Perth spent most of 2019 trading places with Darwin at the bottom of the national residential market, but even though it remained the second-weakest capital city, CoreLogic’s Home Value Index for November 2019 had good news for WA. Dwelling values actually increased by 0.4% over the October–November period. This was the first month-on-month boost recorded since the first half of 2018.
This could be partly attributed to demand spilling out to smaller cities as a result of slowing job growth and higher unemployment in bigger states like NSW and Victoria, CoreLogic points out.
The lack of housing affordability in the powerhouse capital cities has also meant a rising trend of migration to Queensland and less movement out of SA and WA.
“With the current low interest rates and Perth’s population growth slowly but steadily improving, Perth’s median house price could improve over the next 12 months,” says Damian Collins, president of the Real Estate Institute of WA.
While 2019 was hardly a banner year for Perth as sales activity flip-flopped, Collins notes that rental activity has improved.
“We are already seeing competition for good, quality stock, which means we can expect this to pick up at the start of [2020] and continue to gain momentum,” he says.
A slowdown in the amount of housing supply entering the market has been a major contributor to Perth’s positive rental performance.
“We’re at 32 months and counting of stable median rent prices in Perth. If listings continue to decrease, new-build stock continues to decline and leasing volumes remain healthy, we should see the overall median rent price gradually increase,” Collins predicts.
“Perth currently has the lowest median house value of any major capital city. This, combined with strengthening rental conditions and the opportunity to get into good suburbs at an affordable price point means investors are likely to re-enter the market."
Beyond the metro, regional WA is expected to get a lift as well from renewed investment in the mining industry.
“Karratha, Port Hedland and Kalgoorlie are areas to watch in 2020, with the new mining projects going a long way to restoring confidence in these regions,” Collins concludes.
SUBURB TO WATCH
KELMSCOTT:
The suburb of Kelmscott is divided into two halves by the Albany Highway. It’s been popular with residents because of the proximity of a school, a market, a hospital and safe parks. Public transport is convenient here as well, and the suburb has a tranquil atmosphere.
However, Perth’s downhill momentum has affected this area quite badly, with values falling by 30% across both houses and units in the fi ve years to November 2019. The median prices of both markets hover in the $200,000 range. This means they are quite affordable. Yields are also strong, especially in the unit market, which offers an average rental return of 6.4%.
Accessibility: The suburb is on the Albany Highway, and there are public transport options available
Affordability: At low median prices in the $200k range, houses and units are quite affordable
