Positive news is finally coming to WA as vacncy plateau and demand levels increased
After several years of struggling, positive signs are at last on the horizon of Perth.
“We think it has hit the bottom of the market – demand is up year-on-year, rental demand is up year-on-year,” reports REA Group chief economist Nerida Conisbee.
“The western suburbs and also the beach suburbs tend to be the best performers. Housing is doing the best in Perth, and it’s looking to extend to other areas of the market.”
Despite being placed in the same boat as Darwin in the past few years, the outlook for Perth is more encouraging given Perth’s size and general industrial flexibility.
“Perth’s slightly better [than Darwin] because it’s a bit more of a mixed economy. We are hearing positive news about lithium mining, which is good for the economy. There seems to be quite a bit of construction taking place,” Conisbee says.
An upswing for rentals
Rental demand is on the up as well – Perth’s vacancy rate of 5.3% is the lowest it has been since July 2015, according to the Real Estate Institute of WA (REIWA).
“It’s quite remarkable to see it this low, considering seven months earlier Perth’s vacancy rate soared to 7.3% – the highest we have ever experienced,” says REIWA president Hayden Groves.
“REIWA data for February [is] showing stable rent prices and declining listing levels. Leasing activity did drop off in February; however, levels are still healthy and trending above long-term averages.”
This activity in the rental market can be attributed to an influx of residents and the increasingly transient population.
“Rental markets always feel the effects of population trends, with new entrants into the state the first to soak up rental stock,” Groves explains.
“Tenants are also moving more frequently. This has led to an increase in leasing activity, which has driven demand for rentals and had a positive effect on the vacancy rate.”
The amount of new stock on market has also tapered off, thus demand is able to catch up.
“After a challenging few years for landlords and investors, it’s pleasing to see some parity return to the rental market, with tenants and landlords seeing benefits simultaneously,” states Groves.
SUBURB TO WATCH
SOUTH PERTH: Premium suburb takes a hit
As the debates on whether Perth has bottomed out continue, the status of the affluent suburb of South Perth could provide a clue.
While unit values battled up to a positive growth rate of 0.8% in the 12 months to February 2018, house prices fell by 2% after recording a decline of just 1.1% back in 2015. While the median house value remains above $1m, further drops could put it below that level. Moreover, more units (207) were sold than houses (101) in that time frame. This may reflect changing interests in the market.
South Perth is situated just 3km from the Perth CBD and adjoins Canning Highway and Kwinana Freeway.
Accessibility: South Perth adjoins two major arterial roads, facilitating convenient travel
Location: Central for commuters, the suburb is just 3km from Perth CBD