Data shows that median property prices across Australia have been on a steady decline during 2018, with Sydney and Melbourne being the worst hit.
The Perth property market has also been affected, with prices on a steady decline since its peak during the first half of 2014.
Severely affected by the end of the mining boom, the Perth property market went from a peak in the median house price of $616,000, slipping 13 per cent. With interest in the resource sector drying up, thousands of transient workers cleared out and Perth found itself affected by a housing oversupply problem. Other contributing factors were stricter lending measures, a drop in clearance rates, a decline in foreign investment, as well as lower investor confidence.
So has the Perth property market found its bottom yet?
Perth Property Market Predictions
The good news is that the Perth property market has already begun to revitalise, with some suburbs experiencing significant price growth, and others are reporting an increase in tenant activity. There is also word of a new mining boom gearing up alongside a predicted population growth of 1 per cent which has not been seen in a decade.
For these reasons, many experts are now saying the bottom has been struck and the market has begun to rebuild.
The QBE Housing outlook predicts an overall growth of 5 per cent in the Perth property market in the next few years, which is remarkable when compared to predicted declines of 1.2 per cent for Sydney and 2.5 per cent for Melbourne over the same period.
Economist Trent Wiltshire predicts a similar percentage growth projection and offered his opinion that “Perth house prices will grow faster than most other markets in 2019 and 2020 after falling in recent years”.
However, the experts also caution that the revival will likely be slow, with a long journey ahead before a full recovery is realised.
Possible adverse factors to consider include concern over-regulation by the APRA restricting access to credit, making lending difficult for buyers and investors; uncertainty around Reserve Bank interest rate cuts or raises; and the trade war between the US and China, which threatens to stamp out Perth’s recovering iron ore industry.
Perth’s unit oversupply also remains an issue, with Bankwest’s Chief Economist Alan Langford citing this as the main reason why he believes the recovery will be slow. Perth saw a negative 5.4 per cent drop in the price of units in 2018, the country’s worst result behind Darwin.
However, the overall sentiment is positive. Perth property market predictions range from a 2 to 5 per cent growth leading up to 2020 and into 2021, with median house prices expected to reach $550,000.
Which suburbs are showing the most promise?
The QBE’s Housing Outlook reported Stirling and East Fremantle as the top performers in 2018 with 1.9 per cent growth. On the other hand, growth in inner-city Perth slipped a negative 0.9 per cent and Outer Perth suburbs fell by 2.9 per cent.
The 2019 outlook tipped suburbs within 8km-15km of Perth CBD, such as Stirling, Cottesloe, and City Beach, as having the best potential for steady growth, because of their proximity to rivers and the coast, and with a good supply of houses available for under $450,000.
Increases in rental activity
While overall rental activity in Perth declined by 8 per cent, many suburbs managed to buck the trend and experienced considerable increases. Data shows that the suburbs of Kardinya, Coolbellup, Bedford, Kelmscott, and Harrisdale saw notable increases in rental activity.
Furthermore, several suburbs experienced increased tenant activity in the year to March 2019.
Topping the list is North Beach, a coastal suburb in northern Perth. The area had a 28.6 per cent increase in rental activity, with tenants in the area paying a weekly median rent price of $520. Attracting tenants for its lifestyle appeal, North Beach has a median house price of $880,000 and a median unit price of $500,000.
Another good performer was Salter Point, one of Perth’s more affluent suburbs. The area has a median house price of $1.225 million and experienced a high rate of rental activity with a 25 per cent increase over the last year. Salter Point offers tenants a weekly median rental price of $498, along with proximity to the CBD and public transport.
Tenant activity increases in the 20-25 percent range included Bennett Springs, Mundaring, Daglish, Beechboro, and Guildford, while West Leederville, Perth, and Coogee have experienced growth in the high teens.
Bennett Springs offers good value for investors, with a median house price of $430,000, a median unit price of $299,000, and median weekly rents of $400, equating to a rental yield of 4.8 per cent.
Growth in Perth House Prices
Many suburbs in Perth experienced growth for the 12 months to April 2019. What is more, this growth was spread across Perth and not just confined to the more affluent suburbs.
The top growth suburb was Menora, 16km north of Perth, with a house price growth of 19.1 percent to a median house price of $1.25 million. Kensington, close to Curtin University, offered 18.3 per cent growth, with 45 houses sold in the area and now sitting on a median house price of $896,000. Located 20-25km east of Perth, Middle Swan (21km) and Glenn Forrest (25km) saw house prices increase by 15.7 per cent to $361,000 and 15 per cent to $560,000 respectively.
Demonstrating strong demand from buyers, Mount Pleasant impresses with 97 house sold, and house price growth of 13.2 per cent to a median price of $1.24 million. Also with impressive house sales, Beaconsfield recorded 67 houses sold, and 9.9 per cent house price growth to $747,000.
While on average 41 houses were sold in Mt Nasura, South Yunderup, and Shelley, where 9.7 to 11.1 per cent house price growth was recorded. At the more affluent end, Peppermint Grove, with a median house price of $3,850,000, recorded 11.6 per cent growth and 16 houses sold.
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