Extracted from ‘The West Real Estate’ (Saturday 12th January 2019)
To say 2018 was an interesting year for the local property market would be an understatement. With grass shoots appearing in the Western Australian property market this year, conditions are expected to remain stable into 2019.
REIWA President Damian Collins said the market had been fairly subdued overall and weekly sales in Perth had hovered at approximately 500 per week throughout the year. “While we expect sales activity in 2019 to largely reflect what we’ve seen in 2018, there is a possibility rising consumer confidence levels, coupled with improved housing affordability could translate into increased sales volumes,” he said.
“If weekly sales remain at current levels or better, Perth’s median house price could improve during the next 12 months,” he said. “However if lending standards tighten further, this could restrict the number of people who are able to purchase a property, which could negatively impact sales and prices – additionally, if banks chose to increase interest rates, this has the potential to adversely affect buying and lending conditions in WA.”
If recent REIWA data is anything to go by, the most significant improvements in Perth’s property market in 2018 occurred in the rental sector.
Slowing new dwelling commencements and stable population growth has driven its upwards trajectory, a trend REIWA predicted would continue throughout 2019. Mr Collins said the market had delivered stable median rents, healthy leasing activity levels, declining listings and a plummeting vacancy rate in 2018.
“Available rental stock should continue to decline,” he said. “This should see competition amongst tenants increase, putting further downward pressure on the vacancy rate which recently dropped below 4% for the first time in 4 years.
Perth’s overall median rent has held at $350 per week since April 2017 – the longest period of stable rents Perth has experienced since REIWA first started recording rental data in 2001.
“We’re at 19 months and counting of stable median rent prices in Perth,” Mr Collins said. “If listings continue to decline and leasing volumes remain healthy, we should see the overall median rent price increase in 2019 for the first time since September 2014.”
Casting a spotlight on regional Western Australia, Mr Collins said market conditions were poised to improve as a direct result of investment in the mining sector. “Port Hedland, Karratha and Kalgoorlie are areas to watch, with the new mining projects going a long way towards restoring confidence in these regions,” he said. “These projects are expected to create thousands of new local jobs, which should continue to support population growth, improve demand for housing and aid recovery.”
“After a prolonged period of turbulent conditions following the slowdown in the mining sector, the WA market appears to be stabilising, and while the worst appears over, REIWA cautions against expectations of a rapid recovery during the next 12 months,” Mr Collins said.