State of the Western Australian property marketThe precipitous slide in property values in Western Australia appears to be showing no signs of abating. Worse still is the fact that rents are falling amid rising vacancy rates. However, the state looks set to benefit from the falling Aussie dollar and interest rates.
- Property prices continue to fall, no bottom in sight
- Rents are falling as vacancy rates surge
- Economic slowdown has been relatively modest, with the overall State economy continuing to grow
- The state is set to reap the rewards of the big resources investments in the recent years.
- New housing supply starting to fall
- Affordable housing
- Lower dollar to support tourism
- $400 million in WA-government funded transport projects to boost the economy
- Falling interstate migration numbers
- Growing number of people leaving the state
- Rapidly rising vacancy rate
- Rents are continuing to fall
- Property prices still have a long way to fall
- Median house price to fall 1% by June 2019 from June 2016 levels- a drop of 8% in real terms.
- $207 million Karratha Health Campus
- $416 million spread across seven health projects
- $400 million state-funded transport projects
What's in store for investors in Western Australia and Perth?If you’re looking for some good news in the Perth market, you’re likely to be disappointed. The sharp decline in prices and rents are both showing no signs of improving according to the reports by both CoreLogic RP Data and Domain. During the July quarter, CoreLogic RP Data showed median house values dropping by 4.7% to $510,000 with units losing 4.8% to $408,200. Over the past 12 months, house values fell by 5.6% while units dropped by 5.8%. "Housing market conditions in both Perth and Darwin are suffering from reduced housing demand resulting from a sharp downturn in migration and weaker employment opportunities," explains Tim Lawless, research director, Asia Pacific for CoreLogic RP Data. "Rental rates have also fallen substantially in both cities, highlighting that lower housing demand is not confined to home buyers but also renters." Domain’s result mirrored that of CoreLogic RP Data and showed Perth median house prices falling for the sixth consecutive quarters. The median price is now at the lowest point since March 2013. "Like many of the capital cities, Perth is feeling the price shock brought on by a surplus of newly constructed apartment buildings that exceeded buyer demand," says Andrew Wilson, chief economist with Domain.
"Coupled with steep annual drop in house prices, Perth is a long way away from returning to a healthy market. It’s a pretty bleak environment for both houses and units. There're no signs of bottoming out in the next 12 months" Andrew Wilson, DomainHowever, the WA's economy remains resilient according to Deloitte Access Economics. The economic forecaster points out that while there's been a slowdown in the economy, it's been relatively modest with the overall State economy continuing to grow. "One of the reasons that the overall State economy is continuing to grow is that the enormous investment in the resources sector of recent years will result in a beautiful dividend for the State of increased exports of the likes of iron ore and LNG as projects such as the Gorgon LNG project reach the full production phase."