WA Excerpt from the 2017 September Market report

Residents exit Western Australia as the market tries to anticipate the bottom of the cycle

Perth is not expected to bottom out any time this year, as economic conditions remain poor and mortgage interest rates are beginning to climb.

“Perth would certainly be affected because it’s a fragile market. Prices have come off already just  because of the end of the investment mining boom, and now that interest rates are going up they will suffer some more,” says Philippe Brach, CEO of Multifocus Properties & Finance.

The state has over eight months’ worth of established housing on the market, which is contributing to falling values.

“The Perth property market is still in its slump, with a significant oversupply of properties for sale,” comments Michael Yardney, CEO of Metropole Property Strategists.

He says Perth also lost over 4,000 jobs in 2016, in contrast to the eastern states reporting job creation. This has factored into the state’s inability to unload dwellings to buyers.

“Price growth in the weaker markets is being stymied by a combination of excess stock and/or a weak local economic environment,” explains Angie Zigomanis, senior manager at BIS Oxford Economics, in the company’s Residential Property Prospects 2017 to 2020 report.

The report suggests this trend will continue in Perth in the near future due to slow population growth and excessive supply. As investment in the resource sector continues to go downhill, employment prospects are limited.

“Demand has weakened across all buyer segments, including first home buyers, changeover buyers, and investors,” Zigomanis says.

“Net overseas migration has weakened and the net interstate migration inflows became net outflows. Consequently, Perth’s vacancy rate of 5.6 per cent in March quarter 2017 is well above the balanced market rate of around 3%. Rents have also collapsed.”

Market set for resurgence
The city is set to catch a break soon, as economic conditions should hit their lowest point in 2018/19. The construction of new dwellings is also expected to come to a halt, thus addressing the issue of oversupply.

“An improving trend is expected to appear by 2019/20, with [the market] forecast to recover [its] losses,” the report indicates.

Affordability could certainly play a role in the recovery as prices continue to dip; thus, those who invest at this time could be reaping benefits soon if they are prepared to wait the storm out.

“Mining investment is expected to bottom out over 2017/18, with the excess supply also approaching a peak. Perth’s median house price is forecast to bottom out in 2017/18,” the report states.

Rivervale: House and unit prices sink

Originally known as Barndon Hill, the suburb of Rivervale lies near the Swan River, just 5km from the Perth CBD. Many amenities are therefore within easy reach, such as shops and schools. Perth Airport is also only a short drive away – thus, it could be an option for those who travel regularly.

With Perth being the site of several major universities, students likely comprise a significant proportion of Rivervale’s population. Nonetheless, the suburb is in a similar poor condition to Perth, with both house and unit values freefalling.

The drop in unit prices is less steep than the fall in house prices, possibly because of the already-low median value.

Top Suburbs : chermside , east victoria park , mortdale , midland , homebush

  • RS says on 06/09/2017 09:12:55 AM

    The Eastern States Investment companies continuously misunderstand and are way behind the times of what is exactly happening in WA. Every single point Metropole commented on is between 12 to 24 months old. Housing supply started contracting over 6 months ago, Job creation has been on the up for at least the last 12 months and Mining Investment and exploration has been increasing over the last 18 months and is currently the strongest it has been since 2013. I see Metropole do not operate in WA and are obviously not in touch with what has actually been happening in WA, do you think people in the Eastern States would take the advice of a Western Australian Investment firm commenting on the Sydney or Melbourne markets?

  • Daztrac says on 19/09/2017 10:52:46 AM

    Spot on RS, I 100% agree.
    Some WA suburbs are set to achieve good growth in the next 1 to 2 years.

  • SimonA says on 19/09/2017 01:56:38 PM

    Yes old news now for sure. I've followed MY for a few years but people that don't operate here are not that keen on talking it up. Usual story i guess. Definitely hit the bottom and going to be moving forward. Funny how they can still recommend Sydney or Melbourne now though. A lot of growth has been taken from those markets and outlook for Sydney in particular cannot be good now.

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