Western Australian Market Is Finally Making A Comeback

                                                     House prices in Perth have risen for 2 consecutive months indicating a market in recovery

Western Australian market is finally making a comeback

Perth property market records two consecutive months of quarterly growth

IT MAY be time for investors to stop snubbing the Perth housing market, with figures suggesting the Western Australian market is finally making a comeback after the downturn of the mining sector.

Perth’s median house price lifted by nearly two per cent in the three months to December 2016, according to figures from the Real Estate Institute of Western Australia (REIWA).

CoreLogic house price data was even more generous, recording price growth of 2.8 per cent in the capital over the final quarter of 2016 — the second highest growth of all capital cities over the three month period. In December alone, prices were up 1.4 per cent, the third strongest across the nation.

REIWA President, Hayden Groves said December is the second month in a row that Perth has seen a three-month increase in the median house price, indicating the housing market may have passed rock-bottom and it wasn’t even as bad as the market expected.

“I’m surprised that the Perth property market has been as robust as it has been given the broader economic malaise that the state’s economy is in. It has shown a fair bit of resilience,” Mr Groves told news.com.au.

“A bit of a [price] floor has appeared in the market. People were concerned there were going to be significant falls in property values but that really hasn’t materialised. We have seen some falls but the highly desirable suburbs in Perth have held up reasonably well and that has given the buying public some confidence that there is not going to be a disaster.

“That’s why I think people are starting to buy. It hasn’t fallen away in a meaningful way, but it has come down enough for people to be able to buy into them now.”

He is now urging buyers, particularly investors, to take advantage of Perth’s low prices, before they start to accelerate further. The capital city’s median house price now sits at $535,000, REIWA figures say.

“Since the second half of 2016, we’ve seen prices across the metro area start to lift on a monthly basis. If you’re a buyer waiting for the ‘bottom of the market’, you would be wise to make a buying decision soon should this trend continue,” Mr Groves said.

“The benefit of buying now is that there is currently less competition from other buyers, so you’re more likely to find a home or investment property that genuinely meets your needs.”

Mr Grove noted that investors had been “noticeably absent” from the Perth market for quite some time and he expects investors will really start to compete in the market in the second half of this year.

But Craig Abbott, Raine & Horne’s General Manager for Western Australia, said local competition on the west coast is already starting to heat up, with Perth agents reporting a boost in buyer activity.

“Over this last quarter we have definitely seen an increase in listings and buyers are out,” Mr Abbott told news.com.au.

“The agencies that stayed open over the Christmas break have seen great sales in January. One of our smaller agencies, which only had two people sales people in the office, already have 17 sales on the board.”

And like Mr Groves, Mr Abbott said the main driver of buyer confidence is the sense that change is afoot.

“From what I hear back from our agents is that people are transitioning. They see that the interest rates have remained low for a while and [house] prices have seemed to be bottoming out — they can’t go much lower — so it is a great time to be buying,” he said.

But on top of recovering prices, Mr Abbott said rental yields across the capital city are “some of the best in the nation”.

“With prices coming back as they have, it is a good investment … With prices having reached the bottom, an investor can get good returns based on the price of the house,” Mr Abbott told news.com.au.

The average rental yield for a detached house in Perth is 3.6 per cent, according to CoreLogic, 0.5 per cent above the combined capital city average. The average rental yield for an apartment is 0.1 per cent above the combined average, at 4.2 per cent.

A SLOW AND STEADY RECOVERY

Perth pundits are confident the market will continue to recover in 2017.

“I think 2017 will be a lot better,” Mr Abbott told news.com.au. “There is a bit more stability — the Australian election is over with, the US election is over with. I think there will some stability in the market.

“The only concern is the Aussie dollar has to stay low — that is good for foreign investment and it has been creeping up a little — but other than that, from an economic part of view there is nothing to say we shouldn’t have a bit more growth in 2017.”

However, Mr Groves said recovery will be slow. He told news.com.au that 2017 will be the beginning of a “transitional year” for the west coast market.

“Prior to the November and December results coming in, we predicted there will be no meaningful growth in 2017, so [the market] would just hold its ground. But since we have got those two results, we are prepared to say we may see some growth, but it will be less than 5 per cent growth.

“We anticipate there will be more transactional activity in 2017 than there was in 2016 but not by any meaningful amount. It will be a transitional year, transitioning from the bottom of the cycle towards improvement in the Perth property market.”

But considering Perth recorded an annual price fall of 4.3 per cent in 2016, any price growth — or price maintenance — is a welcomed result.

“It will be a slow and lengthy transitional period,” Mr Grove told news.com.au.

SUBURBS TO WATCH

Based on the biggest growth areas in 2016, according to CoreLogic data, the hot spot to keep an eye on is Perth’s western suburbs. Swanbourne, a western coastal suburb of Perth, recorded house price growth of 29.4 per cent last year. This was followed by North Coogee, a western suburb about 18km south of Swanbourne, recording 22.5 per cent growth.

Two other western suburbs — Coolbinia and Claremont — also made CoreLogic’s top five growth suburbs in 2016 after achieving property price rises of 20.2 per cent and 17 per cent, respectively.

The final suburb in the top five was the northeast suburb of Dayton, about 18km northeast of Perth’s CBD, where prices rose 19 per cent in 2016.

JANUARY 16, 2017 7:39PM

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