Perth Recovery

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I’ve been tipping recovery in the Perth market in the past six months and now we are seeing the first signs of a return to price growth in some sectors. 
Several research sources still have the Perth market overall in slightly negative territory in terms of price movements, but my latest analysis for the Price Predictor Index shows that there is price growth in the upper end of the Perth market. 
When city markets are at the early phase of a growth cycle, the upmarket suburbs are often the first to show growth (and it ripples out later to the middle market and then to the cheaper areas).
That’s what happened in recent years in firstly Sydney and later in Melbourne.
Now the latest price data is showing the beginnings of something meaningful in Perth, which has numerous suburbs with median house prices above $1 million.
That top end market has seen growth in their median prices in the past three months and in annual terms also. 
This trend is widespread across the Perth prestige market. Suburbs with rising prices include Nedlands, Claremont, Applecross, Shelley, Cottesloe, Dalkeith, Mosman Park, Trigg and Floreat. 
All have median house prices above $1 million, while Dalkeith and Cottesloe are both above $2 million.
The latest price growth data from CoreLogic finds double-digit annual growth in median prices in most of those suburbs. 
In fact, the median price growth data has Cottesloe, Daglish, Dalkeith and Shelley all growing more than 20 percent in the past year, with a big chunk of that growth occurring in the most recent quarter.
This is a little misleading because it doesn’t mean property values are growing to that degree. It’s simply a product of the vagaries of median prices, which can be particularly volatile in those top-end markets where a few big-ticket sales than skew the data.
But valuers and buyers agents I spoke to during a visit to Perth last week confirmed that values are up 10 percent (ish) in many of the million-dollar suburbs.
Confidence that the upturn is sustainable comes from revival in the state’s economy, especially in the mining sector, and the large numbers of jobs being created. As the WA economy improves, businesses thrive and business people become more confident in their real estate purchases.
According to the WA Chamber of Commerce and Industry biannual review, the WA economy is rebounding, will grow this year and should start delivering a better jobs market and higher wages.
The report is supported by separate research by the ANZ that suggests the WA economy is back among the fastest-growing in the country. CCI chief economist Rick Newnham says the slowdown in the state - that previously hit the jobs market, property prices and confidence - has come to an end. 
The drop in business investment from the peak of the resources boom has also run its course. One symptom is that spending on gold exploration in WA climbed to its highest level on record in 2017. 
We’re now seeing evidence of those stronger economic prospects playing out in improvements in the Perth property market, notably in the top end suburbs.
Terry Ryder is the founder of hotspotting.com.au
<a href="https://mailto:ryder@hotspotting.com.au">ryder@hotspotting.com.au</a>
twitter.com/hotspotting
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Double-digit annual growth seen in Perth pockets

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Evidence that the Perth market has bottomed, after four tough years, is growing.
A market recovery is under way and one of the locations leading the revival is the City of Wanneroo in the north of the metro area.
Strong population growth is propelling the Wanneroo LGA away from its past as a remote, bushy area towards becoming a busy seaside city destined to house 363,000 residents. Over the past decade, 177,000 new residents have moved there, making it the fastest-growing LGA in Western Australia.
Its popularity with young families is evident too. Sales numbers have been rising and this earned Wanneroo a special mention in Hotspotting’s 2017 Winter Edition of the Price Predictor Index. At a time when few Perth suburbs have rising sales activity, several locations in the City of Wanneroo are showing signs of returning to growth.
Growing industrial areas are providing employment opportunities and with houses in most suburbs priced in the $300,000s and $400,000s, the City of Wanneroo is worthy of attention by investors.
Wanneroo is a rapidly-expanding LGA on the northern fringe of the Perth metropolitan area, located about 12km from the Perth CBD at its nearest point and 62km at its furthest point.
Perth’s next major Strategic Metropolitan Centre at Yanchep is currently being developed. Until the early 2000s, much of this area was unpopulated bushland.
The LGA’s main commercial and residential town centres are located at Wanneroo and Clarkson.
Other urban centres are planned at Alkimos, Yanchep and Two Rocks, with the largest retail centre being Wanneroo Cenral.
The Wanneroo region has natural attractions, mainly the beaches, but it is also home to the Yanchep and Neerabup National Park, Yellagonga Regional Park. and Lake Joondalup.
Barbagallo Raceway is a motorsport circuit located in Pinjar. It is renowned for the annual Supercar Championships which attract around 50,000 visitors over three days.
The City of Wanneroo has come to Hotspotting’s attention because of rising sales activity in several suburbs at a time when Perth’s market generally has been weak.
Wanneroo is one of four Perth precincts that are beginning to demonstrate a turnaround in the Perth housing market. Of the four, Wanneroo is the standout location, providing growth markets such as Alkimos, Carramar, Clarkson and Yanchep.
Alkimos is a newly-emerging suburb, having had a population of only 700 at the 2011 Census. The population is now 6,000. As with Yanchep, Butler and Two Rocks, new land estates are becoming available at Alkimos.
Based on 105 sales in the past year, the median house price at Alkimos is $400,000, with a median yield of 4.7%. Clarkson is the busiest suburb in the Wanneroo LGA with 227 annual sales. It has a median house price of $406,000 and a median rental yield of 4.5%.
Generally, young families dominate the region, searching for affordability amid the new development. Houses priced under $400,000 can be found in Banksia Grove, Girrawheen, Merriwa and Yanchep.
The State Government’s LandCorp and the Satterley Property Group are creating a new beach suburb between Yanchep and Alkimos. The 240ha community, to be known as Allara, has the potential to accommodate 3,400 home sites and a population of 7,500 people in the next 10 years.
Building projections obtained from the City of Wanneroo show that between 2011 and 2036, the suburb of Butler will have 2,800 dwellings added; Clarkson 2,400; Alkimos 11,000, Jindalee 3,200 and Yanchep 8,800.
Investors need to be mindful that vacancy rates are an issue, as is the case right across Perth. I expect this to improve as the WA economy and the Perth property market continue their fightback.
Terry Ryder is the founder of <a href="https://www.hotspotting.com.au/">hotspotting.com.au</a>. You can <a href="mailto:%20%3Cscript%20type='text/javascript'%3E%20%3C!--%20var%20prefix%20=%20'ma'%20+%20'il'%20+%20'to';%20var%20path%20=%20'hr'%20+%20'ef'%20+%20'=';%20var%20addy38821%20=%20'ryder'%20+%20'@';%20addy38821%20=%20addy38821%20+%20'hotspotting'%20+%20'.'%20+%20'com'%20+%20'.'%20+%20'au';%20document.write('%3Ca%20'%20+%20path%20+%20'/''%20+%20prefix%20+%20':'%20+%20addy38821%20+%20'/'%3E');%20document.write(addy38821);%20document.write('%3C//a%3E');%20//--%3E/n%20%3C/script%3E%3Cscript%20type='text/javascript'">email him</a> or follow him on <a href="https://twitter.com/hotspotting">Twitter.</a>
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City of Wanneroo, Perth, leading state's market recovery 

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Perth’s rental market has improved, with positive results observable across all key market indicators, According to new reiwa.com data for the September 2018 quarter.
REIWA President Damian Collins said leasing activity was up, median rents remained stable, stock levels had reduced, average leasing times were quicker and the vacancy rate had plummeted to its lowest level in more than four years.
“The rental sector is really leading the charge in the Perth property market recovery. The September 2018 quarter results are very encouraging and should provide landlords and investors with a lot of confidence," Mr Collins said.
Median rent price
Perth’s median rent price across houses and units held at $350 per week for a sixth straight quarter.
Reiwa.com data shows this is the longest period of stable rents the Perth rental market has experienced.
Additionally, when looking at houses reiwa.com data shows the median house rent increased $10 this quarter to $360 per week.
Reiwa.com analysis shows 105 suburbs across the metro area saw their median rent increase during the September 2018 quarter.
"The five best performing suburbs for overall rent price growth were Kallaroo (up 39.5 per cent to $530 per week), City Beach (up 25.9 per cent to $850 per week), Gwelup (up 24.5 per cent to $623 per week), Cottesloe (up 23.5 per cent to $605 per week) and Alexander Heights (up 21.9 per cent to $390),” Mr Collins noted.
Other top performers were Connolly, Inglewood, Ashby, Beaconsfield and Wembley.
Leasing activity
There were 13,234 properties leased during the September 2018 quarter.
Reiwa.com data showed this represented an increase of 5.2 per cent compared to the June 2018 quarter.
“Tenants were a lot more active this quarter than last, with 132 suburbs across the metro area recording increases in the number of properties leased,” Mr Collins said.
Reiwa.com data shows the five suburbs with the highest volume of properties leased during the quarter were Perth (346), East Perth (343), Scarborough (319), Baldivis (243) and Maylands (235).
South Perth, Rockingham, West Perth, Rivervale and Midland were also standout suburbs.
Mr Collins is of the opinion, "provided landlords are listening to the advice of their property manager and pricing their rental in line with market expectations, they have a very good chance of securing a tenant.”
Listings for rent
There were 7,286 properties for rent in Perth at the end of the September 2018 quarter.
Reiwa.com data shows that these stock levels represent an 11.9 per cent drop compared to the June 2018 quarter and a 25.1 per cent drop compared to last year’s September quarter.
Mr Collins stated, “This sharp decline can be attributed to a combination of leasing activity improving and new dwelling commencements slowing. With less new properties coming onto the market, rental stock is being absorbed at a quicker pace, which has put downward pressure on listing volumes.”
Average leasing time
It took landlords 46 days on average to find a tenant for their rental during the September 2018 quarter.
According to reiwa.com data this is one day faster than the June 2018 quarter and eight days faster than the September 2017 quarter.
Mr Collins said that this was due to, “a combination of increased tenant activity and lower listing levels has had a positive impact on average leasing times for landlords, with tenants needing to act quicker to secure a rental.”
Vacancy rate
Perth’s vacancy rate declined to 3.9 per cent during the September 2018 quarter, the lowest level Perth has experienced since the March 2014 quarter, according to reiwa.com data.
Since key market indicators improved during the September quarter, Perth’s vacancy rate has now fallen below the 10 year average.
Mr Collins concluded, “slowly but surely we are moving towards parity in the Perth rental market, with improved conditions across the board meaning there is good opportunity for tenants and landlords to benefit simultaneously.”
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Rental market leading Perth's property market recovery: REIWA

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<div dir="ltr" align="left">After dropping consecutively for three quarters, the median house price in Perth has now reached the lowest recorded by the local market in five years. </div>
<div dir="ltr" align="left"> </div>
<div dir="ltr" align="left">As the market continues to weaken, house rents in Perth are now the most affordable of all capital cities, said Domain Chief Economist, Dr Andrew Wilson.</div>
<div dir="ltr" align="left"> </div>
<div dir="ltr" align="left">
<div dir="ltr" align="left">The median house price in Perth dropped a further 1.3 per cent over the September quarter, to a five year low of $554,095.</div>
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<div dir="ltr" align="left">
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Domain quarterly stratified median house prices
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<table class="domain-table">
<thead><tr>
<td>HOUSE</td>
<td>SEP 2017</td>
<td>JUN 2017</td>
<td>SEP 2016</td>
<td>QOQ %</td>
<td>YOY %</td>
</tr></thead>
<tbody>
<tr>
<td>Sydney</td>
<td>$1,167,516</td>
<td>$1,190,677</td>
<td>$1,079,309</td>
<td class="negative">-1.9%</td>
<td class="positive">8.2%</td>
</tr>
<tr>
<td>Melbourne</td>
<td>$880,902</td>
<td>$869,598</td>
<td>$773,399</td>
<td class="positive">1.3%</td>
<td class="positive">13.9%</td>
</tr>
<tr>
<td>Brisbane</td>
<td>$551,840</td>
<td>$552,874</td>
<td>$531,767</td>
<td class="negative">-0.2%</td>
<td class="positive">3.8%</td>
</tr>
<tr>
<td>Adelaide</td>
<td>$519,517</td>
<td>$520,846</td>
<td>$498,971</td>
<td class="negative">-0.3%</td>
<td class="positive">4.1%</td>
</tr>
<tr>
<td>Perth</td>
<td>$554,095</td>
<td>$561,391</td>
<td>$567,314</td>
<td class="negative">-1.3%</td>
<td class="negative">-2.3%</td>
</tr>
<tr>
<td>Canberra</td>
<td>$723,980</td>
<td>$693,962</td>
<td>$655,468</td>
<td class="positive">4.3%</td>
<td class="positive">10.5%</td>
</tr>
<tr>
<td>Hobart</td>
<td>$409,592</td>
<td>$392,170</td>
<td>$356,916</td>
<td class="positive">4.4%</td>
<td class="positive">14.8%</td>
</tr>
<tr>
<td>Darwin</td>
<td>$593,329</td>
<td>$615,670</td>
<td>$610,510</td>
<td class="negative">-3.6%</td>
<td class="negative">-2.8%</td>
</tr>
<tr>
<td>National</td>
<td>$819,455</td>
<td>$823,381</td>
<td>$758,367</td>
<td class="negative">-0.5%</td>
<td class="positive">10.8%</td>
</tr>
</tbody>
</table>
</div>
</div>
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</div>
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<div dir="ltr" align="left">Perth is one of the only capital cities (along with Darwin) to record a decrease in house prices year-on-year, down 2.3 per cent.  </div>
<div dir="ltr" align="left">The median unit price in Perth also dropped significantly over the September quarter, down 6.7 per cent to $351,875. </div>
<div dir="ltr" align="left"> </div>
<div dir="ltr" align="left">The result 7.7 per cent lower than the median unit price 12 months ago.  </div>
<div dir="ltr" align="left">The median rental price for houses dropped 2.8 per cent over the September quarter to $350 per week; 7.9 per cent lower year-on-year. While the median unit rental price remained steady over the quarter, the result is still 6.3 per cent lower than at the same time last year.</div>
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Perth house prices at five year low: Domain

Perth house prices still in gradual decline: October 2017 RBA minutes

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Australia’s leading developer of masterplanned communities, Stockland, has acquired more than 4,600 residential lots in the fast-growing north-west, north-east and south-west metropolitan corridors of Perth.
The three lot acquisition includes a 40 hectare parcel of land in Sinagra for $53 million (above); 334 hectares of land in Baldivis for $27 million; and 11 hectares of land in Brabham for $11 million.
Stockland has invested and operated in WA for 16 years with a current portfolio of assets worth $1 billion.
The 40 hectare Singara parcel 23 kilometres north of the Perth CBD will offer future residents views across Lake Joondalup.
The Baldivis acquisition of 334 hectares is 37 kilometres south of the Perth CBD in the south west corridor and near the Stockland Baldivis shopping centre.
The 11 hectare site in Brabham will be a consolidation into the existing Whiteman Edge residential project, 20 kilometres from the CBD.
It boasts a park within 300 metres of every home including the brand new $2 million Jungle Park, the all-abilities Livvi’s Place Playground, basketball hoops and a kick-about oval.
Stockland group executive and CEO of residential Andrew Whitson spoke of the improved Perth market.
“We’ve seen early signs of improved economic conditions in WA, particularly in Perth, and this additional land will enable us to plan for three new liveable, affordable residential communities over the long term," he said.
“These acquisitions set us up well to take advantage of future demand in the coming years."
Col Dutton, Stockland general manager for Western Australia, said the three sites are well located near existing or planned community infrastructure including transport, retail centres, schools and parks. 
“We are committed to helping more Western Australians move into their own homes by creating a diverse range of liveable and affordable housing options at our connected masterplanned communities," Dutton said.
“In Brabham, the additional 200 lots adjoin our existing Whiteman Edge project, which enables us to leverage planned infrastructure including a retail town centre, future primary school and the planned Ellenbrook rail line, part of the MetroNet project.
“The Sinagra site has capacity for nearly 700 home sites, with a large proportion offering views across Lake Joondalup and the surrounding natural landscape, and includes plans for a new primary school.
“At Baldivis, our plans for a new residential community will include around 3,700 homes conveniently located just off the Kwinana Freeway within 3 kilometres of Wellard Rail Station. The site is a 30 minute drive to more than 100,000 jobs, including major employment areas in Rockingham, Kwinana, Henderson and Bibra Lake.”
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Stockland back Perth market by spending $91 million on land

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The Perth apartment market carried "a high level of risk," according to RiskWise Property Research, given the significant number of new Perth housing developments completed recently, along with lending restrictions and declining population growth
"The impact of this is projected to last throughout the short to medium-term," RiskWise Property Research CEO Doron Peleg suggests.
“Perth is attracting a new wave of attention because many investors believe this property market has hit rock bottom and that strong capital growth will follow,” Mr Peleg said.
“However, while its economy has shown some slight improvement recently, Perth is projected to deliver low economic growth, a soft job market and low population growth. 
“This means both houses and units in Perth still carry high risk," he said, noting eastern state interest had risen due to an increased number of property professionals and marketeers promoting the Perth market.
Peleg said the WA economy had been in decline “at an alarming rate” since the end of the mining boom.
He said over the past year, the state delivered negative GSP growth of -2.7 per cent and this had a detrimental on the local property market. 
Moreover, he said the 5.7 per cent (seasonally adjusted) unemployment rate (and 8.95 per cent effective unemployment rate) were reflective of the city’s depleted labour market which was the second highest in Australia after Tasmania.
"While the Sydney and Melbourne market go flat, all eyes are turned towards Perth which many are tipping as the ‘next big thing’ in the investment property market," Pelog said, adding that all the promises of potential property profits are not to be believed.
 <img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/3/22/Economic%20growth.jpg" alt="">
WA is also experiencing one of the lowest population growth rates across Australia, he said.
“This has resulted in negative price growth for both houses and units across Perth in recent years. 
“But it is the risk associated with units in Perth that is of the greatest concern as this is very high due not only to current oversupply, but also the number of units in the development pipeline.
“The Perth unit market is facing severe ongoing oversupply. For example, in central Perth there are 1151 new units in the pipeline representing a 13.7 per cent increase to the existing supply, putting this area in our list of danger zones. <a id="m_5876312351129850256LPlnk165931" href="https://www.riskwiseproperty.com.au/News/high_risk_alert" target="_blank" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=https://www.riskwiseproperty.com.au/News/high_risk_alert&amp;source=gmail&amp;ust=1521679759718000&amp;usg=AFQjCNGCSdcqQaiJnsk1M_IC7Mf8yv65uQ"> </a>
“Unfortunately, while it is likely WA will experience slow improvement to its economy as it continues to adjust to the post-mining era, this improvement is unlikely to result, in the foreseeable future, in solid capital growth,” he said. 
“The Perth property market has continually delivered negative or poor growth of -7 per cent in the past three years for houses and -14 per cent for units.
"These negative growth rates for both houses and units fall well below the Australian benchmark and clearly show the dire state of the Perth property market.”
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/3/22/Price%20growth%20rate.jpg" alt="">
He also noted, due to APRA’s lending restrictions, units in some suburbs of Perth were subject to voluntary lending restrictions by the major lenders, such as lower loan-to-value ratio  requiring higher deposits. 
 
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Perth apartments are a high risk property investment: RiskWise

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There's set to be a rise in buyer competition in Perth as listings become more and more scarce.
That's the view of Emma Everett, buyer's agent at WA-based property investment consultancy Momentum Wealth, who says the absorption of existing supply and higher sales transactions are triggering a return to a balanced market in some sectors.    
“Over the past 12 months, we have seen significant absorption of the oversupply left over from the mining and construction boom which, when combined with a rise in sales transactions, is causing stock on market to tighten, with the market now approaching equilibrium at just over 14,000 properties listed for sale,” Everett said.
Stock for sale in Perth nears 14,000 in December as sales activity has been trending higher in the second half of 2019. Back in March there were 17,251 properties for sale in Perth.
Sales in May were averaging around 479 a week compared to 650 a week in November.
Everett said some of the rise in activity is likely due to renewed certainty following the conclusion of the Federal Election.
“Activity was visibly subdued in the first half of 2019, with buyers likely taking a more cautious approach due to uncertainty surrounding potential changes to negative gearing and their impact on the property market.”
“The fact sales activity has trended higher in the latter half of 2019 suggests this certainty has now been somewhat restored”, she said.
Perth had the lowest new sales listings in November, according to CoreLogic. It was the lowest figure since CoreLogic began recording the statistic in 2007.
Everett attributes this to a more positive outlook amongst existing property owners in Perth.
“We are seeing an uplift in sentiment amongst many of the owners we are speaking to on the ground, with those who have previously considered selling due to softer market conditions now reluctant to do so having recognised the market is turning a corner.”
“These owners are prepared to hold onto their properties to achieve a better result, and with record low interest rates and improving rental conditions, they aren’t facing the same cash flow pressures they may have been a year ago,” she said. 
Everett stated that with the supply fundamentals in place, it’s now a case of demand.
“Average days on market in Perth is still relatively high at 84 days for the September quarter suggesting we aren’t yet seeing that sense of urgency we would expect to accompany an increase in demand from buyers.” 
“However, with much of the oversupply in a number of areas now absorbed and low levels of supply coming on stream from new construction, stock levels are poised to tighten even further into 2020 which will drive higher levels of buyer competition, in turn placing upwards pressure on prices in some locations,” she said.
CoreLogic figures released earlier this month showed that <a href="https://www.urban.com.au/expert-insights/buying/107487-perth-records-first-monthly-dwelling-price-increases-in-two-years-corelogic" target="_blank">Perth dwelling values recorded an annual increase of 0.4% in November</a>, marking the first month-on-month increase since early 2018. 
Everett said that suburbs with strong demand fundamentals in place are already seeing higher levels of competition from buyers.
“While market improvements are now starting to translate into headline growth figures, we have seen higher competition in certain segments of the market for some time, particularly in the upper price segment of the market where owner-occupiers have been taking advantage of softer conditions to trade-up into their suburb of choice, and we expect this to spread further into the market in 2020” she said.
 
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Perth Recovery

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