Perth market ready to recover?
Even though prices continue to drop in Western Australia, property experts have hopes for Perth’s recovery.
“After 2016, there has been a significant lift in inquiries and offers since Christmas,” says Geoff Baldwin, managing director for RE/MAX WA.
“Property prices are steady at the moment after having continually dropped for the previous few years and, although we don’t expect booming conditions, we do predict that the WA market will continue to strengthen as the year progresses, resulting in an increase in prices.”
Baldwin points out that investors from Sydney and Melbourne have been showing interest in WA.
“It wasn’t that long ago that Perth prices almost caught up to Sydney and were on a par with Melbourne. While we’re now a long way behind both those cities, history has a habit of repeating itself in real estate,” he says.
“Activity in a recovering market can quickly snowball so we won’t be shocked if there’s a buyer surge this year.”
Bargains attract first homebuyers
Some property experts may be adopting a positive attitude, but it’s important to also consider that the state is still struggling somewhat to get past the mining downturn.
“Western Australia is still coming to terms with the end of the mining boom, and confidence did slip back into negative territory,” says Ken Morrison, chief executive of the Property Council of Australia.
While confidence in Perth remains shaky, the property market is expected to stabilise by the end of the year. For Peter Peard, chief executive of Peard Real Estate, now is the time for buyers to get in on the action.
“We keep on saying we’re at the bottom, but it feels like we are at rock bottom. We’re now seeing some real bargain buying and the buyers are starting to respond and coming into the open homes,” he notes.
Factors that could entice many first homebuyers into the market include the increase of the First Home Owner Grant to $15,000 for new homes by the state government, and the waiver of stamp duty on purchases up to $430,000 for first-time buyers.
“There couldn’t be a better time to buy a new apartment or build a new home. Or if you’re looking to upgrade, then the bargains are there for the picking,” Peard says.
Stockland and Mirvac developers also report that price growth is weak to steady in Perth – thus, investors should be able to get reasonable returns on their property.
However, buyers still do have to exercise a degree of caution, especially when considering larger, affordable properties outside of the city, since regional areas – such as the southwest – continue to struggle.
Inner city suburbs to benefit
Many WA residents are now in a position to seek bargain dwellings due to the availability of steady income and employment opportunities.
“We are likely to see some micro bursts of activity in certain areas as these buyers scramble against one another for quality products,” states Herron Todd White’s Month in Review report for February 2017.
“We also expect an increase in speculative developer and investor activity, which reflects the lack of a premium currently being paid for these sites,” Herron Todd White adds.
Since developers are able to offer incentives to first homebuyers, new units are likely to be more attractive than established apartments. However, this could spell trouble for dwellings in Clarkson, Baldivis and Seville Grove.
Lino Iacomella, WA executive director of the Property Council, feels that more must be done in order to boost Perth’s profile.
“Perth’s inner suburbs are in desperate need of transformation, and the success of urban infill will depend on the next government’s ability to provide frequent and reliable public transport,” he states.
SUBURB TO WATCH
Norseman: All that glitters isn’t gold for mining town
The suburb of Norseman is situated in the last Western Australian district before the border of South Australia. In the past couple of years, house prices here have fallen considerably to reach a median value of less than $100,000.
Originally a gold mining town, it is now primarily supported by the mining and tourism industries. While the mining downturn could account for Norseman’s decline, tourists may help keep the suburb afloat. Popular sites include the Norseman Gold Mine, Beacon Hill Lookout, the Granite and Woodlands Discovery Trail walk and Mount Jimberlana.
Nonetheless, residents still have the convenience of a local high school, a shopping district, hospital and a business area, which could help reinvigorate the suburb’s appeal. Although Perth is a considerable distance away at over 700km to its east, buses run through the suburb all the way to the capital.
Can you afford to buy in this suburb? Find out how much you can borrow