The Perth real estate market has been somewhat flat ever since the end of WA’s memorable property boom in 2014 driven by massive spending in the mining industry, and the Landgate’s April Electronic Advice of Sale 2 (EAS2) figures certainly reflect this. April’s figures demonstrated a small dip from the previous month of March – 4,420 to 3,994. Comparing these numbers to April 2018, EAS2 is down by 368 enquires or 8.4%. With only two months until the end of the financial year, there is a possibility EAS2 figures will, for the first time since records have been kept, fall below 50,000 for the year.
According to some reports, almost 40% of Perth suburbs did in fact experience a price growth between March 2018 and March 2019. However, in contrast, quite a few suburbs – particularly those in outer areas have experienced decreases in the median price, due to supply consistently exceeding demand.
This begs the question, where are the homebuyers? How long should we expect to remain at the bottom of this downswing?
Well, it isn’t all bad news. Whilst WA property prices are not set to soar straight away, analysts like the QBE Housing Outlook report have predicted that after a 2 percent decline by mid-2019, house and unit prices will slowly start to grow to June 2021.
There are a few factors to look to that suggest Perth’s property market is ready to make a turnaround, including; improved economic activity, particularly in the mining sector; population growth; and a tightening of the rental market.
There is much to suggest a lot more spending will start to be invested in the mining industry, with companies announcing various projects planned for the Goldfields and Pilbara regions totalling $75 billion. This will see a massive increase in the demand for professional workers, tradespeople, and semi-skilled workers.
As a result, WA will experience an influx of people, accompanied by a major increase in business confidence that will encourage growth within the property market.
This population growth will further stimulate housing prices. We already saw a slight rise in population growth throughout 2018 and this is expected to continue into 2019. The ABS’ March quarterly population growth showed WA had a 7 per cent increase in interstate arrivals. Hopefully, an increase in Perth population will see an increase in home buyers.
The final factor that is likely to trigger a rise in house prices is the forecasted change in WA rental properties. It’s a renter’s market currently, but with investors presently hesitating with the purchasing of investment properties, and other rental properties being sold off, many forecasters believe there will be a shortage of rental properties by the end of 2019. This should encourage renters to switch to homeownership.
Due to these three pressures of an increase in economic activity, particularly in the mining sector, population growth, and a tightening of the rental market, some experts are now predicting that by 2021 Perth will have the second-fastest house price growth in Australia. They are forecasting a 10 percent growth rate, putting the median WA property price at $570,000. There are lots of strong indicators that the current state of the West Australian property market represents many opportunities for buyers.