Scarborough BeachHope is on the horizon for Perth’s property market in 2018 with early signs of recovery emerging, according to local experts.
Just weeks into the New Year, agents are reporting an increased demand for rental properties and a boost in buyer confidence.
Property analyst and commentator Gavin Hegney said 2017 began in the doldrums but finished with the prospect of 2018 being better.
“So hence 2017 was the year the market was turning if you like,” he said.
“It started with trade-up buyers buying into areas with low interest rates, in areas they thought they could never afford. That market through 2017 probably put on, in certain areas, five or 10 per cent in value.”
Mr Hegney predicted trade-up buyers would continue to be active this year, which was the first sign of market recovery.
“The next area to watch for is the rental market, which will assist in the broader market and we are already seeing the velocity of properties turning over quickly and the number of properties available for rent dropping,” he said. “So there are already signs there that the rental market it is starting to correct.”
Acton chief executive Travis Coleman said although it was still early in the year, there was a definite shift in the mood of buyers.
“There’s increased confidence and in the western suburbs we’re actually seeing a shortage of stock,” he said.
“We certainly believe buyer sentiment has shifted and can only lead to an increase in activity which will continue to see the WA property market moving in the right direction.”
JLL buyers’ advocate Lachlan Delahunty said 2018 would not be a story of rapid growth and hot markets, but more a conversation around affordability and an early stage recovery.
“The break in the clouds around the decline in property prices here in WA is a significant enhancement in affordability,” he said.
“The combination of low property prices, low interest rates and stagnant income growth has made housing affordability in Perth the best it has been in a decade.”
Mr Delahunty said Perth values dropped by almost 11 per cent to bottom at $505,000 in late 2017.
“Additionally, Perth is now ranked the most affordable capital city to rent a house in , with a median rent of $350 per week representing only just over 19 per cent of full time adult weekly earning. Compelling, when Sydney exceeds 34 per cent,” he said.
The end of 2017 displayed the first signs of relief since 2014 with a 0.1 per cent rise in dwelling values, Mr Delahunty said.
“However, during the late parts of 2017 we have started to experience an increase in sales volumes and a large spike in buyer activity,” he said.
An improvement in the rental market and vacancy rates were generally the first signs of a recovery, he said.
“And that’s exactly what we are seeing in Perth now. In 2017 we saw a reduction of almost 18 per cent for listings across the residential market,” he said.
“In combination with strong leasing activity, rental returns grew 3.8 per cent on houses and returns on units grew 4.3 per cent. Quantifying the belief in a recovery. However, the biggest question is will this optimistic data quantify into real value? I think so.”
Ken Preston, LJ Hooker WA manager, predicted moderate improvement across most Perth markets in 2018, however there was also capacity for many suburbs to return to something similar to their former glory.
“The last quarter of 2017 saw the first improvement in price growth for numerous years, albeit minor, but an upward shift, nonetheless,” he said.
“I think we’ve gone past the city-wide median house price declines.
“In terms of the rental market, suggestions are that 2018 will present some favourable unemployment data, which in turn brings population growth, therefore we should see an upward trend now that the days of declining rents appear over in most suburbs.”
Realmark Coastal director Sean Hughes said the rental and sales markets were showing signs of improvement, with multiple buyers and tenants willing to negotiate to secure great property opportunities.
“We expect that this year will trend slowly in the positive, gathering momentum over the course of the year,” Mr Hughes said.
Peard Real Estate Group chief executive Peter Peard said the rental market should record a noticeable recovery, on the back of a falling number of vacant rental properties.
“There are now around 9000 vacant rental properties in Perth compared to around 12,000 two years ago,” he said.
“When the number of vacant rental properties falls below 6000 then landlords will be in a stronger position to increase rents.
“Factors favouring the rental market during 2018 include a decline in the number of new investment properties coming onto the market as well as a crackdown on investment lending by APRA, which is making it more difficult to secure finance.
“As the supply of rental properties begins to tighten during 2018, we should see rents start to increase in some high-demand areas of Perth.”
Mr Peard said the sales market would be steady, with no further downward pressure on property prices due to an improving state economy and a better outlook for the employment market.
“We expect 2018 to be overall a steady year for the Perth property market,” he said.
“We have reached the bottom of the current cycle. The recovery will be more noticeable during 2019 when the economy gains more momentum and the decline in new home building construction over the past two years begins to favour property sellers.”