In this latest Perth Property Market Update I take a deep look at the underlying trends and factors at play in the Perth rental and sale markets at this time as well as my insights into where the best opportunities in this market are. Press play to watch the video update or see the transcription below. I would love to get your thoughts on whether you found this update helpful or and get your feedback on ways to improve the content or the format, simply post your comments or questions below.
Graphs I refer to in this update
If you prefer to read my update here is the transcription
Gday! Jarrad Mahon here, bringing you my latest Perth property market update.
I will cover off the rental and sale market for you as well as some observations on where the best opportunities in this market are.
You can see the number of properties for sale since April steadily been increasing and that was the point that our election, federal election was announced. So you can imagine the uncertainty didn’t help.
Over that time our Perth economy has been slowing down, the mining been slowing down and where is hardest hit has been in the Perth CBD. Where property sale prices have been pulling back, it’s certainly transitioning from a seller’s market into a neutral market (In the CBD) now as we speak.
And as we’ve got that election out of the way, we did have a pulling back in the number of properties for sale in October that was a good sign that the markets are getting a bit more confidence in it. But then coming into November we’ve seen quite a steady rise in the number of properties for sale. That’ usually can be a bit of a seasonal change when you know a lot of people take their properties to the market in spring to take advantage of that extra activity in the market but our number of sales hasn’t picked up as much as I would have expected it to, so its seen the number of properties for sale sparked to the largest number that we’ve had in the market for this entire year. So that’s quite notable.
What I expect to happen as we go into Christmas is the number of properties will stop coming on the market we won’t get new listings for sale, some of the existing stock will meet the market by price revising and clear off. And we’ll probably start January with about 8,000 listings (for sale). Typically what happens is we get everyone thinking of bringing their property on the market will hold off until about the second to third week of January when we’ll start then seeing them come on for sale.
So it’s going to be really interesting to see where our market supply and demand rebounds to going into February. I’ll be keeping a close eye on that. Looking at the number of properties for sale you can see it has been trending down, ever so gradually, that shows that our market is slowly but surely softening so I’m keeping a good eye on that. We are still generally in a seller’s market in the middle ring suburbs of Perth, moving to a neutral market in the inner CBD and in the outer suburbs of Perth where we are more affected by affordability, some of those suburbs are in a seller’s market and others are moving back towards more of a neutral market as well.
[2:51] Perth Rental Market Update
On the rental side, what we’re seeing is that the market is now stabilizing at 3.1% vacancy. We reached quiet a peak of vacancy, so a peak of properties available for rent in July and that’s probably a bit more of a seasonal aspect with Winter being a bit more gloomy/slower month for the rental market.
But we’ve really stabilized our vacancy rate at about 3.1%, that’s a good sign to see. But for any of the landlords that haven’t you know had their property come up for re-leasing in the last you know six months, they’re getting a little bit of a shock with rents having pulled back, ten to twenty dollars and in inner Perth areas, rents have come back as much as fifty to a hundred dollars now.
I’m not overly worried about rents coming back as much in the inner Perth because they were actually at an unsustainable rental yield, investors were on a good wicket for a while and getting 6.5-7% for an unfurnished property and now rents have dropped to 5-5.5% yield that we are seeing in the middle ring suburbs. So the middle ring suburbs didn’t over heat and over shoot, the CBD did and not it is cooling back down.
On the median rent side we also hit our peak of 480pw rent in July and that rent has now come back to that average of $470 and just stabilizing. I expect that we are going to hold tight at this rental price and just go sideways for a while, I will keep an eye on whether this overall softening trend continues.
[4:34] Opportunities for Growth
There is plenty of time to get growth in areas, the one segment of the market we are seeing an increase in demand in is the first home buyers, new property market. When the grant changed in October it became $10,000 for new properties for first home buyers so that has led to a surge for new properties in outer land estates where you can buy house and land packages and the inner areas where you can buy in-fill villas and townhouses. So anything new up to that $500,000 price point where they don’t have to pay stamp duty, in the $450,000 to $500,000 that is where its hottest across Perth for new properties.
We are already seeing the waiting time for titles in outer areas across Perth increase and draw out, we have got some investors also buying house and land packages over the last month or two in those areas because we are also going to get the flow on effect that when the wait time for titles drags out, the buyer demand is building up for the next title release and the developers than check some extra price on top and that adds to the overall price. Builders start feeling the pressure because they have got people lining up to build with them, can they get trades, they are grappling and still getting some workers back from the mines. I am told that things are pretty tight for the builders, get availability of brickies to get properties built in a reasonable period of time.
What I expect with some of the more popular estates such as Harrisdale and Wandi, we are seeing titles not available till March next year, a 4 month wait already! Can it get any longer to wait for titles? It seems that people are prepare to wait for these more popular estates and when they come available I can bet there will be a price increase on the next stage.
If you do want a house and land package I have got some great relationships with land developers and I can get you a fall over block in the stages that have sold or a block in an up-coming stage, we can get first dibs. I’ve also got access to off the plan and house and land packages in the middle ring suburbs and I expect that type of property to do very well with growth over the next couple of years because there is an intersection between first home buyers, investors and down sizers and the middle ring suburbs will probably have the most resilience as things slowly start to come back, people have got good jobs in that market and they are a bit more resilient to changes in interest rates and the economy.
So that is a breakdown of the market and what it means for the different sub markets in Perth, of course if you have any questions on how it relates to your situation give me an email or a phone call and Im only too happy to help. Jarrad Mahon signing off on my Perth Property Market Update, I hope you have an awesome Christmas, I’m probably not going to see you before then. Make sure you check out our staff performing Christmas Rock video, I had a lot of fun putting that together. Cant wait to see you in the New Year!