Stable property market conditions expected in WA in 2019
REIWA’s 2019 outlook indicates the WA property market should remain stable in the New Year, with some notable improvements expected in the Perth rental market.
REIWA President Damian Collins said market conditions throughout 2018 had been fairly subdued, with the most significant improvements occurring in the rental sector.
“We’ve seen weekly sales in Perth hover at around 500 per week throughout the year, while listings for sale were largely unchanged from 2017 levels, fluctuating between 13,000 and 16,000. Listings should continue to trend at current levels throughout 2019.
“While we expect sales activity in 2019 to largely reflect what we’ve seen this year, there is a possibility that rising consumer confidence levels, coupled with improved housing affordability, could translate into increased sales volumes in 2019.
“If weekly sales remain at current levels or better, Perth’s median house price could improve during the next 12 months. However if lending standards tighten further, this could restrict the number of people that are able to purchase a property, which could negatively impact sales and prices. Additionally, if the banks choose to increase interest rates any further, this also has the potential to adversely affect buying and lending conditions in WA,” Mr Collins said.
Perth rental market
REIWA analysis shows the upward trajectory of the Perth rental market should continue through 2019, with stable population growth and slowing new-building construction levels the key drivers for this improvement.
Mr Collins said the Perth rental market had lead the way in 2018, with stable median rents, healthy leasing activity levels, declining listings and a plummeting vacancy rate.
“With population growth in WA expected to remain stable and new dwelling commencements slowing, available rental stock should continue to decline. This should see competition amongst tenants increase, putting further downward pressure on the vacancy rate, which recently dropped below four per cent for the first time in four years,” Mr Collins said.
Perth’s overall median rent price has held at $350 per week since April 2017 – the longest period of stable rents Perth has experienced since REIWA first started recording rental data in 2001.
“We’re at 19 months and counting of stable median rent prices in Perth. If listings continue to decline and leasing volumes remain healthy, we should see the overall median rent price increase in 2019 for the first time since September 2014,” Mr Collins said.
While REIWA’s 2019 outlook for the Perth rental market is positive, any changes to negative gearing could pose a risk for both the rental sector and wider property market.
“In the short term, the improvements we’ve observed in the rental market could see investors returning to the market, however if changes to negative gearing are legislated, this will likely dampen investor activity and have a detrimental effect on the wider WA property market just as it is starting to find its feet,” Mr Collins said.
“As the next Federal Election nears, REIWA will continue its efforts to ensure politicians do not meddle with negative gearing to ensure a healthy and sustainable rental market into the future.”
Regional WA
REIWA expects overall market conditions to improve in Regional WA in 2019 as a direct result of investment in the mining sector.
“Port Hedland, Karratha and Kalgoorlie are areas to watch, with the new mining projects going a long way to restoring confidence in these regions. These projects are expected to create thousands of new local jobs, which should continue to support population growth, improve demand for housing and aid recovery,” Mr Collins said.
“The WA Government’s push for tourism looms as another positive for Regional WA, as it could provide some much needed support to WA’s tourist focused regions, like the South West.
“After a prolonged period of turbulent conditions following the slowdown in the mining sector, the WA market appears to be stabilising. While the worst appears over, REIWA cautions against expectations of a rapid recovery during the next 12 months.”
