Those following the property market in Perth may be deterred by the gloomy headlines.
But investors both in and outside of the ‘Wildflower State’ should keep their eyes on the capital city as there are profits to be gained if you conduct your research properly.
Evaluate the statistics
While there is a lot of data about Perth’s stagnant property market it has to be examined in its context.
For example, Dr J-Han Ho, a senior lecturer at Curtin University’s School of Economics, Finance and Property provides an interesting perspective on Perth property. Dr Ho told The New Daily that looking at median property prices in isolation doesn’t provide the full picture. He says this is because there is an oversupply of stock, but also makes some other observations:
- The growing popularity and ease of creating a subdivision is pushing Perth’s median property price down, as each individual property and land package is cheaper than a freestanding house on a larger block.
- There is an increase in migration to Perth, particularly from countries with high-density urban areas. Those newcomers have shifted demand from houses to units, which are cheaper, once again lowering Perth’s median property price.
- Perth houses tend to be newer than houses in other capital cities, meaning owners don’t have the need to upgrade them as frequently and also tend to hold onto their property for longer.
Things could be looking up
Despite the slowdown in the mining sector and big falls in property prices over the years, you don’t need to put on rose-tinted glasses when you read the news. Recent statistics from CoreLogic found that the housing market rebound finally ventured west, with a 0.4 per cent rise in median property prices in November 2019.
Blue-chip properties in the inner and coastal areas are driving the growth.
There is still a way to go, but for the first time in 18 months Perth’s property market is heading in the right direction.
Tight rental market
Perth’s overall median rent price has been steady at $350 per week since April 2017. According to REIWA this is the longest period of stable rents Perth has experienced since they began recording rental data in 2001. And REIWA expect that the upward swing in the Perth rental market will continue during 2020.
For budding landlords there is more good news. Perth’s vacancy rate fell by 70 basis points to 2.7% during the year up to September. This could be due in part to a combination of population growth and a reduction in new housing construction and means that the market may have passed its lowest point.
Population growth could fuel prices
Perth is on track for a population boom with Greater Perth (which had two million inhabitants in 2018) expected to have 3.3-3.6 million residents by 2052.
These projections are based on data from the Australian Bureau of Statistics.
Planning Minister Rita Saffioti told WA Today that infrastructure will be planned according to these estimates. “This means expanding the public transport system to reflect the current approved growth corridors and areas through Metronet, and also developing new housing precincts adjacent to existing public transport nodes.”
Investors should look towards these “urban corridors” for long-term gain.
According to insurance company QBE, Perth house values are set to rise by 6% and unit values by 5.3% by 2022.
This is based on several key indicators including:
- Australia’s GDP is projected to grow from 2.1% to 2.9% in 2022
- Employment growth is predicted to fall but so is the unemployment rate which will be 4.8% in 2022 – compared to 5.1% today.
- The official cash rate – while predicted to remain low – is predicted to increase by 50 basis points to 1.5% in 2022.
If you’re looking to invest in Perth’s property market contact our specialised team of property managers today.