Property market update: Perth, June 2020

1 minute read

Property market update: Perth, June 2020

by Bianca Dabu 07 July 2020 1 minute read

As Australia recovers from the effect of the COVID-19 outbreak, prices and sales are expected to rebound across property markets. How will Perth fare in the remainder of 2020?

July 07, 2020

Domain senior economist Trent Wiltshire said that the outlook for Australia’s property market may be much stronger than a few weeks ago, but conditions are likely to remain subdued in most parts of Australia in the second half this year.

According to him, prices and sales volumes appear most likely to rebound in Perth, Adelaide and Canberra, whereas in inner-city Melbourne, inner-city Sydney, Hobart and the Gold Coast, prices will probably fall due to a heavy reliance on international tourism and migration. The recent COVID-19 spike in Melbourne may also weigh on prices.

Still, price falls will likely be modest – much smaller than predicted at the height of the COVID-19-related shutdowns.

There is also the possibility of a more rapid rebound as buyers seek to take advantage of record low-interest rates.


Further, confidence has started improving slowly as the property market stabilises and the overall economic outlook trends more positively.

Ultimately, most indicators point to a “rebounding, but sluggish, market”, according to Mr Wiltshire.

“At the peak of COVID-19 fears in early April, predictions of price falls of 10 to 20 per cent were common and seemed reasonable, and property sales had plummeted due to buyer caution and restrictions on selling. But the economic downturn and the impact on the property market due to the pandemic [are] likely to be less severe than forecast in April,” he highlighted.

“Business and consumer confidence have rebounded, employment and job advertisements have started to recover and business output is rebounding. The OECD expects Australia’s economy to perform better than most other countries in the year ahead.”

Property values

Following 11 months of gains, dwellings have been reduced by more than a per cent following 0.4 per cent in May before falling a further 0.7 per cent in June, according to CoreLogic’s Hedonic Home Value Index.

Melbourne and Perth had the biggest reduction in house prices, falling by 1.1 per cent in June, followed by a 0.8 per cent decrease in Sydney, a 0.4 per cent fall in Brisbane and a drop of 0.2 per cent in Adelaide.

Prices in Hobart and Darwin grew by 0.3 per cent while the nation’s capital Canberra also increased slightly by 0.1 per cent, but this was not enough to move property into positive territory as nationally it fell by 1.3 percent over the past two months, according to CoreLogic’s head of research Tim Lawless.

CoreLogic’s research also revealed that more expensive properties are seeing the biggest swings during the COVID-19 market correction.

“The past three months [have] seen this trend playing out, with upper quartile values down 1.7 per cent across the combined capital city index over the past three months, while lower quartile values have fallen by only 0.3 per cent,” Mr Lawless said.

Still, despite the economic risks and the market reducing, Mr Lawless also highlighted some green shoots for property investors.

“With real estate agent activity bouncing back, the number of fresh real estate listings has been ramping up since early May. The rolling 28-day count of new listings remained lower than a year ago, but was 42 per cent higher relative to the recent low in early May,” Mr Lawless said.

“While new listings are ramping up, the total listing count has continued to trend lower, indicating a strong rate of absorption.”

Auctions are showing signs of recovery following the government stopping on-site auctions, he noted.

Supply and demand

CoreLogic’s Auction Market Preview for the week concluding 28 June found 1,363 auctions across capital cities, up on the 1,251 auctions during the previous week.

Sydney saw the highest volumes, with 617 auctions expected, followed by Melbourne with 567, Brisbane with 85, Adelaide with 45, Canberra with 31, Perth with 17 and Tasmania with one.

In terms of the previous week’s results, CoreLogic recorded final auction clearance rate of 59.6 per cent across 1,251 capital city homes, “which was a relatively steady week-on-week result after the week prior returned a final clearance rate of 59.3 per cent across a lower 1,181 auctions”.

“Both auction volumes and the clearance rate were higher over the same week last year, with 1,484 capital city homes taken to auction returning a 60.5 per cent success rate,” CoreLogic said.

In Melbourne, a final auction clearance rate of 60.1 per cent was recorded across 558 auctions last week, higher than the 56.3 per cent success rate across a lower 471 auctions the previous week. One year ago, a higher 635 Melbourne homes went to auction, recording a clearance rate of 68.9 per cent.

There were 522 Sydney homes auctioned last week, returning a final success rate of 61.6 per cent. Last week’s clearance rate was lower than the week prior when 63.7 per cent of the 545 auctions reported a successful result.

Canberra was the best-performing across the smaller cities, with 71 per cent of auctions successful, while only 30.8 per cent of Perth homes were sold last week, making it the lowest final result across the capital city markets.

Despite low auction results, the Real Estate Institute of Western Australia’s new research has shown that weekly sales transactions in Perth have reached over 1,000 for the first time since June 2013.

“Land sales were the standout for the week, which saw the highest level reiwa.com data has seen since August 2009 and can be attributed to the various government home building schemes announced earlier this month,” REIWA president Damian Collins said.

“The schemes have certainly helped people who were undecided about a house-and-land package make their decision quicker, and we will likely see vacant land transactions remain at higher than normal levels until the end of the year when the scheme concludes.

The top fives suburbs for land sales are Madora Bay, Baldivis, Maddington, Wellard and Hammond Park.

According to Mr Collins, Perth metro market is starting to pick back up, and this trend is likely to continue as the state recovers from the pandemic.

Rental market

Rental stock levels in Perth have dropped to the lowest level recorded since November 2013 – a positive news for property owners, according to Momentum Wealth.

Recent data from the Real Estate Institute of Western Australia showed that listings for rent dropped below 5,000 to 4,676 listings.

Team leader of Momentum Wealth’s property management team Amanda Kroczek said that the return to a downward trajectory in rental listings comes from a renewed uplift in leasing activity and limited new stock coming to market.

Despite an initial slowdown in tenant activity in response to social distancing restrictions and market uncertainties surrounding COVID-19, REIWA data showed that leasing levels rebounded by 27 per cent.

Combined with the limited new stock coming on stream, this has supported a continued reduction in rental stock, according to Ms Kroczek.

“These factors have also supported the resilience of rental prices across Perth’s leasing market over the COVID-19 period, with the median rent holding steady at $350 per week, and this could actually be primed to increase if current trends persist,” she said.

However, Ms Kroczek said that, while tightening stock levels meant some regions could be well positioned for a return to rental growth once the emergency period is lifted, the effects are not being felt equally across the market.

Some regions such as Perth’s north-west suburban corridor saw rental stock reduce by over 48 per cent in the year to June 2020, while some areas such as Perth’s inner region recorded a much lower rate of reduction at 15 per cent largely due to the large composition and continuing supply of apartment stock in these CBD areas.

Property owners are therefore advised to remain conscious of local market conditions when determining their rental strategy.

“Given the disparity of performance across the market, it’s really important for owners to work together with their property manager to ensure they are setting the right pricing strategy for their individual property and the conditions in their local area to make sure they are maximising their property’s performance and mitigating the risk of costly vacancies,” she said.

Owners in these low stock locations who aren’t in a position to increase rents need to remain proactive in their rental strategy, Ms Kroczek highlighted.

“While rent increases will not be permitted for lease renewals and existing tenancies until the end of the emergency period in WA, owners in locations benefiting from low stock levels should continue working with their property managers to ensure they are positioning their properties to leverage these anticipated improvements when the market [readjusts],” she concluded.

2020 outlook

Mr Wiltshire said that there could be two likely scenarios to play out for the Australian property market in the remaining six months of the year as a result of the COVID-19 outbreak.

The first possible outcome would be modest price falls, while the second would be a slow pick-up in property sales.

“The key factor supporting prices so far is that few people have been forced to sell their homes due to losing their jobs or having their incomes cut. This has been enabled by the government’s financial support packages assisting households whose income has fallen, in combination with banks allowing people in financial difficulties to defer mortgage repayments,” Mr Wiltshire explained

“The Westpac-Melbourne Institute consumer survey data indicates that while people think it might be a good time to buy, there is no rush because they think prices may fall a bit further. This suggests sales volumes will remain sluggish for the next few months.”

Perth, Adelaide and Canberra are the property markets most likely to rebound fastest as prices are expected to grow at a modest pace and sales activity should pick up. Couple this with the fact that there are few or no COVID-19 cases in these cities, investors can rest assured that the local economies should be able to operate fairly normally.

“In Western Australia, almost all social distancing restrictions will be removed on 18 July. The mining sector is strong due to robust demand from China,” according to Mr Wiltshire.

“Perth’s rental market has held up well, with the rental vacancy rate back to where it was pre-pandemic and well below the level a year ago. WA’s tourism industry is the least reliant of all the states on interstate and international visitors, meaning border closures should have a smaller impact on the economy.”


New building stimulus measures introduced by the federal and Western Australian state government are driving a significant rise in first home buyer enquiry, according to Perth-based property investment consultancy Momentum Wealth.

Combined with the existing First Home Owner Grant and duty concessions, the federal HomeBuilder scheme and state Building Bonus package could see eligible first home buyers in Western Australia receive between $44,000 and almost $70,000 in stimulus if they sign a contract to build or purchase a new property under construction before 31 December 2020.

Chair of Momentum Wealth’s residential investment committee Emma Everett said that, while this presents a great opportunity for first home buyers to enter the market, buyers should be careful not to overlook the risks and cost of building or buying in the wrong area.

The stimulus could provide a great opportunity for buyers to get into their first home sooner than planned, but these new building grants are also somewhat geared towards house and land packages in outer suburban housing estates, many of which are already facing oversupply, according to her.

“One of the key risks for buyers who purchase in these outer areas is that they will not just be competing with the existing supply already on market, but also new stock that comes on stream from future developments,” Ms Everett highlighted.

“This could not only hold back their property’s long-term capital growth potential, but also accelerate price declines in a future downturn.”

Ultimately, buyers looking to leverage the stimulus measures should consider the different options available.

Ms Everett said that while property investment is encouraged, as always, buyers should be careful about where they do it, keeping in mind the implications on their property’s future value as well as their own lifestyle requirements.

“Rather than buying in outer areas with lots of oncoming supply, buyers could look at purchasing an infill lot in an established suburb closer to the city, or a townhouse or villa under construction in a more tightly held area where there’s less competing stock, better amenity and a higher land value advantage to drive the property’s growth over time,” she said.

Further, with some builders understandably increasing their prices to compensate for the influx in buyer demand, Ms Everett also reminded buyers to ensure they aren’t overpaying.

“At the end of the day, if you’re paying $20,000 too much to purchase a lot or house and land package that won’t pay you back in its end value, that’s going to defeat the object of qualifying for the grant in the first place,” she said.

“Equally, you don’t want to be purchasing a [poorly located] block of land just to receive the full $70,000 in grants if that property is going to decline in value and reduce your long-term returns, where purchasing a villa or townhouse would benefit you more in the longer-term due to stronger capital growth.”

On the other hand, for people looking to sell, Ray White Group managing director Dan White said it’s important to understand that the real estate industry has remained very active despite restrictions starting two to three months ago.

“The competition for property is as strong as ever – and with demand very much outstripping supply right now, there’s never been a better time to list your property,” he said.

“Addressing the question of whether to sell now or wait, given the conditions we’re seeing now and the potential risks in the market later this year, it seems hard to see why anyone would wait.”

Further, banks and other major lenders have generally been very aggressive in trying to attract customers, offering very low-interest rates and specials, as well as cash incentives to refinance existing loans to them, according to him.


The federal government recently announced a new $688 million housing stimulus package aimed at reviving property market activity.

Under the Morrison government’s HomeBuilder package, a $25,000 grant will be available to owner-occupiers “substantially renovating” or building a new home from 4 June to 31 December 2020.

A national price cap of $750,000 has been set for new home builds, and a renovation price range of $150,000 to $750,000 will apply to renovating an existing home with a current value of no more than $1.5 million.

The grants will also be means-tested, with the government setting income caps of $125,000 for singles and $200,000 for couples. An applicant’s eligibility will be based on their latest assessable income.

The government has estimated that approximately 27,000 grants would be handed out as part of the package across $10 billion in building projects, supporting 140,000 direct jobs and another 1,000,000 related jobs in the residential construction sector.

The top region by eligible HomeBuilder properties is Melbourne – south-east, with 157,364 properties worth less than $1.5 million, followed by Perth – north-west at 145,889 and Melbourne – west at 141,444 properties.

Melbourne appeared two more times on the list, with Melbourne – outer east ranked fifth with 130,307 properties and Melbourne – northeast at 108,354 properties.


Track the major market movements in Perth and get to know more about the capital city’s growth drivers and hotspots through Smart Property Investment’s April 2018May 2018June 2018July 2018August 2018September 2018October 2018November 2018December 2018January 2019February 2019March 2019April 2019May 2019June 2019July 2019August 2019September 2019October 2019November 2019December 2019January 2020February 2020March 2020April 2020 and May 2020 market updates. 

Visit Smart Property Investment’s Property Market News page to get updates on other major capital cities.

Property market update: Perth, June 2020
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Bianca Dabu

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