Residential Sales Market
As we move forward into 2022 price growth appears to be continuing, although at a moderated pace whilst affordability of WA houses remains attractive by comparison to other major Australian urban centres. Listing levels continue to be low and the prospect of increased buyer and tenant demand looms with border normalisation.
“With more active and informed buyers in the market and pricing remaining positive, this summer is a smart time to sell with Realmark” said Mr Percudani.
Recent CoreLogic data indicates a slowdown in housing price growth for WA as conditions due to WA’s firm border closures have impacted the listing levels and population growth. This has led to a slight rise in the days on market for a property rising to 24 days in November compared to 14 days earlier this year in April* .
“It is our belief that once State borders reopen on 5 February 2022, WA should see the residential market resetting as interstate migration resumes, driven by lifestyle and employment demands” said Mr Percudani.
Perth housing values grew only 0.4% in the three months leading up to November 2021, down from 7.7% in March 20211.
“With value consolidation, potential sellers have increased equity in their current property that is encouraging and enabling homeowners to consider an upgrade and purchase a new home this Summer” Mr Percudani explains.
The upward trend in property prices has followed several cash rate reductions, an increase in positive market sentiment and an uptick in employment particularly across the WA mining and agricultural sectors. WA has seen fewer interruptions to economic growth from COVID-19 in comparison to other states and territories and because of this, the unemployment rate has trended well below the decade average to 3.9%, the second lowest in Australia behind Darwin*.
“At Realmark over many years we are often asked if Summer is the right time to sell my home however there are more active buyers in the summer selling season. Realmark we know that with an increase in competing buyers, our sellers benefit from a better sale price for their property” said Mr Percudani.
Whilst WA houses present exceptional value, consumer trends have been slowly shifting in 2021 with renewed demand for higher density options including apartments, villas, and town houses particularly those that have a high degree of amenity or an exceptional location. Affordability remains the main driver in this trend, with units and townhouses becoming more affordable. Coastal and lifestyle locations have seen the highest annual growth rate across WA as homeowners seek a better location2.
Sellers of these various types of properties should consider bringing their properties to market and benefit from the summer selling conditions.
“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” said Mr Percudani.
Residential Rental Market
Evaluating the rental market, it appears to have reached some degree of stability and a healthy point between supply and demand. In fact, rental prices have appeared to have stabilised across many markets and sectors in WA.
Demand from tenants appears to be focused on the quality of properties with a high demand for family houses as well as tenants looking for longer tenancy security. This suggests good yield and security prospects for investors.
Rents have seen a sharp uplift off the back of the positive turn in migration and employment against supply. Housing rent values have increased by 11.5% both across Perth and regional WA with rental listings remaining tight across the state averaging around 8,800 over the past 6 months down from 26,441 in August 20161.
“The tight rental market is likely to continue this summer and borders reopening will apply further pressure on this trend” said Mr Percudani. Again, during this Summer it’s important for owners to canvass the market for potential tenants through home opens and marketing to secure several applications to select from potential tenants to ensure they have achieved the maximum investment outcomes.
Commercial Market
As an investor the time to get into the market is now with investors from across the country, and the wider Asia-Pacific region is now aware of the opportunities the WA commercial market can offer. Scarcity of land supply in key areas and improving rents have added to the appeal of WA.
“Abundant investor capital is poised for investment in the commercial property sector. WA presents an ideal opportunity; however, the astute investor would be wise to move early in 2022” explains Mr Percudani.
WA has been the least-interrupted retail sales market throughout the COVID-19 pandemic and, as a result, the WA market has outperformed in a major way.
“From transactions Realmark Commercial is closing, it is evident that investors are increasingly being priced out of core markets on the east coast and are looking further afield to secure core investments. Many residential investors are also choosing to turn to commercial real estate, as a hedge to inflationary pressures, attract higher yields and have longer lease security. Investors combine these considerations with quality strata, rental and facility management to achieve asset protection and an overall winning investment outcome” said Mr Percudani.
“At Realmark we stand by our ability in either the residential or commercial markets to ensure our investors and vendors have assurance as conditions evolve in 2022.”