Marked by a fifth consecutive month of price growth, Perth has successfully sustained the recovery of its property market during the first quarter of 2020.
Newly released data from CoreLogic confirms that’s residential property market was recording a sustained growth trajectory through to the end of March, as government measures tackling the coronavirus outbreak kicked in.
CoreLogic’s Home Value Index revealed a 0.5 per cent rise in house prices for the Western Australian capital in March, with values up 0.9 per cent across the first quarter of 2020.
Chair of Momentum Wealth’s residential investment committee, Emma Everett, said that the latest figures are further proof that Perth’s property market was recovering.
“This marks the fifth consecutive month of price growth for Perth’s residential property market, confirming as we have suspected for some time that the market was on the right trajectory for a more sustained recovery prior to the COVID-19 health crisis, which we know will have some impact on buying activity in the weeks and months to come,” she said.
As sellers hold off on putting properties in the market, the Perth market maintains balance by a coinciding decline in new listings for sale.
Data from the Real Estate Institute of Western Australia (REIWA) saw sales activity drop from 657 sales in the week ending 15 March to 426 in the week to 29 March as buyers retracted from the market amid the coronavirus outbreak.
Meanwhile, new listings for sale dropped from 1,297 to 817 across the same period, with the number of sales listings withdrawn rising from 327 to 448 respectively as sellers choose to wait out the current market disruption.
According to Ms Everett: “While we are seeing a drop in buyer activity as anticipated, this is also coinciding with a decline in new listings for sale, with many sellers holding off until market conditions improve, so as it stands the market is maintaining some level of equilibrium.”
Further, the fact that sellers aren’t “panic selling” could be an indicator of longer term confidence in Western Australia, she said.
“While this a positive sign that sellers are recognising the stronger long-term outlook at hand for Perth’s property market, it’s also reassuring that we aren’t seeing market conditions that could cause widespread seller competition, and hence a significant fall in property sale prices,” she said.
“From a buying perspective, we are actually seeing a number of buyers who are reviewing their finances, not just to mitigate the current situation, but also to prepare to capitalise on opportunities as the situation improves.”
The shortage of stock for sale and rent in Perth stands the property sector in better stead than other major markets across Australia.
While the current environment will likely lead to a continued reduction in transactions as people deal with the uncertainties, there is still a strong underlying demand for housing, which places Western Australia in better stead than markets such as Sydney where high levels of investor participation and oversupply could increase susceptibility to price fluctuations, Ms Everett highlighted.
Perth recorded a total of 12,581 properties for sale (REIWA) in the week ending 29 March – over 4,000 less than the 16,992 properties recorded during the same period last year.
While buying activity saw a decline in the second half of March, data from REIWA shows that Perth’s leasing market continued to record strong activity, with the number of properties for lease continuing its downward trajectory.
Rental listings were down from 5,767 at the beginning of January to 5,417 on the 29 March 2020, while leasing levels remained consistent with figures recorded at the beginning of the year.
A total 1,011 properties were leased in the week ending 29 March – just a fraction less than the average 1,055 properties leased per week in January 2020.
Team leader of Momentum Wealth’s property management division, Amanda Kroczek, said: “While we may see a decline in leasing activity over the coming weeks due to the temporary drop in interstate, regional and overseas migration, as it stands we are still receiving a lot of enquiries from prospective tenants.”
While experts are not expecting the same level of rental growth that they were anticipating earlier in the year, especially with the impact the pandemic will have on jobs, they are hopeful the measures and assistance provided by the government, in addition to the relatively low levels of rental stock on market, will place Perth in strong stead compared to other markets that may be facing an oversupply of properties for lease.
Ultimately, during times of uncertainties, Ms Everett strongly encourages property investors to remain focused on the longer term outlook.
According to her, while the impact of the ongoing health crisis is going to be short and sharp, many of these effects in terms of market activity are going to be temporary and property will, as it has previously with events such as GFC, recover and show strong-term resilience.
“Perth especially is well placed to embrace that recovery,” she concluded.