18 Sep 2019

Perth Real Estate Market Update: Recovery Starting to Show Strength

by Naked Edge Writers

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Guid,Tips,Selling,Auction real estate agents

Perth Real Estate Market Update: Recovery Starting to Show Strength (September, 2019)...

The bottom of the market is well and truly past us and we are starting to see lots of buyers turning up to home opens! This shows us the market is in recovery, but the old real estate adage ‘presentation and price’ still rules supreme. For a successful sale homes must be priced right and presented well.

WA commodity prices are still very strong…

And will continue to remain that way for the next couple of years. With iron ore prices currently sitting at US$90 per tonne, we are well above the federal government base price (US$55 per tonne), and experts forecast prices will finish the year between US$90 per tonne and US$100 per tonne. This should keep WA relatively protected from the rest of the slowdown across Australia.

Encouraging Landgate Figures…

What I also found encouraging last week were Landgate figures showing a 5.2 per cent jump in settled deals compared to this time last year. This signals that buyer confidence in the WA economy is translating into property sales. Meanwhile, interest rates are predicted to drop a further 0.25 – 0.50 per cent before the year is out, and this will further increase most buyers borrowing capacity.

The two rate cuts and interest rate floor amendment in the middle of the year has already put between $60,000 - $100,000 extra into buyers pockets - depending on whether they are single income or dual income families. So many Australians may suddenly find they can get their home loan approved.

There are two things stopping the WA market…

The first one is population growth. It’s still patchy as people are moving here, but the same sort of numbers also seem to be leaving. Although we have had population growth close to 2 per cent this year, we need it to get to 5 per cent before we start seeing a big difference in the amount of properties that are on the market and being sold.

The other thing we need to be mindful of is the banks - they’re still being very tight on lending. But the announcement last week that Westpac won the court case against ASIC is good for borrowers going forward. According to Cameron Kusher from CoreLogic, the court judgment should result in some loosening of borrower serviceability assessments.

On the investment side of things…

The vacancy rate remains below 2 per cent across the Perth metro area - which comes as welcome news for landlords who have been looking for price increases. We’ve recorded some modest rent increases across multiple suburbs and as the vacancy rate decreases rents will continue to rise. This will then push buyers into purchasing homes, instead of renting.