As we enter 2021 with high hopes, there are many positive signs for the Western Australian property market.
Understandably, we cannot forget that there is still a global pandemic which hit us hard last year, and our economy is still dealing with what were and still are challenging times.
For our property market, 2020 was a year where improvement occurred significantly in the second half, with low vacancy rates, increasing house prices and fast selling days. But how does the Perth property market fare against the nation’s other capital cities as we move into 2021?
WA has been the most affordable state for housing for over three years in a row, according to REIA’s Housing Affordability Report (September 2020 quarter) which revealed that the proportion of income required to meet loan repayments in WA improved to 23.9 per cent in the September 2020 quarter and had the highest quarterly increase in the total number of loans (46 per cent).
To put that into perspective, in New South Wales, the proportion of income required to meet loan repayments was 42.3 per cent and NSW suffered the biggest decline in housing affordability over the year.
The report also revealed that WA was again the most affordable place to rent with the proportion of family income required to meet the median rent sitting at 17 per cent – substantially below East Coast markets, where rents make up as much as 29 per cent of median income.
In addition, CoreLogic data for December revealed Perth still has some of the most affordable rent and dwelling prices with Adelaide having a slightly lower median rent price and Darwin having the lowest median dwelling value.
The dream of home ownership remains far more achievable in WA, with record low interest rates, government grants and affordable prices and this continues to be reflected in the proportion of first home buyers in the state’s owner-occupier market, which is 40.8 per cent.
Since COVID-19, there’s been pressure on the rental market due to the lack of supply, contributing to record low vacancy rates in WA, making it an extremely difficult time for tenants trying to secure a rental.
reiwa.com data shows the December vacancy rate for Perth is again below one per cent. To put this into perspective the Sydney vacancy rate is 3.3 per cent and in Melbourne it’s 5.4 per cent*.
Corelogic data for December follows a now well-established trend across all capital cities where house rents have shown a more positive trajectory than unit rents since the onset of COVID-19.
Although rent prices are surging in Perth and Darwin, prices are still substantially lower in Perth than they were during the previous peak in 2013.
On the other side of the country rental conditions are much softer, with the Melbourne and Sydney unit markets suffering, where weak demand and high supply has driven a sharp drop in rent prices as demand falls due to the lack of overseas migration.
While tenants of course would rather not see rent rises, they can feel comfortable that it’s still cheaper to rent in WA than most other states and that’s likely to remain so for some period of time.
Residential sales market
Clearly our housing markets were not immune to the COVID-19 economic fallout, but those house price predictions of significant falls did not eventuate, and now real estate prices around Australia are starting to lift as confidence is restored.
Despite the volatility, national home values finished on a high in 2020, with CoreLogic’s home value index rising three consecutive months in a row, following a 2.1 per cent drop during COVID-19 (April – September 2020).
If we look around the country, dwelling values in December 2020 compared to March 2020 increased in most capital cities, except for Sydney and Melbourne where longer lockdowns were experienced.
The Perth dwelling value increased one per cent since the onset of COVID-19 – a healthy figure given the dire property market we endured previously. On top of this, sales activity remained strong and property was being snapped up at the fastest rate since 2006.