As we enter 2021with high hopes, there are many positive signs for the Western Australianproperty market.
Understandably, wecannot forget that there is still a global pandemic which hit us hard last year, and our economy is still dealing with what were and stillarechallenging times.
For our property market,2020was a year whereimprovement occurred significantly in the second half, with low vacancy rates, increasing house prices and fast selling days.But howdoesthePerthproperty marketfare against the nations other capital citiesas we move into 2021?
|CAPITAL CITY||MEDIAN DWELLING VALUE||% CHANGE IN DWELLING VALUE|
SINCE COVID-19 (DEC 2020 VS MAR 2020)
|MEDIAN WEEKLY RENT|
CoreLogic Hedonic Home Value Index data as at 31 December 2020
WA has been the most affordable state for housing foroverthreeyears in a row, according toREIAs Housing AffordabilityReport(September 2020 quarter)which revealedthatthe proportion of income required to meet loan repayments in WA improved to 23.9per cent in theSeptember2020 quarterand had the highest quarterly increase in the total number of loans (46 per cent).
To put that into perspective, in New South Wales, the proportion of income required to meet loan repaymentswas42.3 per centand NSW suffered the biggest decline in housing affordability over the year.
The report alsorevealedthat WA was again the most affordable place to rent with the proportion of family income required to meet the median rent sitting at17per cent – substantially below East Coast markets, where rents make up as much as 29per cent of median income.
In addition, CoreLogic data forDecemberrevealed Perth still has some of the most affordable rent and dwellingpriceswithAdelaide having a slightly lower median rent price and Darwinhavingthe lowestmediandwelling value.
The dream of home ownershipremains far more achievable in WA,with record low interest rates, government grants and affordable pricesand this continues to be reflected in theproportion of first home buyers in the states owner-occupier market,which is40.8per cent.
Since COVID-19,theresbeenpressure on the rental market due to the lack of supply,contributing to record low vacancy rates in WA, making it an extremely difficult time for tenants trying to secure a rental.
reiwa.com data shows theDecembervacancy rate for Perth isagain below oneper cent. To put this into perspective the Sydney vacancy rate is3.3per cent and in Melbourneits5.4per cent*.
Corelogicdata for December follows a now well-established trendacross all capital citieswhere house rents have shown a more positive trajectory than unit rents since the onset of COVID-19.
Although rent prices are surging in Perth and Darwin, prices are still substantially lower in Perth than they were duringthe previous peak in 2013.
On the other side of the countryrental conditionsare much softer, withthe Melbourne and Sydney unit marketssuffering,where weak demand and high supply has driven a sharp drop in rentpricesasdemandfalls due to the lack of overseas migration.
While tenants of course would rather not see rent rises, they can feel comfortable thatitsstillcheaper to rent in WA thanmostotherstatesand thats likely to remain so for some period of time.
Residential sales market
Clearly our housing markets were not immune to the COVID-19economic fallout, but those house price predictions of significant falls did noteventuate,and now real estate prices around Australia arestarting to liftas confidenceis restored.
Despite the volatility,nationalhome valuesfinished on a high in 2020, with CoreLogicshome value index rising three consecutive months in a row, following a 2.1 per cent drop during COVID-19(April September2020).
If we look around the country, dwelling values in December 2020 compared to March 2020increasedin most capital cities, except for Sydney and Melbournewhere longer lockdowns were experienced.
The Perth dwelling value increased one per cent since the onset of COVID-19 a healthy figure given the dire property market we endured previously.On top of this, sales activity remained strongand property was being snapped up at the fastest rate since 2006.