In exciting news for property investors and landlords, experts are predicting Perth property prices to rise faster than any other capital city market in Australia in 2021.
We take a look at what happened in the Perth property market in 2020, what to expect this year and where savvy investors should be looking to buy in 2021.
How 2020 played out for the Perth property market
Despite the COVID-19 pandemic delivering a significant economic blow, the Australian national housing market showed resilience in 2020. It was invigorated by historically low interest rates, mortgage holidays and government buyer incentives. There was a remarkable rise in consumer confidence as COVID-19 related restrictions were lifted, and the year finished strongly for many markets around the country.
Perth was no exception. Prior to 2020, our property had been experiencing declining values for about six years. But last year, despite the unpredictable conditions, things started looking up. According to CoreLogic, Perth dwellings increased in value by 1.9% over the course of 2020. The year went out with a bang, with values rising 1.1% in the month of December and 2.8% across the December quarter to see the Perth median property price sitting at $471,310 by 31 December. The increases represent a 6.4% total return.
Despite the gains of 2020, Perth property values remain 19.9% below their 2014 peak. This isn’t necessarily a bad thing – rather, it means there’s plenty of room for growth in 2021.
What lies ahead in 2021?
Economists for the major banks and financial institutions such as CBA, AMP Capital, ANZ and Westpac are universal in their prediction that the Perth property market’s upward trend will continue this year. Even taking into account the possibility of more localised COVID-19 outbreaks, which are likely to keep national borders closed and state borders fluctuating, they expect to see strong capital growth for Perth property in 2021.
The general consensus amongst the experts is that home prices across the nation will rise between 4 and 5 per cent in 2021.
When it comes to Perth, however, ANZ are predicting a 12 per cent growth in property values in 2021. AMP Capital are close behind with a prediction of a 10 per cent gain, noting the favourable impact the high iron ore price is having on the West Australian economy, as well as the extremely low Perth rental vacancy rate. Westpac are expecting an 8 per cent rise in property values for Perth this year, with another 8 per cent to come in 2022. CBA is tipping that Perth could be the best performing larger property market in Australia in 2021, again pointing to its low rental vacancy rate, and the fact that the West Australian economy fared better during COVID than that of other states and territories.
The Real Estate Institute of WA (REIWA) agrees with the economists’ predictions of strong Perth property capital growth in 2021. They are expecting house price growth of between 6 and 10 per cent, suggesting that this year will be the best performing year for the Perth housing market in approximately seven years.
Perth hot spot suburbs for property investors in 2021
So, where should canny investors be looking to buy in Perth in 2021?
To the north, suburbs close to the freeway and the coast such as Kingsley, Craigie, Heathridge, Padbury and Duncraig have been popular of late, with properties in these areas selling after very few days on the market. Areas set to benefit from the new Yanchep rail line, such as Eglington and Alkimos, along with Banksia Grove, are well worth a look, as are those along the new Ellenbrook rail line to the north-west.
South of the river Melville, Willagee, Leeming and Willetton are perennially popular thanks to their great schools. The Thornlie-Cockburn link, due for completion in 2023, will open up suburbs like Canning Vale and Jandakot. The Canning Bridge precinct, including Applecross and Mt Pleasant, is another area to watch. The City of Rockingham offers buyers great value, with a median property price currently below the Perth average.
Properties with a view and those within a 15km radius of the CBD will always be popular with owner-occupiers, renters and investors alike.
For more expert advice about the Perth property market, contact our friendly team today.