Negativity in Australia’s biggest markets reduces optimism for Perth’s future, but there are many positive signs for the city
Despite initial reports of strong optimism, consumer expectations for Perth have fallen. The results of the most recent ANZ/Property Council Survey Index for June 2019 revealed that the confidence level in Perth fell from 129 index points in the previous quarter to 125.
“Last year’s optimism around green shoots hasn’t fully materialised. Whilst WA is a separate property market to the eastern states, the media coverage and negative sentiment in Sydney and Melbourne may have influenced Perth residents,” says Sandra Brewer, executive director of the Property Council of Western Australia.
However, there is still good reason to have faith in Perth’s prospects.
“Confidence in the WA property sector has taken a slight hit across the board but remains overall in positive territory and the third-highest in the country,” Brewer points out.
“It was promising to see an increase in staffing levels over the past four consecutive quarters, demonstrating that the industry expects an overall increase in activity. The WA industry remains confident that strong economic growth can return; this is reflected in the fact that WA had the highest state economic growth expectations of all jurisdictions.”
For this reason, there is increasing confidence in construction activity within the local industrial sector as the METRONET and Infrastructure WA projects gain ground.
First home buyer activity gets shot in the arm
Resources are making a comeback in supporting the local economy. Coupled with the now-affordable properties the downturn created, first home buyer activity has risen significantly as coastal lots become available at low prices. Numerous projects are in the pipeline, including FMG’s $1.7bn Eliwana iron ore mine and the $28bn spend for Woodside’s Browse LNG development.
“This new investment in the resources sector has seen employment in the mining sector increase over the last two financial years in a row, and these improving employment opportunities are resulting in a surge in the number of younger FIFO families buying house and land packages,” says Jarrod Rendell, project director for Atlantis Beach Estate in Two Rocks.
“This is part of the general trend of growing first home buyer activity in WA, with first home buyers now accounting for 34% of all owner-occupier finance commitments in the state. This is the highest rate for any state in Australia.”
SUBURB TO WATCH
MIDLAND: Bottom nowhere in sight
Property values continue to nosedive in the suburb of Midland, regarded as the regional centre of the City of Swan, around 16km from the Perth CBD.
House prices were down to $364,129 after negative growth over the 12 months to March 2019 reached the double digits again at -10.4%. This continues the downward trend observed for the past five years. Things are no rosier in the unit market, where the median value was under $250,000 following a 27% drop in the three years to March 2019.
Investors can, however, benefit from the strong average rental return of 5% plus for both houses and units as of January 2019.
Location: Midland is the regional centre for the City of Swan and also close to Perth
Yield: Rental yields are strong, averaging 5.4% for houses and 5.8% for units
Top Suburbs :
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