Recent data released this month from CoreLogic indicates that the WA housing market continues to be the most affordable market than any other major Australian capital city making it favorable for investment for owner-occupiers.
So what does all of this mean when it comes to the WA residential property market? The sentiment amongst buyers, sellers, and investors continue to be positive according to Realmark’s Managing Director and Founder, John Percudani, who provides an analysis on the market.
“Perth is the fourth largest city in Australia and is now the most affordable city in Australia. Interstate migration will be attracted to the WA housing market due to economic factors. The WA labour markets are tight with unemployment sitting below 4% and jobs growth rising at 6% per annum which is the fastest of any state in Australia, making the move to WA for employment a very attractive prospect. Combining this with affordability and investment prospects makes WA a prime market to purchase property in Australia” said Mr Percudani.
Listing availability continues to be low as the rate of absorption of new listings continues to be elevated. A major influence on the WA housing market encountered in recent months has been the border closure, however as the state borders have now opened, we should see an uptick in international and interstate migration and corresponding impacts on rentals and buyer demand.
“Demand continues at a ratio of 1:2 sales per listing to be ahead of the supply. Because of the speed of clearance, listings that are being added to the market are clearing very quickly and this extenuates the apparent lack of stock available” said Mr Percudani.
In Perth, listing stock levels are down 6.2% to the same time last year in 2021 because of the transactional activity and demand for housing across WA and Perth.
"What we can see for supply are listing flows approaching average trends and underlying this we are seeing increasing demand for market appraisals. This is normally a precursor for stock being added to the market. The market will continue to be ahead of supply in 2022 but the balance of this could make for more healthy and sustainable market conditions” said Mr Percudani.
Rental stock has been tightening across Perth and major regional markets explains Mr Percudani “The rental market continually has low supply and low vacancy rates and this underpins a clear indication on housing demand in WA. This trends is set to continue throughout 2022 with ongoing solid demand and slugish supply of new rental properties.”
Housing prices consistently and substantially outpace incomes growth however demographic tailwinds, low inventory levels, and ongoing demand for coastal or tree change housing options are keeping an upwards pressure on housing prices in WA. The affordability of the housing market creates restricted access to properties, and with limited supply in listing levels, it makes it difficult for first home buyers to purchase their first home which is a large portion of the WA housing market.
“With more active and informed buyers in the market and pricing remaining positive, this continues to be a favorable sellers’ market in WA. If you’re a seller you should be confident in the market, you have a better opportunity now to have a rewarding sale outcome” said Mr Percudani.
“When buyers vs listings are at a 1.2 ratio essentially a sales result is assured. One note of caution to all sellers, it is important to not always jump at the first offer. Ensure your property is not being put through a quick sales approach as the data indicates properties sold “off-market or first open” may risk a lower sale price. It's about delivering a smart sale, not just a fast sale. At the end of the day if there was a time to leverage great sales, great marketing, an optimised time on market and property presentations, it's now” said Mr Percudani.
The WA market has a high yield and security for investors and good growth prospects with a relatively affordable buy-in price, but we are still yet to see investors taking advantage of these market conditions.
“If you're an investor don’t wait for the typical herd mentality. The conditions in WA be it property values, vacancy rates, yields on investment and moderating competition, combined with a solid economic background all suggest that investing in the WA rental market would be a good move at this time and a sector of investment to move into, not out of” said Mr Percudani
“WA has been on a different COVID management timetable to other states and due to the dramatic impact from the previous mining boom, investors may be distracted by previous cycles but the fundamentals suggest a positive investment story rather than a negative one. It will be a much better financial decision to invest in WA in comparison to other states where markets are offering lower yields and up to twice the buy-in cost” said Mr Percudani.
“With the roll-out of vaccinations and a significant easing in social distancing restrictions we are seeing an uptick in foot traffic for home opens and auctions. As the population cautiously adapts, there is likely to be a shift in household spending and a slowdown in savings that may have previously gone towards a deposit for a home as WA is able to travel again” said Mr Percudani.