Perth’s property market: Will there be pain ahead?

According to Emma Everett, chair of Momentum Wealth’s investment committee, the Western Australian capital recorded a strong start to 2020 with strengthening rental conditions and four consecutive months of price growth indicating signs of a more sustained recovery after a five-year downturn.

However, recent events have understandably added new uncertainty as to what will happen within Western Australia’s housing sector and economy,

“Earlier this week, data from the Real Estate Institute of Western Australia (REIWA) showed a total of 179 sales and 239 leasing transactions recorded in a single day, so we haven’t seen that immediate drop in sales and leasing activity like the financial markets,” she said.

“This is likely being driven by buyers and renters who have already committed to transactions, and we are expecting a slowdown in activity in the shorter-term.”

Still, while the property advisers are expecting a delay in rental and price growth in the short term, the long-term outlook for Perth’s property market remains strong.

Perth’s property sector is already recording a shortage of stock for sale and properties for lease, so while we anticipate that the current environment will delay activity, there is still a strong underlying demand for housing.

“This places WA 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 12,691 properties for sale in the week ending 22 March, which is nearly 5,000 less than the 17,288 properties recorded during the same period last year, according to data from REIWA.

“While we will no doubt see a reduction in transactions as people deal with the uncertainties, the long-term fundamentals we are seeing in terms of tightening supply, limited oncoming stock and increased mining investment set the market in strong stead to resume its recovery once certainty is restored, and this will be supported in turn by easing credit conditions and government stimulus,” she said.

Long-term outlook

Moving forward, Ms Everett said buyers and sellers should apply any decisions in the context of a longer term outlook.

While the impact of this is going to be short and sharp, based on previous trajectories recorded during events such as the GFC, we will recover and property will show long-term resilience, according to her.

“It’s important that sellers in particular don’t make any rushed decisions that could compromise their long-term property goals,” Ms Everett concluded. 

“A lot of buyers will undoubtedly be holding off on investment decisions, but certainly in the next six months we are expecting to see some great buying conditions as competition reduces, so those who do have high levels of income security could find themselves in a strong buying position.”