2017 Perth property wrap
Whether you’re a property investor or looking to buy your first home, keeping up with the local trends in the Perth property market is the best way to ensure your investment goes further. Perth is still recovering from the slowing mining sector, however, the end of 2017 showed some strong potential for property growth.
Current state of Perth’s property market
Overall, there’s been a steady decline in house sales in 2017, matched with increases in the durations for which houses are on the market before selling. However, the Perth property market does seem to be showing signs of growth heading forward, making investing in property a more than viable option that can yield great benefits.
Overall, there’s been a slight decrease in the value of homes in Perth and surrounding suburbs in recent years. However, Perth’s property prices (including both housing and apartments) are still relatively affordable in comparison to the east-coast counterparts. This decrease has begun to slow and in the last three months, the median price of homes has seen an increase of 1.9%, showing good signs for the 2018 new year.
Although on average the price of homes in Perth has decreased over the year, certain suburbs have flourished. Over the last 6 months, the price of houses in certain suburbs, such as those in the Western corridor, have increased with some commentators calling a stock shortage in the area.
With fewer people moving to Perth causing a lower population growth, the rental market has been continually deteriorating since 2012, with rental vacancy rates on the rise. The excess rental supply that this has caused has lowered the median weekly rental price in Perth from ~$475 in 2013 to ~$360 in 2017, a substantial shift. This has been somewhat offset by the record low Reserve Bank interest rates of 1.5%.
West Australian unemployment rates have dropped
Although the unemployment rate in Western Australia saw a steady increase from October 2013 through to October 2016, in the last quarter of 2017 it’s been showing some signs of recovery, dropping to 5.9%. As a general rule, as the unemployment rate drops, confidence and household incomes increase, which is favourable for a recovery in the number of renters and buyers in the market.
The change of government
In March 2017, Labor took control of the state government, with a lengthy list of investment promises to keep. The 2017 state budget saw Labor allocating $2.3 billion toward multiple road and rail projects throughout Western Australia. This will help to drive the economy – and the construction industry in particular – creating approximately 6,000 jobs. With the increased investment in transport infrastructure, housing close to train lines and bus routes should see an increase in value as our population grows and congestion worsens.
Benefits of road infrastructure and Metronet
With $2.3 billion being invested in road and rail projects, Perth property owners and investors have a lot to look forward to. Metronet is one of Western Australia’s biggest public transport plans and looks to reduce expected future road congestion. With help from federal funding, Labor plans to construct a Morley-Ellenbrook line, Yanchep rail extension, Forrestfield-airport link, Thornlie-Cockburn link and many more.
Houses that were not connected to Perth’s transport network previously, but are in target areas for transport plans should see some healthy value growth in coming years.
Move towards tourism
As the mining and construction boom continues to slow, the Labor Government are moving towards tourism to help to grow Western Australia’s economy. This should bring in more jobs and foreign investment, which will help to drive Perth’s property prices.
Future planned projects
There are many future projects planned in Perth which should help to boost economic growth and in turn property prices, especially for homes close to suburbs with planned projects. Some of the larger planned projects include:
- Shopping centres: Karrinyup, Mandurah forum, Westfield Innaloo, Perth Airport DFO
- Entertainment: Perth Stadium (soon to be completed), Perth Cultural Centre
- Health & Education: Perth Children’s Hospital, Inner City College
Government spending is great for property investors, but it’s important not to forget other property price drivers, such as demographic shifts and demand and supply. If you are unsure about the current state of Perth’s property market, speak to your local property investment consultancy experts for specialised advice.
Sharp decline in housing construction
Perth has seen a sharp decline in housing construction approvals, commencements and completions in 2017. Since December 2014, the total number of dwellings approved on an annualised basis has dropped almost 40% as of the end of 2017.
So, what does this mean for the Perth property market?
This is a good sign for the oversupplied market as minimal new stock will be coming onto the market. So, the decline in for sale and for rent stock in 2017 bodes well for 2018. Moving forward, the current stock should be absorbed, bringing the market back to equilibrium and creating opportunity for future growth.
Author Bio: This article is written by Alex Hamilton, who writes for Momentum Wealth. Offering market leading research and advice on the Australian property market, the company helps clients accelerate their wealth through property investment by assisting them in the strategic planning, financing, acquisition, management and development of their commercial and residential investment properties. Catch Alex on Google+.