WA Excerpt from the 2016 June Market report

Bottom of the market could be cause for hope
A sudden surge in values this year, which heralded the first positive growth in two years, was a glimmer of hope for real estate punters
Perth homeowners and investors should be happy to hear suggestions from economists that Perth is possibly nearing the bottom of its market, a place it has been waiting to land since its economic slowdown in 2013.
The March CoreLogic RP Data Home Value Index reports the year-on-year loss at -1.95%, with the end of the first quarter 2016 seeing a slight upswing in house values of 1.3%. Units fell -0.24%.
Economists’ suggestions that Perth is nearing its lowest point beg the question: will it ever return to its former growth trajectory, or merely stabilise to corrected market values? Either way, the low prices are signalling bargain-buying time, particularly as the state is showing signs of finding its economic feet.
Recovery ahead
Perth buyer’s agent Liz Sterzel of Property Wizards explains that WA’s capital city is showing signs of recovery as the tourism industry gains momentum and oil and gas industries buoy the economy.
“Accordingly, we have seen a pick-up in enquiries as buyers begin to return to the market, hoping to take advantage of the wide range of choices on offer,” says Sterzel. “Perth has never experienced a 10-year period without house price growth, and with the expectation that prices are at or near bottom, and large numbers of housing stock available, there are opportunities for both new and seasoned investors.”
Unlike the historically well-performing markets that Sydney and Melbourne enjoy, Perth’s sliding values and negative sentiment keep many risk-averse investors at bay. Sterzel explains that in a real estate environment such as Perth’s, confident investors with vision for the long term are gearing towards add-value properties, and she reminds investors that time in the market is key to success.
“With careful understanding of their budget and potential cash flow, the savvy investor will be able to ride out these quieter market conditions and reap the rewards of the next upswing,” she says.
In February, the median of capital city dwellings was $599,000, around $16,000 less than 12 months prior. Strong performers included houses in East Perth and Burswood in Victoria Park, with 9.1% and 11.1% annual growth respectively, according to CoreLogic RP Data.
Regional areas have own strengths
While these premium suburbs with median values over $1m signal a strong market, buyers looking for similar strength without the astronomical price tag could consider regional cities in WA, which are a mixed bag of highs and lows but also stand on their own two feet in terms of potential and affordability.
Regional city Kalgoorlie’s suburb of South Boulder has proven historically strong, with an annual growth of 11.3%, while the port city of Albany remains solid at 10%, with a median of $720,000, CoreLogic RP Data reports.
Despite slipping dwelling values over the last quarter, coastal city and major seaport region Geraldton still has suburbs with good entry-level medians earning solid rental returns, says Phil Sorgiovanni, principal at Activewest Real Estate and branch chair for REIWA.
A prime example is Beachlands, which has enjoyed an annualised growth of 9.8% and averages a rental return of 4% for its $380,000 median. A surplus of stock is contributing to lengthier times on the market, giving buyers the luxury of choice and better value for their dollar.
“Sellers have become far more realistic and understanding of current market conditions, with many properties offering considerable value for those looking to buy,” says Sorgiovanni.
“If the residential market continues to stabilise from a price point, we should see some confidence return with buyers’ expectations on value and opportunity.”
At the top end of WA, local real estate agents say the beach resort town of Broome has a bright future despite its remote location.
“Broome has had consistent growth over the last 30 years and the future is no different,” says Raymond Kuceli, sales manager at First National Real Estate Broome. “With property prices and rental prices already settled and adjusted, it will see a steady growth from here on in.”
Shining brightest for investors is the average rental return of 6%, propped up by a high rate of renters in the greater Broome area, which ABS statistics peg at 56%.
“This is the best time for purchasing, as prices are the best they have been for many years, and the sales numbers are a sign that people see the value in our property,” adds Kuceli.
In the capital city, renters are smiling as competition pushes rents further into the red. In the year to February, house rents plummeted 8.3%, coming second-to- last behind Darwin; a significant drop considering Brisbane is third lowest with an annual change of just -0.7%.
Forrestfield: Future plans signal future growth
Major infrastructure development is a key growth factor for the suburb of Forrestfield, located 15km south of the Perth CBD.
Managing director of Professionals Forrestfield Glen Newland says the suburb is popular with young families and blue-collar workers, who are drawn to the large blocks that cater for kids and allow for large sheds.
“It’s still in the first-home buyer’s bracket of $420,000 to $460,000, where you can get a full-size block with a family home,” says Newland.
While currently only pockets of Forrestfield are zoned for subdivision and units are still reasonably new to the suburb, Newland says most of Forrestfield has been flagged for rezoning in the future.
Forrestfield’s population is expected to rise with the completion of the $2bn Forrestfield-Airport rail link in 2020, which includes plans to develop the surrounding 250ha into high-density residential and commercial zones, as well as a new shopping centre.
Conveniently located adjacent to Perth Airport but sidestepping the flight path, Forrestfield’s drawcards also include lifestyle amenities for residents.
“We have the Hartfield Recreation Centre, which has every sport under the sun, and Forrestfield
Marketplace has just been bought out and will be getting a facelift, so it will be quite a nice shopping complex in the future,” says Newland.

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