It remains the most-affordable capital-city housing market in the country but Perth’s long-awaited property recovery is starting to hit its straps.
The latest quarterly Risks & Opportunities Report from RiskWise Property Research has shown improved market conditions, strong government incentives and ultra-low interest rates have led a strong recovery of the property market in Western Australia’s capital.
The WA housing market has recovered well, with substantial increases in housing prices, leading to capital growth of 3.9 per cent for houses over the past three months.
There has also been a noticeable improvement in buyer confidence, resulting in improvements in housing finance, according to RiskWise.
Pete Wargent, co-founder of property buying services company BuyersBuyers.com.au, confirmed that buyer sentiment has turned around very rapidly.
“The rental market has gradually shifted over recent years from a huge surplus of rental stock in 2017, when city-wide vacancy rates were at about 5 per cent, to a chronically tight rental market, with numerous examples of spiking rents” Mr Wargent said.
“First-home buyers were already taking advantage of the low mortgage rates and the government deposit scheme, but now it seems that buyers from every cohort are quickly realising that the long-awaited recovery is now about to hit full steam,” he added.
Mr Wargent advised prospective buyers in 2021 to be well organised, well-researched, and act decisively, saying Perth listings were lower than a year ago “and there is now real potential that the coming decade could be a strong one for the resources sector, as global stimulus pumps up demand for commodities”.
Riskwise’s Risks & Opportunities report found sustained weakness in the housing market since the end of the mining boom has led to continued price reductions, which had made Perth the most affordable capital city housing market in Australia with a median house price of $475,000.
Housing prices are projected to increase over the next 12 months in the range of 6 to 10 per cent, particularly for the mid-to-high end of the market.
The report found popular areas that have shown resilience in the past 12 months, such as Perth-Inner and Perth-North East, are highly likely to enjoy stronger demand in 2021.
Meanwhile, the report also found that rental apartments continued to carry a higher level of risk of delivering poor or negative capital growth, due to the combination of oversupply, lending restrictions and lower demand.
Perth’s North East area currently has the highest rate of unit oversupply in WA with 724 units in the pipeline (a 6.6 per cent uplift to the established stock).
The risk associated with rental apartments has further increased since COVID-19, according to RiskWise’s report, with investor demand likely to shift towards detached houses.
