Perth's resistance to the COVID-19 outbreak places its housing market in a solid position over the next few months, experts say.
There are several factors that would keep Perth's housing market busy: low vacancy rates, upward pressure in rents, and affordability, said Terry Ryder, founder of Hotspotting.com.au.
"Its market is now pumping strongly, led by first-home buyers,” Ryder said. A standout feature is that many of the precincts with the best performance are at the affordable end of the market, reflecting the reality that first-home buyers are a major force in the market at present, more so than investors."
Two major drivers of activity among first-home buyers are the HomeBuilder grant by the federal government and the state government’s Building Bonus scheme.
Ryder said Perth has been on the “cusp of revival” since last year, only to be impeded by events like the federal election and the onset of the pandemic.
“But the gathering forces are building a perfect storm for the next Perth up-cycle,” he said.
Sales activity in Perth increased by 11% over the previous week, driven by the 2% uptick in house sales, 19% rise in unit sales, and 48% gain in vacant land sales, according to figures from the Real Estate Institute of Western Australia (REIWA).
Demand was also strong in Perth's rental market. In fact, Perth's listings were down by 12% on a monthly basis. The decline was more substantial on an annual basis as listings were down by 53% from last year.
The robust demand in sales and rental markets is an indication of the improving affordability in Perth, said Damian Collins, president of REIWA.
"This is an exciting time for potential home buyers and investors. Not only is WA currently the most affordable state in the country, but this combined with all of the various government bonus schemes and the current low interest rate environment, means it's even easier to enter the property market," Collins said.
A report from the Real Estate Institute of Australia (REIA) showed that the share of income required to meet repayments in Western Australia decreased by 24%.
"Although affordability has improved slightly across the country, the dream of homeownership remains challenging for many Australians on the East Coast," Collins said. "We're lucky that this dream is very much alive in WA, which is evident by the large proportion of first-home buyers WA has retained, despite the difficult economic conditions felt through the COVID-19 pandemic."
The proportion of income needed to pay rents also improved, dropping to 16.1%. However, due to the low vacancy rate, rents are likely to rise in Western Australia, which is good thing for potential investors.
“It certainly appears that WA has escaped the COVID-19 induced property slowdown and given the high levels of demand and limited supply, we may even see house prices rise later in 2020. I would encourage anyone thinking of buying, whether as a home buyer or investor, to act sooner rather than later,” Collins said.