Perth is primed to defy the odds and continue to grow, fighting the conditions that have caused markets to slow across the nation.
While most of the nation’s markets have slowed in the face of economic headwinds, one booming capital has continued to shine: Perth.
WHITEARCH director Ashby Farrell said the strength of the Western Australian capital’s property market was supported by low supply and high demand.
He said that while the available stock in the Perth market had risen over the course of the year, and buyer competition had softened, there was no sign the city was set to stagnate.
“I don’t want to freak out sellers or people into thinking the market’s going to crash. This is just helping us get back to a more equal playing field,” Farrell said.
He said the increase in listing supply in the market meant sellers needed to give more consideration to their property’s sales strategy, including presentation and marketing.
“Sellers need to think a little harder about how they’re positioning their property, because buyers do have a little bit more choice, which means they have a bit more time
“It’s still a crazy market; it just feels like it has cooled off because buyers have more time to make a decision,” he said.
Supply to continue to play a major role
Farrell said the consistent undersupply of properties across Perth had played a significant role in driving the dwelling values higher.
“Until we fix our supply issues, we probably can’t fix the underlying issue with the Perth market,” Farrell said.
“Part of the reason the established market is going so well, if you’re an owner, is the fact that the cost of replacement is frankly absurd.”
With construction costs ballooning since COVID-19, Farrell said that delivering affordable entry-level homes had become financially unfeasible for developers, as they would no longer make a profit.
Farrell said developers had no appetite for producing affordable supply, as it would not allow them to maintain their profit margins.
“The only thing that makes sense for developers to build in Perth right now is high-end property.”
Reforms to reshape the rental market
Following the Western Australian government’s recent proposal to abolish “no-grounds terminations”, Farrell said the state’s rental market was set to undergo a significant shift.
While many landlords and property managers viewed the change as a negative for their rental properties, Farrell said they could actually find themselves in a better position if they put in the extra effort.
He said that if the changes triggered investors to remove their properties from the rental market, it could create an opportunity for those who remained.
“You are going to have better tenants, because you are going to be forced to do better checks and stay on top of breaches more regularly,” he said.
“No one has ever removed a tenant who pays their rent on time, keeps the property clean, and asks for a reasonable level of maintenance.”
As a result, Farrell said that tenants would likely be issued breach notices for more minor issues that a property manager would typically let slide, so they would have the necessary paper trail if a tenant proved to be wrong for the property.
Additionally, he said the change could result in the death of the fixed-term lease for rental tenants.
“What would be the point in a fixed-term lease if you have to continue to renew them unless you were going to sell the property or renovate?”
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