Hints of positivity pop up in the property market, but Perth is expected to remain subdued for the near future
Perth is showing signs of life, but this rally could be choked by the state’s faltering economy.
“The weak economy is reflected in the state’s poor population data. Western Australia’s total population growth in 2016 was lower than the combined population increase of Casey and Hume (outer-Melbourne LGAs). Interstate migration data also shows people have been leaving in droves,” reports Simon Pressley, managing director of Propertyology.
“Perth also has an oversupply concern, with WA producing 28,535 new dwelling completions in 2016 – sufficient for 70,000 people – while the population only increased by 16,835.”
Nonetheless, the president of the Real Estate Institute of WA, Hayden Groves, offers an optimistic outlook for the property market.
“Perth’s property market showed signs it had stabilised in the June quarter, with the latest preliminary data revealing there was little change recorded to key market indicators over the three-month period,” he says.
While market conditions remain unfavourable, Perth may finally be finding its footing again.
“We’re certainly not experiencing the steep declines across the board we once were. Although no one can accurately ascertain the future of the property market, the signs are there that we have finally found, or are very close to finding, the ‘floor’ of the market,” Groves says.
Auctions could be the answer
Fairly strong sales have also helped temper the oversupply issue in the June 2017 quarter.
“Although we still have plentiful choice in the market, we do appear to have hit a ceiling and are no longer seeing the increases we once were. As long as transactions remain steady, we should see listing levels decline,” Groves states.
In particular, the auction market is a significant aid for struggling vendors, since it facilitates quick transactions.
“In this market, when there is plenty of competition between sellers to secure a buyer, standing out from the crowd is paramount. Selling at auction has plenty of benefits for the vendor, with a short but high-profile marketing campaign bringing serious buyers to the forefront quickly,” Groves says.
“You also have the security of knowing if your home doesn’t sell at the fall of the hammer, you can continue to negotiate a purchase price with those interested buyers after the auction using the more familiar private treaty method.”
While this tactic remains new to many Western Australians, Groves believes the success of auctions in Sydney and Melbourne shows the usefulness of auctions, especially as a tool to boost sales.
SUBURB TO WATCH
Bunbury: Major city works to overcome decline
On the southern end of the Leschenault Estuary, the suburb of Bunbury benefits from being part of WA’s third-largest city.
While this area has suffered because of the state’s downturn, efforts are being made to enhance Bunbury’s economy through industries outside of mining, such as retail, timber production and tourism. Plans have been made to set up light industry and tourism zones, along with land-use initiatives for effective land development.
A campus of South Regional TAFE has been established in Bunbury, which could bring in student residents. There is also a strong emphasis on the local arts scene, with several galleries and an entertainment centre that features theatrical and live performances.
Education: The presence of a South Regional TAFE campus in Bunbury draws students
Government: The city of Bunbury aims to improve its economy in the face of a statewide decline
Can you afford to buy in this suburb? Find out how much you can borrow