Newly released data from leading property research firm, CoreLogic, confirms that Perth’s residential property market was recording a sustained growth trajectory through to the end of March as government measures tackling the coronavirus outbreak kick in.
CoreLogic’s Home Value Index revealed a 0.5% rise in house prices for the State capital in March, with values up 0.9% across the first quarter of 2020.
Chair of Momentum Wealth’s Residential Investment Committee, Emma Everett, said the latest figures are further proof 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.
Perth market maintaining balance as sellers hold off
Data from the Real Estate Institute of Western Australia (REIWA) saw sales activity drop from 657 sales in the week ending 15th March to 426 in the week to 29thMarch as buyers retracted from the market amid the coronavirus outbreak.
However, Mrs Everett said the drop in activity was offset by a coinciding decline in new listings for sale, which dropped from 1297 to 817 across the same period, with the number of sales listings withdrawn rising from 327 to 448 respectively as sellers choose to wait out the current market disruption.
“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,” she said.
Mrs Everett said the fact that sellers aren’t “panic selling” could be an indicator of longer-term confidence in WA.
“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,”
“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,” she said.
The WA-based property consultant said the shortage of stock for sale and rent in Perth stands the property sector in better stead than other major markets across Australia.
“Perth’s property sector was already recording a shortage of stock for sale and properties for lease, so 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 WA in better stead than markets such as Sydney where high levels of investor participation and oversupply could increase susceptibility to price fluctuations,” she said.
Perth recorded a total of 12,581 properties for sale (REIWA) in the week ending 29thMarch – over four thousand less than the 16,992 properties recorded during the same period last year.
Mrs Everett said property investors should remain focused on the longer-term outlook.
“While the impact of this is going to be short and sharp, we also know that 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, and Perth especially is well placed to embrace that recovery, ” she said.
Perth’s leasing market remains strong
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 5767 at the beginning of January to 5417 on the 29thMarch 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 29th 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 the company is continuing to receive regular enquiries from tenants.
“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,”
“We’re certainly not expecting the same level of rental growth as we were anticipating earlier in the year, especially with the impact the pandemic will have on jobs, however we are hopeful the measures and assistance provided by the government, in addition to the relatively low levels of rental stock on market, will place us in strong stead compared to other markets that may be facing an oversupply of properties for lease,” she said.