After a tumultuous year for Australia’s residential market, which has seen many markets see-saw, the pendulum is swinging back in the favour of the West.
To many people’s surprise, Perth outpaced most other Australian residential markets in the last quarter, with a median house growth of 1.9% – surpassing the national rate of 0.8%.
But the questions that remain are how sustainable is this growth and whether it’s underpinned by impulse buying. Are purchasers staying well-informed or are they signing up to property purchases on compulsion?
There’s no doubt that a macro view points to more prosperous times for Perth’s residential market, however, when we look more in-depth at our micro markets, the performance spread is little more evident.
Specifically, there have been some concerns over our outer metropolitan suburbs, where supply has really kicked up over the past four months – fuelled by the introduction of the Federal HomeBuilder and State Home Bonus grants.
Further to this, there is growth divergence within suburbs due to the varying levels of demand for different products.
For example, in Perth’s outer northern suburb of Alkimos, where quality and value of product fluctuates significantly, there are at least five different land estates located within Alkimos. Some are by the ocean, while others sit east of Marmion Avenue, some have stronger covenants and others have smaller and/or inferior products. Understanding value is about understanding the dynamics of the market.
There is a similar situation playing out in the outer southern markets of Lakelands through to Mandurah, where a sharp spike of buyer activity has been triggered in response to new development planned and underway.
This quality variance results in a wide distribution of values within a single suburb. From our professional position as residential valuers, it is important that we closely consider the analysis of each sale and understand competing markets – the types of dwellings, buyer activity and other key drivers.
As a result of the HomeBuilder and State Home Bonus grants, we are seeing heightened pressure on builders to get more dwellings on the ground and simultaneously manage costs as demand for materials and trades heightens. Meanwhile, developers are feeling pressured by having to not only provide new land product but to get it Titled.
In the north east pocket through to Aveley, more land is coming on stream, with stock including small houses on small blocks. Located some 21kms north east of Perth and part of the City of Swan - one of Perth’s fastest growing LGA’s with improved transport routes up through the north east corridor and proposed benefits from Metronet – this market is providing achievable living options in a projected growth zone.
Infill land pockets in some of Perth’s most sought after western, riverside and coastal locations continue to be sought after, underpinned by strong employment in the resources sector. With low levels of stock to match demand, this is resulting in value growth within these suburbs.
Even in some of the more established eastern localities of Dianella, Morley, Joondanna and Osborne Park are seeing the highest growth levels in five years.
Finally, Perth’s residential market is also welcoming a fresh wave of interest from investors venturing west again after a prolonged period out of our markets. The lure of investing in one of the country’s most affordable cities with an increasingly attractive rental market due to some a 12-year low vacancy rate of just 1.6% is very compelling.