The Western Australian economy and in particular the mining sector will hold the key to any improvement in the Perth housing market in 2019, after another sharp fall in values over the past 12 months.
Figures from CoreLogic show Perth dwelling values fell 4.7 per cent over 2018 to be down more than 15 per cent over the past four years, with units faring worse than detached houses.
The stat of the housing market downturn, as well as corrections in the Perth office market and other property sectors, coincide with the end of the last mining boom, when interstate and overseas migration fell as resource jobs disappeared, reducing demand for homes and rental properties.
CoreLogic head of research Tim Lawless said he did not
expect a rebound in Perth house prices in 2019 but the “slide in dwelling
values should find a floor” over the coming 12 months. “The Western Australia
economy is seeing an improvement in jobs growth lower unemployment and
improving resources sector, with each of these indicators rising from levels
that are well below average.
“ Mr Lawless said.
“Overseas and interstate migration has turned a corner, however, overseas arrivals are moving higher from a low base and net interstate migration trends remain well in negative territory, as substantially more residents leave the state than those arriving.: he added.
On a more positive note, Mr Lawless said the long-running downturn in the WA housing market had a silver lining with housing values” roughly at the same level as they were 10 years ago, providing one of the most affordable entry points to a capital city housing market when measured against household incomes”.
CoreLogic figures on Wednesday showed the median price of a Perth house at $471,730 with median unit prices at just $370,646 – roughly half the median values for both in Sydney, and well below median prices in Melbourne, Canberra and Brisbane.
ASX-listed property portal Domain – majority owned b Nine, publisher f The Australian Financial Review – is more bullish on Perth then CoreLogic, tipping values to rise 5 per cent in 2019 and a further per cent in 2020 due to better economic conditions and better fundamentals in the mining sector.
So too is listed property giant Mirvac, which committed to more house and land projects in Perth in November saying the West Australian capital’s struggling housing market had bottomed out.
“We believe Perth has found a bottom and people are transacting. We are believers in Perth and we are putting money where that belief is,” said Mirvac boss Susan Lloyd-Hurwitz.
Also optimistic is Neil Kay, head of residential for WA at Knight Frank, who cited a steep drop in residential rental vacancy rats from a high of 7.6 per cent I 2017 to 3.9 per cent in November 2018
Mr Kay also pointed to the success achieved with the small number of new apartment developments launched in 2018 as a positive sign. One of these included ASX-listed developer Finbar achieving enough sales within four months of launch to get construction underway on a new project in the riverside suburb of Applecross.
“Over the next 12 months, a lot will depend upon how the recovery in the resources sector continues to build in WA.” He said, “The initial positive effects are certainly being felt in the rental market and prime residential market and I fully expect this activity to continue into the market as a whole.”