Property managers and BDMs in Western Australia making plans for 2019 will be interested in a new industry report which finds that the Perth property market is in for growth next year, while the whole of WA will remain on an even keel.
According to the Real Estate Institute of Western Australia (REIWA), the Western Australia is expected to avoid any declines, with Perth to see an uptick in growth.
Over 2018, Perth’s best quality was its rental market, said REIWA president Damian Collins.
“We’ve seen weekly sales in Perth hover at around 500 per week throughout the year, while listings for sale were largely unchanged from 2017 levels, fluctuating between 13,000 and 16,000. Listings should continue to trend at current levels throughout 2019,” Mr Collins predicted.
“While we expect sales activity in 2019 to largely reflect what we’ve seen this year, there is a possibility that rising consumer confidence levels, coupled with improved housing affordability, could translate into increased sales volumes in 2019.
“If weekly sales remain at current levels or better, Perth’s median house price could improve during the next 12 months.”
These predictions, however, are dependent on economic conditions remaining as they are. If lending standards become even more scrutinised or if banks raise rates higher, the market could see a decline.
“However, if lending standards tighten further, this could restrict the number of people that are able to purchase a property, which could negatively impact sales and prices,” Mr Collins said.
“Additionally, if the banks choose to increase interest rates any further, this also has the potential to adversely affect buying and lending conditions in WA.”
The improving Perth rental market
Perth’s successful rental market is expected to keep its momentum going through 2019 due to steady population growth and a slowdown in new building construction, according to REIWA data.
Mr Collins said that during 2018, steady median rent of $350 per week, lively leasing activity, and drops in listings and vacancy rates all contributed to Perth’s rental success.
“With population growth in WA expected to remain stable and new dwelling commencements slowing, available rental stock should continue to decline. This should see competition among tenants increase, putting further downward pressure on the vacancy rate, which recently dropped below 4 per cent for the first time in four years,” Mr Collins said.
Mr Collins noted that Perth’s median rent price has remained at $350 per week for 19 months in a row, which is the longest period of consistent rents in Perth since the REIWA started collecting rental data in 2001.
“If listings continue to decline and leasing volumes remain healthy, we should see the overall median rent price increase in 2019 for the first time since September 2014,” Mr Collins said.
This prediction, however, is made on the assumption that vehicles within the economy like negative gearing stay consistent. If the way properties are negatively geared is changed, Mr Collins warned the entire property market would be at risk.
“In the short term, the improvements we’ve observed in the rental market could see investors returning to the market. However, if changes to negative gearing are legislated, this will likely dampen investor activity and have a detrimental effect on the wider WA property market just as it is starting to find its feet,” Mr Collins said.
“As the next federal election nears, REIWA will continue its efforts to ensure politicians do not meddle with negative gearing to ensure a healthy and sustainable rental market into the future.”
Regional WA sees boost from mining investment
Outside of the capital city, the REIWA is also predicting that regional WA will see property markets improve due to investment into the mining sector.
“Port Hedland, Karratha and Kalgoorlie are areas to watch, with the new mining projects going a long way to restoring confidence in these regions,” Mr Collins said.
“These projects are expected to create thousands of new local jobs, which should continue to support population growth, improve demand for housing and aid recovery.
“After a prolonged period of turbulent conditions following the slowdown in the mining sector, the WA market appears to be stabilising. While the worst appears over, REIWA cautions against expectations of a rapid recovery during the next 12 months.”