Perth Market

What has happened to Perth MARKETS GENERALLY?

Consumer confidence down, mainly due to the mining sector and resource prices.

It is a normal part of the market cycle that there are a few years of strong growth followed by a few years of slower or even negative growth. What everyone must remember is that the property market is cyclical and Perth will have its time again.

We have now had two years of no growth and most economists predict that 2017 will be the year that the market in Perth starts to grow again. (Fin Review Oct 2016)

 

"PROPERTY CLOCK" COMING OUT OF BOTTOM OF CYCLE.  HOW DO WE KNOW?

Sources: (REIWA), Financial Review, RP Data, Core Logic, Forecast ID

Vacancy rate trend (Residex) Reduced in last quarter for the first time in 18 months to 3.8% (down by 0.5%)

 

SUPPLY:

Affected by building approvals (declining for the last 18 months), 

 “There were 1,011 in building approvals for houses during January 2016 compares with 1,584 during January 2015. Building approvals in WA for new houses have been on the decline since they peaked in July 2014, when 2,298 houses received building approvals.”

What does this mean? New homes are being absorbed by the market.

 

DEMAND:

Interest rates (lowest in history), 

 

AFFORDABILITY:

Perth property is now among the most affordable of any capital city in Australia.

This affordability is highlighted by the fact that the ratio of annual income in WA compared to the median house price in Perth is now 5.6.

In comparison, it now takes 10.4 times the annual salary for someone living in NSW to buy a house in Sydney and 7.8 for Melbourne.

Because of Perth’s affordable house prices, we should also see more activity from eastern states investors in the WA market over the year.

According to the REIWA - The number of houses listed for sale also stabilised and even declined in some areas of Perth over recent months, which is another positive sign for the property market.

Perth now has the highest proportion of first-home buyers in the owner-occupier market nationally.  WA has just increased the First Home Owner’s Grant from $10 to $15k.

 

OTHER STATISTICS:

RP Data: Three months to December 2016 shows the Perth median house price increased 1.9 per cent to $550,000.

Green shoots now appearing on the resources sector with an upswing in commodity prices, especially iron ore.

My prediction is that there certainly will be an improvement in the Perth property market but will most likely not occur until the second half of 2017. 

 

SO WHAT?  WHAT ABOUT THE NEXT 5, 10, 20, 30 YEARS?

Infrastructure:     See below
Resources:         See below

Population Growth - Perth’s population may exceed that of Brisbane’s by 2028 (ABS)

I HAVE BEEN TALKING ABOUT PERTH GENERALLY – VERY IMPORTANT TO LOOK AT DIFFERENT MARKETS IN ANY CAPITAL CITY A PICK AREAS THAT WILL OUTPERFORM OTHERS OVER THE LONG TERM