Perth Property Report, August 2020

Read our Perth property market report with the latest property rental and sales statistics for August 2020.

Perth’s rental vacancy rate has dropped down to 1.6%, which is the lowest level we have seen since March 2008.

REIWA president Damian Collins said that Perth’s vacancy rates have remained below 3% for 21 consecutive months but now that we’re sitting below 2%, we are starting to see the impacts of limited stock with rental properties now in higher demand and areas where rents are already being pushed up.

Throughout July, there were 3,553 properties for rent according to REIWA’s statistics, which was 50% less than levels seen in July 2019. This shortage is creating a lot of competition for renters in the market right now, but as a property investor, this puts you in a strong position to get into a great value market right now, with low interest rates and a high demand from tenants.

Sales activity in the Perth market increased 19% over the past week, with REIWA reporting 834 transactions. This is attributed to a 14% rise in house sales, a 39% increase in unit sales and a 26% increase in land sales over the last week, comparative to the beginning of August.

Over the last three months, we have seen sales activity recover to levels that are around 13% higher than what we saw this time last year, but overall, we’re still down on our long-term average, as our listings remain 26% lower than 2019.

Property experts are forecasting two likely scenarios for the remainder of 2020 throughout the Australian property market – either property prices will fall modestly, or property sales will see a slow pickup. Experts are however saying that Perth is one of the few capital cities that will likely see a rebound, due to the minimal impacts of COVID-19. Domain’s senior analyst Nicola Powell said that Perth prices continue to remain relatively stable considering the economic impacts of COVID-19.

For property investors that are looking to get into the market right now, the State Government rolled out a $20,000 grant for property investors who build a house as part of the $117 million “Building Bonus” scheme which expires at the end of 2020.

If you’re looking to maximise this scheme to get into your first or next investment property Perth, here are some tips to help you set yourself up well:

  1. Avoid areas that are high risk e.g. Mining Towns

With WA’s resource sector picking up due to surging commodity prices, demand for housing in mining towns is starting to rise, as a result house prices have increased. One of the best performing regional areas at the moment is Newman, with a 25% annual growth in house prices. While this is good now, these areas have historically been high risk for investors because when the mining sector booms, values surge but they collapse very quickly when there is a downturn – making it a volatile investment.

  1. Think long-term

While grants like the Building Bonus Scheme are great, you still need to take at least a 10-year view on investing in property. Property is not a 5-minute game, you have to be it in for the long-run to see any gain and it’s also about timing the market to set yourself up for growth.

  1. What’s in the pipeline

New developments in an area, will help drive future capital growth of the suburb you’re going to invest in, so it pays to do some research into the area’s ‘growth demand potential’. Look for things like, new transport infrastructure, employment hubs and amenity that will drive demand for the area over the long-term. Many new investors are buying homes in new suburbs that have very little planned for the future to bring people in to the area – without the population demand, you risk a diminishing tenant pool and growth rate potential, so choose your area wisely based on what’s happening over the next 10 or so years.

  1. Quality property management

Many first-time investors will choose a property they would like to live in, but if you’re purchasing a property for financial reasons you need to put your business hat on and leave your emotions out of the decision. Your investment property needs to give you a return which means it has to make good business-sense, so you want to make sure the property and location appeals to a quality tenant, which isn’t necessarily aligned with your personal appeal in a home.

Furthermore, take your emotions out by avoiding trying to manage your property. This is the number one reason that investors get out of the market too early or never go onto buying a second property – the process of selecting a good tenant and maintaining the property become too difficult and time-consuming. Hiring a good property manager can ensure you get; the right tenant, the right rent, your property is taken care of and you can hold on to it for the long-term, without the stress.

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Perth Rental Market

Perth’s rental prices have remained stable over the last three months, sitting at $350 per week according to REIWA’s latest data. This can be broken down to $370 per week for houses and $340 per week for units and apartments.

Experts are predicting a major “blow out” for rent prices as the ban on rental price increases lifts in October. The ban is creating a pressure environment as demand for rental stock increases and rents at this level are likely to be unstable moving forward.

See below the latest snapshot for the Perth rental market as at August 23rd, 2020.

Perth rental market august 2020

Perth Sales Market

With the increase in sales activity throughout August, it’s good to see levels picking up to where they were before the pandemic hit.

According to the latest statistics, there were five key areas that saw particularly strong sales activity during July and August including Byford – up 92%; Port Kennedy – up 88%; Quinns Rocks – up 50%, Heathridge – up 42% and Banksia Grove – up 38%.

As at August 23rd, sales listings were 1% higher than what we say four weeks ago but are 24% lower than levels seen this time last year. See below for the latest snapshot of the Perth sales market.

Perth sales market august 2020

 

If you’re looking for an experienced property manager or perhaps considering changing property managers to help you maximise your property’s performance, contact us today for a free no obligation chat with one of our experienced property managers.

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