The Western Australian property market may have hit its bottom in 2020, but the state’s real estate body is expecting big things from 2021.
In its 2021 outlook, the Real Estate Institute of Western Australia (REIWA) has indicated the state’s property market “should experience steady growth in both the rental and sales market – something not seen since the strong conditions in 2013”.
REIWA president Damian Collins has acknowledged that while 2020 has been an unusual year for property, Australia’s larges state is showing extremely positive signs as it heads towards a new year.
“Sales activity in Perth at the start of the year was sitting at approximately 2,900 transactions per month,” he began.
This figure is now sitting at nearly 4,200 transactions per month, with the high transaction volume meaning listings for sale have reached a 13-year low.
Just over 10,000 listings are currently available on reiwa.com, which means there’s plenty of upward pressure on prices, Mr Collins flagged.
Citing anecdotal evidence from agents, the president said it’s becoming more and more common for sellers to be receiving multiple offers, with some vendors being offered thousands more than the advertised price.
This kind of buyer behaviour has not been seen since 2013, and “with record-low interest rates looking like they will be around for a while, many buyers are finding it cheaper to buy than rent”.
“This is one of the reasons why we can expect sales activity in 2021 to continue gaining momentum.”
And while current prices did mean Perth held the title of the city with the lowest median house value of all capital cities this year, the president is of the opinion that this could change in 2021, thanks to population growth from people returning from interstate and overseas.
“It is expected that prices will increase between 6 and 10 per cent over the next 12 months,” he forecast.
Rentals reach crisis point
The REIWA is also anticipating an inflation on rental returns, as the rental vacancy rate dips to “crisis levels” of below 1 per cent – which is good news for investors, but not such good news for renters.
Mr Collins said conditions for renters could get worse before they get better due to the influx of return travellers and the reopening of state borders if current vacancy rates remain.
“We can expect rents to grow an additional 10 to 15 per cent throughout 2021,” he noted.
“However, even with this increase, WA is still the most affordable capital city to rent in across all Australian states and territories,” the president flagged, highlighting his optimism that the scarcity of properties could attract more investors looking to take advantage of favourable market conditions.
Regional areas to reap rewards
It’s not just Perth that will benefit from better conditions, with the REIWA expressing an expectation that regional markets will also see the benefit of population growth and changes in lifestyle preferences due to COVID-19.
Mr Collins said the institute has already seen significant improvements in Karratha, Port Hedland and Kalgoorlie Boulder during the latter half of 2020 – thanks to both increased rental demand and sales activity.