After languishing near the bottom of the market with Darwin for what has seemed like forever, there is finally positivity to be observed in Perth as a recovering economy helps usher in a second wind.
“After a prolonged period of turbulent conditions following the slowdown in the mining sector, the WA market appears to be stabilising,” reports Damian Collins, president of the Real Estate Institute of WA (REIWA).
“Mining projects are expected to create thousands of new local jobs, which should continue to support population growth, improve demand for housing and aid recovery.”
There is also a stronger focus on supporting the tourism industry, especially in the regional pockets of the state, indicating that the WA government is looking to strengthen its economic foundation, which would help cushion the blow of an industry downturn.
Residential supply levels have been low, but sales activity is expected to pick up this year.
“We saw lower sales activity at the start of [last] year, followed by an uptick in the second half of 2019, while listings for sale in Perth decreased from 17,000 to 14,000 – stock levels this low were last seen in 2014,” Collins says.
“We expect sales activity in 2020 will continue to gain momentum; however, there is a possibility that rising consumer confidence levels, coupled with improved housing affordability, could translate into higher sales volumes than we have seen in the last few years.”
The Domain Rental Report for Q4 2019 also showed a rental market with tightening vacancies. The average vacancy rate dropped from 3.5% to 2.5% in the year to December 2019 – a far cry from the 5% peak in 2017.
While the rate at which rents were falling in the past few years granted Perth the title of the most affordable capital city rental market, both house and unit rents have taken an upwards turn, rising 3% in the year to December 2019. Almost all regions of Perth experienced this boost, including the mining hotspot of Pilbara. The increase in rents has been accompanied by an uptick in rental yields – surely excellent news for investors.
Nonetheless, Damian Collins still warns buyers to be careful.
“While the worst appears over, REIWA cautions against expectations of a rapid recovery during the next 12 months,” he says.
SUBURB TO WATCH:
COTTESLOE: Affordability still out of reach
Cottesloe may have been sharing in the downturn of the Perth market for the past several years, but this suburb’s premium status is evident, as after five years of falling prices, affordability is still out of reach.
The median house value is approaching $2m, and that’s after a 9.4% decline in growth over the last 12 months. The median unit price is more than $800,000. Units also recorded a resurgence over 2016–19, when prices were up by 17.5%.
Cottesloe is home to the North Cottesloe Primary School and is close to a beach that’s perfect for relaxing on, which could be especially appealing to those who work in the city. There are cafes and restaurants in the suburb as well.
Location: Cottesloe is close to both the city and the beach
Amenities: The suburb contains a primary school, a beach and many dining options
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