For those looking to buy at the bottom of the market, you’re too late. Local property markets have roared back into life with sales transactions up 44 percent on this time last year and prices are rising.
Here’s the top reasons why prices should continue to rise in 2021 in no particular order:
Firstly, rents are rising in Perth. REIWA’s latest reported vacancy rate for Perth metropolitan area is at 0.8 percent, the lowest recorded and down from 2.5 percent this time last year. Rents are up to a median of $395 per week, $30 a week higher than last year and once the ridiculous moratorium ends in March, rents will skyrocket. Competition for rental stock is fierce with a mere 2723 properties advertised for rent this week compared to 5726 advertised this time last year. These numbers entice investors into a buying mood, who when competing for properties, push up prices.
Secondly, supply has dropped from 12,500 this time last year to around 9,500 listings across Perth’s suburbs. As supply continues to tighten, buyers compete to buy quality homes, pushing up prices. Enormous increases in transactional activity means new listing stock can no longer keep pace with sales activity and demand. Supply will continue to fall as the year progresses.
Thirdly, population growth is returning to more normal levels with fewer people leaving the state than twelve months ago. WA Treasury predicts increases in population growth for this year thanks to COVID-19 related re-patriation pressures, new mining projects creating more jobs and WA’s COVID-safe reputation.
Fourth, interest rates are extraordinarily low and likely to stay there for some time. Fixed term interest rates of around 2 percent is very cheap money indeed.
Fifth, WA’s economy is improving with federal government infrastructure spending commitments boosting jobs, various government stimuli, a lazy extra $2B in state revenues and iron ore prices continuing to surprise and delight the state government.
Sixth, aside from Darwin, Perth remains Australia’s most affordable city to buy a home. On average, a Sydney-sider commits 42 percent of their income to service their mortgage, whilst in Perth its 24 per cent; enviably more affordable. Perth is more affordable than Hobart Online Casinos AUD nowadays and as WA’s economy continues to improve, eastern states’ folk will once again look west to relocate their families.
Seventh, respected property commentators are all predicting Perth’s property prices will rise in 2021. ANZ predict up to 12 percent growth, Westpac 18 percent over the next three years and Core Logic 5-8 percent. No one is predicting a fall. My view? Price rises of no less than 7 percent.
Finally, the market now has momentum. Harder to measure, yet equally potent, once a market begins to move, media coverage, ‘water-cooler’ and ‘bbq’ stories about property values and rents gather pace and frequency. Once underway, a bullish property market begins to take on a life of its own and is hard to stop.
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