Perth is still one of the poorer performers in the national market, alongside Darwin, and property in this capital is thus the most affordable it’s been since 2006.
While a few states are seeing more activity in their regional markets as their capital cities struggle, this is not the case for WA, as its outback is the among the weakest regional subregions in the country, according to CoreLogic’s Home Value Index for May 2019. Agricultural struggles have also likely impacted the property market in the wheatbelt.
“The current downturn has certainly dragged out much longer than we would have anticipated a couple of years ago due to a range of factors, primarily the continuing sluggish economic conditions and slow population growth,” says Tanya Steinbeck, CEO of the Urban Development Institute of Australia WA.
“We have also seen extremely tight lending criteria being applied by the banks, which has further dampened buyer demand. However, the federal election outcome, the introduction of the First Home Buyers Deposit Scheme, the latest rate cut, along with more reasonable retail lending criteria, should all help to support a market recovery.”
Affordability of the land market represents a significant movement towards positivity, as there are good opportunities for buyers.
“Perth land prices are currently representing excellent value for money, potentially $5,000 under market value at this point in time,” Steinbeck points out.
The state government has also modified the Keystart loan scheme to accommodate new income limits – eligibility has now increased to $105,000 for singles and $130,000 for couples. Moreover, there is a 5% deposit initiative to spur first home buyer activity, improve affordability and eliminate the need for lenders mortgage insurance.
“By increasing the income limits, it allows these people, who are working hard to get into a new home, to actually do it. All the signs are there of a real rebound. The upside outweighs any concern around negative equity. These changes will help WA bounce back again,” says Craig Gemmill, managing director of Gemmill Homes.
“WA has gone from 7% to 2.3% vacancy rates. When we were talking about green shoots 12–18 months ago, we were probably being a bit premature or optimistic. But now, not only do we have green shoots, we have a bit of fertiliser to put on the lawn too.”
SUBURB TO WATCH
QUEENS PARK: Values still falling
The Canning City suburb of Queens Park continued to see values fall over the year to May 2019, with houses and units recording dips of 6.1% and 10.4% respectively.
This maintained a long stretch of negative growth observed here since 2014, which has caused median property values to fall to more affordable rates. The unit market also offered signifi cant rental returns of 7.4% on average as of March 2019, from a weekly rent of $340.
There are several open spaces in Queens Park, such as parklands and reserves. These facilitate a lot of community activity and sports. There are also quite a few schools in the suburb, including Queens Park Primary and St Norberts College.
Amenities: The many parks and reserves make this a family-friendly suburb
Yield: Units in Queens Park generate high yields of 7.4% on average
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