, Perth’s ranking as the weakest capital city market in CoreLogic’s Home Value Index for September 2019 has come as a surprise to some.
“We’ve been surprised that Perth produced yet another poor last 12 months. What we’ve seen over the last 18 months is a significant reduction in vacancy rates and an improvement in interstate migration,” says Propertyology managing director Simon Pressley.
“On reflection, we probably underestimated the volume of supply which first needed to be absorbed before prices would start to grow again.”
These conditions have played a part in many WA suburbs reselling at a loss, according to CoreLogic’s Pain and Gain report for the June 2019 quarter.
“Sellers in the major mining areas may still be finding it challenging to generate a profit. Around half of all properties sold in the North and South Outback areas of WA generated a loss for the seller over the June quarter,” says CoreLogic head of research Tim Lawless.
Nonetheless, the continued decline in prices has resulted in housing affordability improving in the state, with the proportion of income necessary to meet home loan repayments dropping to 22.4% – a fall of 1.5% compared to 12 months previously, as per the Housing Affordability Report released by the Real Estate Institute of Australia for the June 2019 quarter. First home buyers seem to have taken advantage of the favourable buying conditions, as their numbers increased by 4.8% over the quarter.
SUBURB TO WATCH
EAST FREMANTLE:
Things continue to look grim for the luxury suburb of East Fremantle, particularly in the house market.
Prices took a hit of 12.1% in the year to September 2019 – yet another double-digit drop in line with the trend observed over the past five years. The median price dipped below $1m as a result. Moreover, rental rates plummeted by a whopping 15.4% to an average of just $550 per week.
Unit values fell, too, but not as significantly, declining by 2.0% in the 12 months to September 2019. Rental rates slipped by only 1.3%, holding to a weekly average of $375.
Prices: House prices continue to fall in East Fremantle, dropping the median to under $1m
Rent: Rental rates for houses plunged by more than 15% in the past12 months
