Demand for houses was strong during 2019 with active buyers across all price ranges. Apartments on the other hand continued to lose value due to oversupply resulting in long days on market. The rental market has stabilised and should see further modest improvement during 2020. Overall, we'll see a very gradual improvement in the New Year.
Perth sales market
There was lower sales activity at the start of the year, followed by an increase in the second half of 2019, while listings for sale in Perth decreased from 17,000 to 14,000. Such low levels haven't been since 2014 and is close to a "normal" market scenario.
Although there was a large spurt of inner city listings in North Perth, Mt Hawthorn, Perth, Highgate and Leederville in the second half of the year, it was pleasing to see that most properties sold relatively quickly with some gentle upward pressure in prices due to increased buyer competition.
I expect sales activity in inner city areas in 2020 to continue to gain momentum spurred on by a possibility that an improving economic scenario, coupled with improved housing affordability, could translate into increased sales volumes than we have seen in the last few years. I believe inner city house values will remain largely stable for most of the year.
The impact of rate cuts and tax reforms put in place during 2019 have not yet made its way to WA, however it is expected that the onset of these initiatives will be seen later in 2020.
Interest rates at historic lows, slow population growth, improved activity in the oil/mining/gas industries will assist in improving Perth's median house price.
Note however, that this rise will not be consistent across all sectors of the Perth market. This also applies to the inner suburbs of Perth where different property types will perform differently.
Inner city houses will be in good demand.
Character homes of all sizes and price ranges will continue to be sought by inner suburb dwellers however correct pricing will still be key to a successful sale. Assuming you have the right agent working for you, expect a sale to occur within 30 days.
This is also a great time to trade-up to a larger family home in Mt Hawthorn/North Perth/Mt Lawley/West Perth with strong demand between $1.0M-$1.3M.
Renovators abound in the above suburbs as they search out an opportunity to secure an inner city foothold and add value. Buying at the bottom of a cycle ensures rich rewards when the market turns.
Apartment doldrums to continue
Apartments have fallen approximately 20-30% since the 2014 peak and it was a challenging year indeed. New boutique apartments or new townhouse clusters will continue to be of more interest however the overall glut of units throughout the inner city has wound values back to 2006 in many instances.
Outlook
The weaker demand from investors will continue to be felt in the unit market. Meanwhile, unit dwelling completions are on track to remain elevated in the short term relative to historical averages. Consequently, median unit price growth is forecast to be marginally lower than that of detached houses. After a marginal decline in 2019/20, a limited rise is forecast for 2020/21 before unit price growth picks up to take the median unit price to $380,000 by June 2022,
or a 5% increase on June 2019 levels. First home buyers will become active protagonists in the market.
The stamp duty concessions for off-the-plan apartment sales is a desperate attempt by the government to stimulate the stagnant apartment market. However, there are pitfalls in buying off-plan read 4 Reasons I Wouldn't Buy Off The Plan and strongly recommend to apartment buyers to buy in established apartment complexes which offer far better value in many instances.
Thinking of Selling in 2020?
Here are some tips to consider:Correct pricing still critical for a positive result
Use a local, experienced agent regardless of what you're selling - do your homework!
Get the right advice the first time! (See above)
Ensure a tailored marketing campaign gives the property adequate exposure
Get your property presentation right
Apartment sellers need to be serious about selling or otherwise try in 2-3 years time
Having trouble selling? Contact me for confidential advice.
Perth rental market
As an inner city landlord myself, I understand the pain of lower rents and longer vacancy periods over the past several years. However 2019 saw the rental market lead the way with an upward trajectory which should continue through 2020 with consistent demand in line
with improving population growth and reduced supply the key drivers for this improvement.
Stable median rents, reasonable leasing activity levels, declining listings and a plummeting vacancy rate to currently sit at 2.3 per cent. In 2017 the vacancy was a staggering 7.5%!
Expect to see competition for good, quality stock which means we can expect this to pick up at the start of next year, and
continue to gain momentum into in 2020.
Perth’s overall median rent price has held at $350 per week since April 2017 – the longest period of stable rents Perth has experienced since REIWA first started recording rental data in 2001.
According to Damien Collins of REIWA, “We’re at 32 months and counting of stable median rent prices in Perth. If listings continue to decrease, new build stock continues to decline and leasing volumes remain healthy, we should see the overall median rent price gradually increase. Perth currently has the lowest median house value of any major capital city. This combined with strengthening rental conditions and the opportunity to get into good suburbs at an affordable price point, means investors are likely to re-enter the market.”
With REIWA’s 2020 outlook for the Perth rental market positive, an increase in investors looking to take advantage of the favourable market conditions should materialise which will help boost the available supply of rental property, keeping rent increases to moderate levels.
It's time to reassess your your apartment investment.
Here are some tips to consider:
How well did my investment property perform during 2019?
What’s it worth today?
Where is the market heading?
Is there a better property manager out there? i.e fees? communication? level of service?
Should you sell or hold?
FOR FURTHER DISCUSSION OR ADVICE REGARDING YOUR HOME OR INVESTMENT PROPERTY CALL ME ANYTIME ON 0412 427 877 OR EMAIL claude@edisonproperty.com.au