If I was to use one word to describe the market at the moment and where I think it will be next year it would be: patchy.
On average, property sales transaction activity is down 3% for houses and 5% for units compared to 2017 which was also lower than previous years. Perth’s median house price currently sits at $515,000 and median rents at $350 per week.
reiwa.com reports that total number of properties listed for sale has increased from 13,075 in January to be 15,741 at 9 December 2018, although it’s worth noting that the January figures were post a withdrawal of approximately 1500 properties from the market at the end of 2017. I’m anticipating a similar withdrawal rate at the end of this year.
The rental market has improved this year with Perth rents remaining steady for approximately 18 months now and vacancy rates having fallen from 5.4% in January to 2.9% currently to be at their lowest levels in 4 years. That said, actual leasing activity levels are 3.8% down on the 2017 average so the lower vacancy rate reflects a lesser level of property being available for rent rather than an increase in the level of demand.
Despite the fact that the Perth market performs very differently to the East Coast, the negative press in recent months regarding those markets appears to have had some level of influence on local market sentiment this quarter as does the tighter lending environment, although there is some good news with APRA announcing this week that it will lift restrictions on banks issuing interest only loans which had dampened investment and lending activity.
The start of next year will likely be affected by the Federal election and the inevitable speculation and brouhaha around negative gearing that will unsettle investors. We’ll all wait to see how that one pans out!
The Perth market isn’t homogeneous and whilst we’re seeing good levels of demand for some kinds of properties in some areas, character homes in Bayswater being a good example, conditions may be markedly different elsewhere.
Interestingly, national Property Valuers Herron Todd White have now separated the Perth market into “Inner” and “Outer” areas in their analysis to reflect the differing levels of where they believe the markets are at, with houses in inner areas assessed as being at the bottom of the market but with speculation that prices for houses in outer areas may further soften. The major difference between the markets predominantly relates to supply and demand, with the inner city premium end of the market faring significantly better than suburbs further away from the CBD. In some outlying suburbs with new land developments and housing activity it’s been reported that the equivalent of two years worth of property sale transactions could be on the market for sale at any one time, with the oversupply negatively impacting prices as a result.
For me personally it’s been a very positive year in terms of the number of quality properties we’ve sold, particularly character homes on full blocks in our traditionally popular near city suburbs, and we’d expect that level of demand for quality trade up properties to continue into 2019. The trade up/trade down market seems to be where demand is highest locally whereas the local unit/multi residential market could continue to soften, albeit likely less so than in outer suburban areas and not necessarily across all suburbs.
If you want to know reiwa’s view on the APRA decision and mid year budget update and market outlook click here and for Herron Todd White’s December 2018 month in review for residential property click here.
As always, if you’d like an update on your specific property please call me on 0405812273 – we’d love to help.