Perth recorded its highest property sale transactions towards the end of June, with REIWA reporting 613 home sales and 412 vacant land sales. Both of these figures are significantly higher than our 52-week average.
Damian Collins, president of REIWA, said the boom in land sales, which is at their highest level since August 2009, could be attributed to all the various government grants and incentives. “The schemes have certainly helped people who were undecided about a house and land package make their decision quicker, and we will likely see vacant land transactions remain at higher-than-normal levels until the end of the year when the scheme concludes.
With WA seeing few to no COVID-19 cases and restrictions lifted on 18th July, property experts are picking Perth as one of the few Australian property markets that are likely to rebound the fastest, with price values expected to grow as sales activity picks up. The mining sector is also performing strong due to increased demand from China. This should give Perth property investors some confidence that our local economy should be able to hold up well.
Perth’s rental market continues to perform strongly, with rental vacancy rates back to where it was pre-pandemic and well below levels, we saw this time last year.
Perth Rental Market
Rental stock levels have dropped to the lowest level recorded since November 2013 which is positive news for Perth property investors.
REIWA data reported 3,717 properties for rent in Perth recorded at the end of the week ending 26th July, which is 7% lower than what we saw in the previous month and 47% lower than what we saw the same time last year.
In particular, Perth’s northern suburban corridor saw rental stock reduce by over 48% in the year to June 2020, however some of Perth’s inner-city suburbs saw a much lower rate of reduction of 15% largely due to the continuing supply of apartment stock.
The downward trajectory in rental listings comes from an uplift in leasing activity and limited new stock coming to the market with Perth’s current vacancy rate sitting at 2%.
Despite COVID-19 restrictions creating a slowdown in tenant activity, REIWA data reported that leasing levels have rebounded by 27%. Combined with limited stock coming on to the market, this supports the strength of our rental market as the median rent prices remain steady at $350 per week, which is expected to increase if these trends continue to remain throughout 2020.
While Perth is performance is varied across the market, it’s important for landlords to work with a strong property manager to ensure they are maximising their rental pricing strategy, for conditions in their local area to help leverage continued improvements in the market and mitigate costly vacancy risks.
During July 2020, rental properties in Perth sat vacant for an average of 22.6 days and at Benchmark, our landlords saw an average vacancy period of 5 days taking our vacancy rate to just 0.5%.
Perth Sales Market
With Perth recording its highest property sales transaction activities since 2009, we are poised to recover quite strongly over the next 12 months. A closer look at listing stock levels throughout July, there were 10,657 properties for sale in Perth recorded at the end of the week ending 26th July, which is 2% higher than what we saw earlier in the month.
Director of HIA, Cath Hart has said she is expecting the home-building industry to recover over the next 12 months. “The revised outlook for the state’s home-building sector is a 15% improvement from the financial year 2019-2020, when we did about 13,800 starts, as the sector regains some of the momentum that was starting before COVID-19,” Hart said.
The revised outlook takes into consideration the announcement of the Building Bonus Grant and the Federal HomeBuilder Scheme with plans to cut red tape in building approvals, while also encouraging more interstate FIFO workers to settle in WA.
Combined this with WA coming back stronger than other capital cities amid the global pandemic, our state is well positioned as an attractive destination that will help to drive population and business growth.
Perth’s Market Indicators Q1
- 3% Capital gains rate in the apartment segment
- $348,500 Median value of apartments
- 150 days Average days-on-market for apartments
- 4% Gross rental yield for apartments
- 1% Decline in housing median value
- $527,000 Median housing price
- 147 days Average days-on-market for houses
- 72% Gross rental yield for houses
Source: Knight Frank Australia June 2020 Residential Review
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