Perth spent a large portion of 2019 sitting at the bottom of the residential market across Australia, however despite this, CoreLogic’s Home Value Index report for November 2019 showed positive news for WA. Dwelling prices increased by 0.4% throughout the October – November period which was the first month on month increase recorded since the beginning of 2018.
According to CoreLogic’s data, this trend could be attributed to more demand spilling out to smaller cities as a result of slowing job growth and higher unemployment in bigger states such as NSW and Victoria.
Housing affordability is also pushing people out of the Melbourne and Sydney markets which has seen a rising trend of migration to Queensland and less people leaving WA. Combine this with current low interest rates and Perth’s population growth slowly improving, Perth’s median house price is expected to improve according to REIWA president Damian Collins.
Amid the unprecedented impacts of coronavirus, Perth property experts say the WA market is holding its own and while the outlook is extremely uncertain, there continues to be high levels of economic stimulus in Australia to help cushion economic challenges over the coming months. Realstate.com.au’s chief economist, Nerida Conisbee says that “once concerns about COVID-19 abate and productivity returns to the Australian economy, this stimulus will help drive property demand”.
Although the outlook for property at current is uncertain, if we look at previous economic downturns, such as the 1991 recession or the Global Financial Crisis in 2007, Australian property has fared better than other sectors but it’s certainly not immune to the downturn. In the short-term we could potentially expect to see a fall in demand for properties however, with the government focusing on supporting businesses and households, they are building bridges for us to get to the other side and ensure the long-term health of our property market.
Perth Rental Market
According to the latest reiwa.com data, rental listings were 0.8% higher than levels seen in February, and 19% lower than levels seen 12 months ago. With rental properties in high demand, we saw the first increase in Perth’s median weekly rent in over three years to now sit at $360 per week. According to REIWA, we have seen this because of a slow-down in-home construction since 2016 and fewer investors active in Perth’s market, which has created more competition amongst tenants to secure a rental.
The overall picture is broadly the same across Australia however markets like Sydney that are faced with oversupply issues, were already seeing some downward pressure on rents. While we expect to see a short-term weakness in the economy which will accentuate this downward pressure on rents, Perth’s rental market has been performing strongly for some time now with vacancy rates falling to 2.2%, signalling that WA investors are less likely to be impacted by oversupply issues at current.
Extra relief for tenants has just been confirmed as prime minister Scott Morrison announced a six-month moratorium on evictions for both residential and commercial tenants during the coronavirus pandemic across Australian states and territories. The government has encouraged landlords to seek the help of banks, and added that further discussions and help will be on the way to provide relief for both landlords and tenants. Read more here.
The latest Perth rental market snapshot shows top suburbs with leased properties as at March 30: East Perth, South Perth, Perth and, Scarborough.
Perth Sales Market
In the coming weeks, it’s clear that property transaction numbers will likely fall, but the impacts on values is yet unclear. This comes as a result of consumer confidence slumping and economic uncertainty which has been evident across share markets around the world since the COVID-19 pandemic kicked into gear.
This is evidenced by REIWA’s latest data with property listings decreasing 0.9% on levels seen last week. A closer look shows that stock levels for house listings decreased by 0.6%, listings for units decreased by 0.9% and vacant land listings decreased by 1.5%.
Despite likely downturns, there are emerging trends that this will be short-lived. Over the past two weeks, we have seen more experienced investors who have lived through multiple property cycles and who have secure jobs indicate that they see this as a short-term blip in their long-term investment journey. According to property investment expert Michael Yardney, many experienced investors recognise that it’s times like this – where many people sit back waiting to see what will happen – that offer great opportunities to pick up valuable investment properties while interest rates are at its lowest. In particular, we’re seeing a lot of movement in off-the-plan investing as people are looking to lock in today’s prices, paying no more until settlement.
The Federal Government and the RBA have stated that they will likely issue more stimulus packages as the needs arise which will include focuses on credit markets to ensure businesses remain open and employers retain workers, both of which will have short and long-term impacts on the property market.
Record-low interest rates mean access to finance remains available – whether this will support the market will be determined by buyer activity.
Long term impacts
Interest rates are likely to remain at 0.25% for some time. It means buyers will have the advantage going forward once we come out the other side, which could help to stimulate the market.
The latest Perth sales market snapshot shows top selling suburbs North of the river as at March 30, 2020: Quinns Rock, Ballajura, Ellenbrook and, Butler.
If you have an investment property and are interested in an obligation-free chat with one of our experienced specialist Property Managers, contact us today.