WA-based property investment consultancy, Momentum Wealth, says Perth’s property market is offering a window of opportunity for astute buyers, but it could be time-limited as stock in established areas continues to tighten.
This comes as various industry experts, including Westpac Chief Economist Bill Evans and Hotspotting’s Terry Ryder, forecast strong long-term growth for the Perth market.
While reducing his national downward projections following relative resilience throughout the COVID-19 pandemic, Mr Evans predicts a national surge in property prices from June 2021, with Perth at the forefront of these gains alongside Brisbane with projected growth of 18% by 2023.
Chair of Momentum Wealth’s Residential Investment Committee, Emma Everett, said improving conditions in Perth’s residential sector had already seen the market resume headline price growth.
“Given the significant tightening of stock we have seen across both the sales and rental market, combined with the sustained increase in buyer activity following the lifting of COVID-19 restrictions, it was welcome but unsurprising news to see these improvements reflected in CoreLogic’s Home Index for September,” she said.
Data from the national research firm showed property prices in Perth rose 0.2% last month, resuming a trend seen in early 2020 when the capital city recorded six consecutive months of positive price movements.
Heightened demand as some suburbs face stock shortage
Ms Everett said Momentum Wealth’s property consultants were already seeing heightened competition across a number of suburbs.
“While these conditions are now translating into resumed headline price figures, competition in many of our approved suburbs has been heating up for some time as buyers compete for a reducing pool of properties, with high quality stock moving very quickly as a result.”
“Our buyer’s agents are seeing investment-grade stock go under offer in as little as one to two weeks in these high demand areas, often with multiple competing offers,” she said.
This comes as data from the Real Estate Institute of Western Australia revealed houses sold 27 days faster in September 2020 compared to the same month the year prior, taking a median of 28 days to sell compared to 55.
Ms Everett said improvements had been particularly noticeable in established suburbs located in close proximity to key amenity drivers such as the CBD and school zones, which in many cases also had limited new stock coming on stream.
Heathridge, Wembley and Leeming were amongst suburbs with the lowest proportion of property stock for sale in October according to data from realestate.com.au, with only 0.8%, 0.9% and 0.5% of stock available respectively.
These improvements have been reflected in a lowering of days on market over recent months, with these suburbs all recording average days on market significantly lower than the Perth average (49 days) across the June quarter at 14, 10 and 33 days respectively (REIWA) – conditions which Ms Everett said have continued into October.
“A lot of the activity in these established areas has been driven by owner-occupiers and first-home buyers, many of whom are recognising the market’s relative affordability and the opportunities this is bringing in terms of trading up their existing home or entering the market at a lower price point,” Mrs Everett said.
The June Housing Affordability Report from the Real Estate Institute of Australia (REIA) showed Perth was the cheapest State across Australia to purchase property, with only 24.0% of family income required to meet loan repayments compared to 42.3% and 36.8% in New South Wales and Victoria.
Window of opportunity for investors, but could be time-limited
Ms Everett said the State’s affordability also offered a unique opportunity for investors in a position to enter the market.
“The combination of the market’s affordability, tightening rental stock and continued growth indicators is providing a unique opportunity for investors with the right property criteria to enter the market at a reasonable price point while also benefiting from a strong rental yield before the market records further price growth,” she said.
Ms Everett said while many investors were awaiting the end of temporary COVID-19 legislation, this could also come at the cost of higher competition.
“With quality stock already hard to come by in many of our investment-grade suburbs, and days on market reducing as a result, buyers who wait