In the last few months we’ve seen significant change in the Perth inner North market and more broadly the Perth market overall.
Whilst RP Core Logic reported a median sale price increase in for Perth properties of 1.9% for the three months to the end of November 2020, we are seeing instances of particular suburbs and property types achieving well above that figure and our expectations.
I’ve heard some buyers describe the current market as being over heated and wondering if it might be better to wait for 6 to 12 months to buy until things “settle down” – my response to that is at your peril!
We’re coming off median prices that are effectively at the same level as they were in 2006 having experienced declines upwards of 20% over the last 5 years – that’s a lot of catching up to do.
Expecting or hoping prices will go back to those levels isn’t a gamble I’d be taking.
What we’re seeing now, in my opinion, is the start of a long overdue recovery that began back in January and February of 2020 that COVID temporarily put a handbrake on.
That handbrake has now come off due to the management of the virus, positive economic outlook for WA, population flow back into the state, incredibly low interest rates and very tight market supply conditions both in terms of properties for sale and rent – properties listed for sale are at a 13 year low of 9,723 and rental vacancy rates are also very low at 0.95% .
Whilst the price rises expected in 2021 won’t be the same for all suburbs or property types, bearing in mind that the Perth property market is not a homogeneous one, personally, I don’t see anything to indicate that prices will revert at some point back to previous levels, particularly not in the Perth inner North market, so any decision to put buying on hold for six to twelve months might turn out to be an expensive one.
Relative to the rest of the Australian market Perth has gone from being the most expensive capital city in Australia in 2006 to now being the most affordable. Perth, along with Sydney, is being broadly predicted by banks and economists to perform the strongest in 2021 with predicted price increases of anywhere between 5 to 15%, what this means is that the price gap for those looking to trade up will widen. Yes your own property, if you own one, will go up in value, but the higher priced property is going to go up by more.
Think about it – if your $600, 000 home increases by 10% that’s $60,000. But on a $1,000,000 property that’s $100,000 – so that’s $40,000 more you need to fund or find.
I appreciate this is all crystal ball gazing and there’s no guarantees as to what will happen in 2021, just like the predicted 20 to 30% price drops at the start of COVID-19 never eventuated.
But when you look at the market & economic fundamentals and where we are relative to the rest of Australia, I think things are looking very rosy for the Perth market. Fingers crossed!
Natalie Hoye is the Founder and Licensee of Red Fox Property Group – a boutique agency doing things differently in the suburbs surrounding Beaufort Street. We call it ‘real estate alchemy’: a genuine blend of science and intuition, marketing and magic, head and heart. The Red Fox Way. And we’d love to chat with you about your local real estate needs. Call us now on 0405 812 273.