Perth house market falters further
Perth recently recorded its strongest quarter for 2016; however, the capital’s house market still recorded a decline of 0.8%, bringing the median price down to just over $560,000.
“The Perth market failed to maintain the gains of the previous quarter with house prices down sharply again. Perth unit prices also continued to fall, although the rate of decline appears to be easing,” says Andrew Wilson, chief economist at Domain Group.
“A sustained revival in prices growth remains dependent on an improvement in the local economy and a revival in consumer confidence.”
Nonetheless, Wilson feels that for first home buyers this could be a blessing in disguise.
“The current market is the most affordable for buyers in years, meaning that it could be the right time for Perth locals to take the next step to purchase their first home,” he says.
“It’s not just first time buyers that benefit from the current [low] prices. If you’re looking for a change of scenery, try widening your search to include those ‘wish list’ suburbs you’ve never been able to purchase in before.”
Confidence levels rise
Lino Iacomella, executive director of Property Council WA, adds that the current situation could be good for buyers in the long term, as the property market appears to be stabilising, with “expectations of an economic turn-around for the industry”.
Confidence levels in WA have also increased significantly for the first time in three years, strengthening this position.
The commercial scene in particular is looking strong, with confidence rising especially in the retail and hospitality sectors and construction of over 10 new hotels in the Perth CBD announced.
“It is reassuring to see confidence starting to return to the WA property industry and, although the numbers are still low, they show that the market could be stabilising after a tough stretch,” Iacomella states.
“Although the latest results are positive, the market is still fragile and Government needs to be proactive to support broad-based economic activity that will drive our economy, which will create jobs and build strong communities.”
In line with this, a piece of land in the southern metro suburb of Murdoch
has been earmarked for significant commercial use, with plans to build community housing. There are also plans to make this area a hub for health, technology and education. This project is intended to help manage population growth in the CBD.
Perth tenants benefit
Real Estate Institute of WA (REIWA) data indicates that as house and unit prices have dropped, so have rental rates.
“Perth tenants are definitely taking advantage of market conditions,” says Hayden Groves, president of REIWA.
“The improved levels of affordability are providing good opportunity for first-time renters to emerge and enter the market, while those in share houses are now finding they can afford to move out on their own.”
He adds that leasing activity in the September 2016 quarter increased consistently throughout the metro, especially in the northwest and southwest, suggesting that even for investors it’s a good time to enter the Perth property market.
Near the coast, Scarborough’s rental market has also been seeing some activity recently. Meanwhile, Lakelands, also situated beside the water south of the CBD, is presently the best-performing suburb in the metro, being the only one to report an increase in median price. This is likely because of the new shopping centre under construction, as well as Lakelands’ affordability and the suburb’s relative proximity to Perth compared to peers like Mandurah.
With the entrance of more players in the market, demand could go up given that the number of houses due for construction is the lowest since 2012, while the figure for units is the lowest since 2014, according to CoreLogic head of research Cameron Kusher.
SUBURB TO WATCH
Gosnells: Accessible location and prices
Situated 20km southeast of Perth, the suburb of Gosnells offers residents remarkable convenience. It is served by two train stations on the Perth to Armadale line, as well as by several buses.
Gosnells is also situated near Albany Highway, which is the primary road link to Perth, and is a short distance away from the local airport. This, coupled with its affordable property prices and rising confidence levels in the metro, means buyers are seeing this suburb’s potential.
Gosnells has been assisted by community efforts to improve the area to boost interest. There is a good local school, Southern River College, as well as medical centres, cafes and restaurants. Given its multicultural community, there are Asian dining establishments and grocery stores in the vicinity. Residents can do their shopping at nearby Canning Vale
Square and Spencer Village. There are many recreational spots as well, and the suburb is close to parks and reserves.
Can you afford to buy in this suburb? Find out how much you can borrow