Broad Range Of Perth Suburbs Record Median Price Hikes
After nearly a decade of stagnating or falling, green shoots are appearing in the Perth property market.
Several property forecasters have set out predictions that suggest the market has likely reached its nadir, with modest price growth expected in 2020.
The latest sales figures from Western Australia’s peak body for real estate in the state, REIWA, show a 16 per cent increase over the previous month’s data.
The top end of the market in Perth has proven relatively resilient over the past few years, but the latest sales figures suggest the recovery may be expanding across a broader swathe of the city.
Among the faster growing metropolitan suburbs has been a seemingly random collection of suburbs in the less affluent south-east, such as Armadale and Canning Vale, the foothills areas around Midland and Middle Swan, middle-class north-of-the-river suburbs such as Ballajura, Menora and Bayswater. This in addition to the wealthier suburbs locked into the so-called golden triangle between city, port and coastal Scarborough, such as Wembley and the elite Peppermint Grove, which are also performing well.
Such a wide spread of growth suburbs has been unusual since median prices took a serious downturn from 2014.
House and unit prices are expected to bottom out in spring and remain unchanged during the next six months to December, with prices likely to stay at the June median of $520,000 for houses and $330,000 for units.
A competing mix of positive and negative market indicators will ultimately determine whether the market improves and how quickly.
The end of the mining boom saw unemployment rise and job seekers leave the state but population estimates point to a 1.5 per cent increase in 2020. The mining outlook is improving and the weaker Australian dollar is supporting exporters. All of this could lead to more people buying more properties and propping up prices. Interest rate cuts by the RBA could also help improve sentiment.
“WA currently has just shy of 17,000 homes for sale in Perth, with an average selling time of around 80 days but with interstate and overseas migration slowly on the rise, the demand for property is lifting, resulting in an increase of the median house price by 0.6% from the last quarter,” Paul White, director of aussieproperty.com, said.
But despite these positives, mortgage arrears are rising and a significant number of households are in negative equity, weighing on the local economy and spending.
Rents offer some clues to speculators. Rent prices were unchanged in May, with 26 per cent of suburbs seeing their median rent price increase. The biggest improvements occurred in Subiaco, Mosman Park, Warnbro, Dudley Park and Cloverdale.
“The rental market has continued to improve, with vacancy rates now down to 2.5%, the lowest since 2013, and almost a third of Perth suburbs showing an increase in rental values,” Mr. White said.
Houses are likely to rebound before the apartment market turnaround takes hold.
The Agency’s WA General Manager, Stuart Cox said they have seen an increase in enquiries and home open attendances since the election in May.
“We expect to see an increase in enquiries over the second half of 2019, which will turn into more sales but we don’t expect this to happen quickly.
“Instead, it’s more likely we’ll see confidence steadily growing as the economy gathers pace, and north of the Swan River, I’d single out Mount Lawley, while south of the river, I’d highlight Mount Pleasant, Applecross and South Perth in this category,” he said.
For the moment, with prices still down, Cox believes Perth property represents the best value in the country. Although, some suburbs located within a 10 km radius of the city have been outperforming the rest of the market.
Stability in the unit market was still likely, but the future supply of apartments remains relatively high and could result in downward pressure on unit prices.