Western Australia’s weakening economy is draining strength from the property market
Over the past year, the Perth market recorded value growth of just three per cent, according to RP Data. This poor performance seems to have slowed further in recent times – over the June quarter, house values rose by just 0.2 per cent and units stayed flat, Australian Property Monitors reports.
Data from the REIWA suggests buyer activity has eased in the first half of the year. In the June quarter, sales were down by six per cent and stock levels are up by eight per cent. The rental market is also faltering, with rising vacancies and falling rents.
RP Data notes that less people are moving to the west coast, with interstate migration falling by 56 per over the past year. RP Data research analyst Cameron Kusher suggests the mining downturn means Perth is attracting fewer workers from other states.
The construction sector may also take a hit in coming years. BIS Shrapnel predicts residential construction will fall by five per cent over the next three years, reflecting decreased investment in the mining sector.
Resources-rich towns are seeing low levels of activity in the current economic climate. Compared to last year, sales volumes were down by 45 per cent in Karratha and 24 per cent in Port Hedland, according to the REIWA.
These poor tidings are knocking industry confidence. The Property Council/ANZ survey shows optimism fell from 128 points to 123 over the past quarter. However, the news is not all bad for Perth.
Onethehouse.com identifies three Western Australian suburbs among the top 10 in the country for growth over the next five years. Seville Grove in Perth’s south is predicted to grow by 10 per cent per annum over the next five years and offers a yield of 5.52 per cent. Secret Harbour and Dalyellup were also highlighted for their growth potential.
Meanwhile, despite warnings from Herron Todd White that Perth’s inner city may suffer from an over-supply, RE/MAX Western Australia managing director Geoff Baldwin says these fears are unfounded. He believes tighter regulation and financing requirements will ensure builders meet, rather than exceed, buyer demand.
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