- After six years of downturn, Perth's property market is already moving
- Prices have risen 3% over the past five months; tipped to rise 10% this year
- They could go on a 20% to 30% run over "next few years"
- However, this would only be recovering prices back to 2014 levels
At the annual API-REIWA property breakfast this morning in front of a predominantly “happy and smiling” audience (as noted by most speakers and panellists on stage), the President of REIWA Damian Collins remarked that he expected to see Perth property prices rise “20% to 30% over the next few years.”
“This would only be getting back to what it was in 2014,” he cautioned, “as we’ve come off 73 successive months of downturn, where prices fell 20.9%.”
The recent downturn is one of the longest on record, after a 25-month downturn that ended the 11-year upturn from the mid 1990s to the end of 2006. In that downturn, Perth properties fell 11.8%.
Most observers explained that Perth property (sales, rentals, land, commercial, regional) was already moving and the market could be described as ‘hot’.
“Last year, at this event, we were predicting maybe 3% to 5% growth for the local property market, ” said Collins this morning, “but of course the pandemic put paid to that.”
“In January 2020, we were seeing 700 property sales a week across the state, but this slowed abruptly to 280, before recovering to 700 a week by July.”
Mr Collins is predicting 50,000 sales for the calendar year 2021, averaging a thousand a week, which is what they were already reaching by the end of 2020.
“We’d suggest that 12,000 to 13,000 properties for sale (stock) would be a ‘balanced market'”, he said, “however this week we are sitting at only 8,200.”
There is a shortage of available property for sale, he argued.
Counter intuitively, he suggested, some investors burnt by the past seven – or even thirteen – years may now choose to hold their properties for longer expecting the run up in prices to continue for at least a year. This will not alleviate the current shortage.
The end of the WA government restrictions on property management at the end of March will build pressure for rental prices to rise, as will the low stock of rentals, which has fallen from 11,000 at the end of 2016 to 2,400 today.
The vacancy rate for rental properties has fallen below 1% and is touching 40-year lows.
“We badly need investors, or we’ll struggle to have enough accommodation,” said Collins.
While some people have been waiting for the bottom to get into the market, Collins argued we were “well past the bottom.”
That’s probably the issue of using published data – which is, by definition, historical – to guide you what to do now. On the ground, things have been moving for a while.
In closing the event, property commentator Gavin Hegney suggested the Perth property market was “closer to boom than depression. Be worried,” he said, “it could be a dangerous break out.”