A combination of tightening sales stock and rising buyer demand is prompting price growth across a growing number of Perth suburbs as buyer competition heats up, according to WA-based property investment consultancy, Momentum Wealth.
Chair of Momentum Wealth’s Residential Investment Committee, Emma Everett, said lowering sales stock combined with rising buyer demand has led to increasing levels of buyer competition for a number of areas across Perth’s property market.
“Although there are some outer areas that continue to struggle with oversupply, we’ve seen a significant tightening of stock for sale across the vast majority of established suburbs in Perth, with low building approvals over recent years combined with few upcoming land releases further limiting the supply of oncoming stock in these areas,” she said.
Data from the Real Estate Institute of Western Australia (REIWA) showed there were only 10,667 properties listed for sale across Perth in the week ending 13th September – a decline of 23% from the same period in 2019.
“At the same time, Perth has recorded a sustained increase in buyer activity in the months following the easing of COVID-19 restrictions, with sales activity trending 40% higher in August compared to the same period in 2019, which is putting further downwards pressure on stock levels.”
“These conditions are translating into an increasingly competitive market as buyers in high demand areas compete for a reducing pool of properties, with our buyer’s agents regularly noting higher attendance at home opens and multiple offers from buyers for high quality stock in our preferred suburbs,” Ms Everett said.
Some suburbs already growing
While yet to flow through into headline price growth, these conditions combined with suburb-specific demand and supply factors have already translated into improvements across a number of areas, with REIWA reporting that 45% of Perth suburbs experienced increases in median sales price across August.
Ms Everett said this had been particularly the case in suburbs where tightening stock levels and limited oncoming supply had been accompanied by strong demand signals from buyers in the form of high online property views.
While the average days on market for properties in the Greater Perth region was 50 days in the 3 months to June 2020, this was significantly lower in areas such as Kingsley, Beldon and Mount Hawthorn where high online property views and limited stock led to days on market of 20, 20, and 24 respectively across the same period (REIWA).
These suburbs were amongst a number of areas to outperform the broader market in the year to June 2020, recording price growth of 6.3%, 4.0% and 6.3% respectively, where prices in Greater Perth declined 3.1% across the same period.
Conditions aligning for investors – but opportunities could be time-limited
Ms Everett said while primarily owner-occupier driven, and despite the extension of the emergency period in WA, savvy investors were already turning their attention to Perth as conditions ripen.
“As it stands, these improvements are primarily being driven by owner-occupiers and first-home buyers, however we are starting to see that interest from investors who recognise that conditions are ripening and the market is already moving, and we expect it’s only a matter of time until others follow suit, particularly once we see broader rental growth” she said.
Momentum Wealth’s Property Management Team Leader, Amanda Kroczek, said while the extension of the emergency period meant that rent increases remained prohibited for existing tenancies, rents were already rising for new tenancies.
“With rental vacancy rates reaching a 12-year low in Perth and rental stock continuing to tighten, our property managers have seen a significant rise in tenant competition on-the-ground, which in many cases is resulting in rent increases for advertised properties as tenants are offering more to secure their property of choice,” she said.
Ms Everett said that when combined with the relative affordability of Perth, these conditions present excellent opportunities for investors in a position to enter the market.
“Perth’s relative affordability, improving rental conditions, and early growth indicators are providing ideal conditions for investors with the right property selection criteria to enter the market at a reasonable price point and at a strong yield while positioning themselves to leverage future market improvements,” she said.