Perth’s property market looks set for a year of slow improvement amid reduced access to finance, low population growth and oversupply in some suburbs, experts say.
And most key local industry players agree the worst is over for Perth’s residential market. It comes as Perth’s median house price remained flat over the three months to December, according to the latest Domain House Price Report, but still fell 3.3 per cent over the year. The median unit price fell 2.9 per cent over the 12 months.
By comparison, house prices in Sydney and Melbourne fell 9.9 and 8.4 per cent, respectively. JLL WA valuation area manager and buyers advocate Sarah Ronaldson said 2019 was likely to be not so much a year of recovery, but one of stability.
“With a backdrop of strengthening population and employment growth, demand for dwellings should improve over the medium term,” she said.
“Another positive for the residential market is that stabilising local conditions, plus deteriorating conditions in Melbourne and Sydney, should give counter-cyclical investors more confidence to invest in Perth’s relatively affordable market.”
Perth’s house prices will experience modest growth with a likely increase of 5 per cent in 2019, according to Domain economist Trent Wiltshire. He said the market was likely to remain soft with a turnaround at some point.
“The outlook for the economy in WA is looking better, things like job vacancies are at their highest point since 2013. So economic growth forecasts are a bit better and the mining sector is looking better,” he said. Mr Wiltshire said another good sign was that population growth and net overseas migration were improving in WA.
“These kind of things all suggest that there are probably going to be better times ahead for the Perth market,” he said. However, Mr Wiltshire warned that Australia-wide factors, such as the financial services royal commission and tighter lending conditions, were weighing on the Perth market.
“Things like that held back the market in 2018 and that could continue in 2019, so that’s a big downside risk,” he said.
Urban Development Institute of WA chief executive Tanya Steinbeck said she believed while the bottom of the market cycle had been reached, it was unlikely there would be a dramatic uplift in the market in 2019. “[It will be] more likely a relatively steady year with things really starting to pick up early next year,” she said.
The new year was set to finally deliver some much needed demand, making it the best time for buyers and sellers to make major decisions about their property plans, Acton Real Estate chief executive Travis Coleman said. “Highly sought-after suburbs have always performed well, but we’re starting to see suburbs that have been underperforming attract more interest,” he said.
“Based on what our teams in our 25 offices in the metro area and South West are telling us, the increase in inquiries, appraisals, rental applications and general confidence is a really strong indicator that this could be the year we’ve been waiting for.”
While a return to normal market conditions by the year’s end was the best outcome to hope for, LWP managing director Danny Murphy said even though the volume of sales should increase, the recovery in prices would lag with a return to 2014 prices expected to be two to three years away.
“With the expected recovery, 2019 will represent a great time to buy with the first half of the year representing the peak time,” he said.
“In a recovering market, traditional property fundamentals will drive activity in the first instance; location, value for money and capital growth potential will see the affordable ‘middle ring’ suburbs with existing or proposed transport links begin to shine – Bassendean, Greenwood and Leeming are examples of areas providing sound investment opportunities.”
When a market strengthens, blue-chip suburbs were always the first to start moving forward again, Ms Ronaldson said. “So if you are looking to get into the western suburbs, now is your time to act,” she said.
“There are still plenty of great buying opportunities within 15 kilometres of the CBD, namely Stirling, Dianella, Morley and Hilton.”