The State Government’s decision to cancel the planned WA border reopening on 5 February elicited many mixed emotions.
We take a look at what can we expect for the Perth property market when the border does reopen.
Perth property market update
Home prices here in Perth rose by 13.1 per cent last year, according to data from CoreLogic. Although that’s a growth rate not to be sneezed at, national house values increased by 22.1 per cent over the same period. CoreLogic attributes Perth’s slower growth rate to weaker housing demand due to the lack of interstate migration caused by border closures, although Domain says Perth property values may have grown at a slower rate regardless of the border status. Either way, the result is that despite strong growth in 2021, Perth housing remains amongst the most affordable in the country. The Perth median house price – $520,000 – is the second-lowest in Australia.
The Perth rental market, meanwhile, was very competitive in 2021. It experienced an annual growth rate of 16.9 per cent over the 2020-21 financial year before finishing up the calendar year on 11.5 per cent growth. Vacancy rates dropped to a four-decade low of 0.7 per cent in the December quarter, according to REIWA, while Perth house yields were the best in the country at 5.2 per cent, and unit yields, at 5.76 per cent, were second only to Darwin.
What impact will the border reopening have on the Perth property market?
Perth house prices are expected to continue growing once the WA border reopens. REIWA is predicting property values will rise by another 10 per cent in 2022, with increased demand from interstate and overseas arrivals coupled with low housing supply set to drive prices up.
The relative affordability of Perth property prices, compared to the rest of the country, will not only support further price growth but will attract more investors from the eastern states. Thanks to our tight vacancy rates and healthy yields, investment activity has been on the rise in Perth. Once the borders are open and interstate and overseas investors can visit to inspect Perth property, we expect that investor demand will only increase.
What will happen to the Perth rental market once borders reopen?
Once our international and state borders reopen, the return of interstate and overseas visitors and migrants will put further pressure on Perth vacancy rates and rents. Given the fact our borders have been closed for almost two years, the impact on rent prices is expected to be significant. CoreLogic is forecasting Perth rent prices to rise faster than the national average, while REIWA is predicting a 10 to 15 per cent rise in rent prices as demand for rental homes outstrips supply. While this is good news for property investors and landlords, it will undoubtedly put pressure on renters. With REIWA reporting that more than 85 per cent of Perth’s rental housing is owned by private investors, the situation will hopefully be eased somewhat by an increase in investor activity.
(Article by Rentwest).
