What’s happening with the Perth property market?
Good question, and the answer is different whether you’re buying, renting or selling.
Last week, REIWA reported that there were 17,220 properties for sale in Perth, which is 7% higher than the same time last year.
12,000 is considered to be a neutral market, so the statistics would indicate that we’re deep into over supply, but both sellers and buyers need to be aware that there are markets within markets and that whilst for some suburbs and property types buyers might be spoilt for choice, it may not be the case for others.
After a period of stabilisation RP Data Corelogic have said that property prices for Perth in February slid back again by an average of 1.5%, with houses down 1.4% and units by 1.7%. But again, this is one month of statistics and an average so also not true for all suburbs and property types. It also, according to reiwa.com.au, reflects the fact that 49% of February’s sales activity was in the sub $500,000 section of the market. Read more on that here.
In positive news, the indications are that the rental market has well and truly stabilised with vacancy rates now at a low 2.6%, well back from the 7.3% that they were in July 2017, with the expectation that the reducing supply levels will put pressure on rents causing them to start to rise this year.
The Banking Royal Commission is now done and dusted, with the indications being that there will be no further restrictions placed by banks on lending over and above the considerable tightening that’s already occurred in the last year and a half, which according to realestate.com.au Chief Economist Nerida Conisbee had the affect of stalling the fledgling recovery of our local market in 2017.
Our run of record interest rate lows looks set to continue for a while yet with the RBA keeping rates on hold again for this month with some economists even predicting a further cut at the end of this year.
But in the short term we have a Federal election. And if there’s one thing we know about elections it’s that the property market doesn’t seem to like them, irrespective of the policy discussions taking place and who is looking like getting into power.
In terms of WA economic conditions, according to CommSec, the outlook is positive, with economic data and indicators pointing towards improvement and light at the end of the tunnel, which is great news for the local economy and property market in the medium to longer term.
So my personal expectation is that we will see the market continue to be fickle and patchy for a while yet, with things starting to settle towards the latter part of the year.
If you’re a buyer, particularly in Perth’s quality inner suburbs, I think you should be taking advantage of the current uncertainty to snap up something before the overall signs of improvement begin to strengthen. If you’re a seller, the market is the market, and if you decide to hold on until things improve, remember that you’ll be having to buy in those improving conditions as well.
If you’re a landlord, things are looking up but don’t get too carried away with your rent reviews because we’re not there yet! And if you’re a tenant, be prepared to factor into your budget potential rental increases going forward, particularly if rental conditions tighten further.
Photo by Josh Spires on Unsplash