Perth’s biggest property winners and losers after the 2020 lockdown revealed
Perth’s biggest property winners and losers after the 2020 lockdown revealed
If you’re a Perth property owner who has held on through the financial rollercoaster ride of the past 10 years, you might finally look set to be rewarded.
Perth’s property market shows signs of being on the mend as predicted before the pandemic struck, after local investors were forced to hold on the longest in the nation to see a return on their investment after the mining collapse, according to Australia’s leading property analytics CoreLogic.
“The Perth housing market increased 1.9 per cent in value over 2020, [which] still sits well below record high values seen in 2014,” CoreLogic’s latest report says.
Its ‘Pain and Gain’ property report has crowned the Perth council areas of Cambridge and Nedlands as the biggest winners for profitable sales since the June quarter’s COVID-19 slump.
About 89 per cent of Cambridge home owners who sold in the September quarter turned a median profit of $450,500 after holding their properties for a median of 12.6 years.
Closely followed by 85.7 per cent of Nedlands sellers, who showed a median profit of $549,444 after a 13-year return on investment. (See the full list below.)
Perth’s western suburbs have mostly been shielded from influences like the mining downturn, extreme weather events or an oversupply of dwellings on the market, with Cottesloe and Mosman Park also proving among the most successful. (Data for the state’s smallest and most wealthiest shire of Peppermint Grove was limited to what appeared to be a single sale at the profit of $5.76 million.)
Interestingly, the south-east corridor stretching from the City of Armadale through the Shire of Serpentine-Jarrahdale to the Shire of Murray has been shown to have among the best turnaround sales records, with a 7-8½ year hold providing a median profit of $185,500 to $191,000 for more than 67 per cent of those areas’ September quarter sales.
But those in nearby Mandurah and Perth’s north-easterly City of Bayswater have suffered some of the worst losses.
Close to half the sales in Bayswater were at a loss of $53,000 after a typical hold of seven years, with the remaining 54.6 per cent who sold after 14 years only making $169,000.
In Mandurah, 40 per cent of sales were loss-makers, with dips of $56,000 on average. These were largely owner-occupied properties, with an average purchase date in the early 2010s.
The figures surprised Real Estate Institute of WA president Damian Collins, who said there was no clear indication why the shires of Serpentine-Jarrahdale and Murray wouldn’t be more reflective of Mandurah, Rockingham and Kwinana, where a median of close to 40 per cent sold at a loss.
Nor why an inner city suburban area like Bayswater would not have had more profitable sales.
“It is not as prestigious as the western suburbs but certainly you would have expected it to be far higher than 54 per cent, and quarter-by-quarter some of these things can be statistical anomalies as to why, but the Bayswater numbers certainly surprised me,” Mr Collins said.
But the greatest pain has been felt in Perth’s CBD, with the City of Perth’s apartment living costing 64.6 per cent of investors a median of $105,000 in losses, with only $67,750 on return for investment for sellers who had waited almost 15 years.
“Considering the median apartment price is around $500,000 that’s a pretty big hit,” Mr Collins said.
“Unfortunately people tend to buy investment properties at the peak of the market and sell at the bottom.”
Across greater Perth, houses were a wiser investment over units, with units taking almost 16 years to turn a profit, compared to the 11.5 years for a house.
This stands in contrast to the eastern states, where typical hold periods remain less than 10 years and units can sell after practically half the years needed in Perth.
Regionally, the most significant comeback was across the northern half of outback Western Australia, where the rate of loss-making sales had fallen from 48.5 per cent in the June quarter to 38.4 per cent in the three months ending September.
“The trend in improved profitability across mining sectors looks set to increase,” the report said.
“Australian housing markets are being led into a broad-based upswing off the back of record low interest rates.
“For mining regions, very affordable dwelling prices and an increase in mining investment over the year to September may result in higher prices over the coming quarters.
“However, many of these markets have sustained a downturn since the early 2010s, meaning property holders will need to wait years before value in these markets are substantially recovered.”
Mr Collins said Karratha had come up 25 per cent in last 12 months after suffering a 70 per cent drop from its peak, and Port Hedland was “really strong” with an almost 9 per cent improvement after an 80 per cent drop.
“I don’t think we’ll ever go back to those crazy levels that we saw and they were unsustainable; we shouldn’t be paying $1 million for a property that is pretty average in port Hedland and Karratha,” he said.
“But they will get back to replacement value which is about $650,000 to $700,000.”
Out of the four major coastal regional areas of Bunbury, Queensland’s Gold Coast and Cairns, and Geelong in Victoria, the biggest quarterly reduction in the rate of loss-making sales was across Bunbury. Its unprofitable sales fell from 33 per cent to 26.4 per cent.
“The good news is that we’ve had a big increase in people making profits, I think that’ll continue,” Mr Collins said.
“Prices in Perth are seemingly tracking along at about 1 per cent a month in growth, well they have for the last three months, and so I think we have a pretty good 2021 ahead.”
Gross loss and profit-making sales, Sept 2020 quarter
