Perth Property Digest: This Weeks Headlines
Moderate property price growth expected in 2023, 3rd January 2023, REIWA
“REIWA’s 2023 outlook estimates that Perth house prices will show moderate growth of between 2 and 5 per cent in the next 12 months. ” REIWA CEO Cath Hart said.
Housing shortage hits new low in December, 10th January 2023, REIWA
“Listings for sale and rent hit 12-year lows at the end of December 2022, according to reiwa.com data. “REIWA CEO Cath Hart said.
The number of properties for sale dropped to 6,931 at the end of the month. The last time they were this low was August 2010, when there were 6,858 listings.
Low vacancy rates in Perth market, 17th January 2023, WA Business News
Recent data from residential research groups has shown a decline in Perth’s rental vacancy rate, with SQM research reporting the city to have the lowest rate in the country.
Rents hit record high in 2022 despite market slowdown, 11th January 2023, RPM
Report author and CoreLogic head of research Eliza Owen outlined, despite easing rental growth potentially signaling a market shift is underway, she conceded that “it’s not great news for tenants just yet [as] rents are still rising in most capital cities and regional areas with vacancy rates low”.
Immigration could surge to 300,000 in 2022-23, 16th January, 2023, Australian Financial Review
Treasurer Jim Chalmers says the 235,000 increase in net overseas migration forecast in the October budget is likely to be wrong, with the real figure expected to be much higher after a strong rebound in arrivals.
Has Australia’s housing boom hit the end of the road and could it take the economy down with it? 16th January 2023, ABC News
If the cash rate hits 3.85 per cent, as forecast by two of the four major banks, our Sydney borrower will be up for almost $5,000 a month in repayments at a mortgage rate of about 6.3 per cent. Put another way, someone with an $800,000 mortgage is likely to have to find an extra $2,000 a month to meet their new repayments, or close to $500 a week.
CoreLogic Home Value Index, 2nd January 2023, Corelogic
Justin Davies – Insights
I love January as usually it’s a time of year to refresh and reflect. 2023 is year of the rabbit in the Lunar new year and is said to be one where the sacrifices of the past are rewarded generously. All the seeds of effort we have sown shall finally bear fruit whose sweetness is determined by the purity of our heart’s intent. I’m not one for fortune telling, but I think this rings true for the Perth property market for 2023.
Just looking at the headlines, we have the tightest rental vacancy rate in the country and the lowest number of properties advertised for sale since August 2010.
A balanced market is around 8,500 properties for sale and as of late last week there were 7,188 properties for sale.
We are seeing first hand just how tight the rental market is with home opens for rental properties with queues and tenants bidding over the asking rent to secure a home.
We have also noticed an increased in interstate enquiries from people relocating from the East Coast to Perth for work, looking rental properties. We’re watching this space closely!
Anecdotally the local job market is very strong, with ads on the radio again searching for skilled workers for the states vast resource projects. The last time I remember this happening was during the resources boom of 2005-08.
The strong local job market is seeing the states population migration levels grow again as we entice workers back to Sunny WA with great job prospects and our enviable “great outdoors” way of life.
It’s not all positive though and it would be remiss of me not to acknowledge rising interest rates. The impact that has on current buyers purchasing power, as well potential mortgage stress for existing owners in a rising interest rate environment. The majority of the news and case studies are coming out of the East Coast where the median house price in Sydney is just over $1mill and the average household debt is $800k. I don’t disagree that the East Coast is going to feel some pain with rising interest rates, but I get some level of confidence that Western Australia will be able to weather the storm, as the average loan in Western Australia is just under $480k.
In fact, I think the fact that the Perth median house price being one of the cheapest in all of Australia at $560k, will in itself be a driver for more demand. We forget that there was a period between 2006 and 2008 where the Perth median house price was the highest in all of Australia. Right now, Perth is the 7th cheapest in Australia, we’re cheaper than Adelaide and $448,526 cheaper than the Sydney median house price. With the state of the current rental market, it’s still very achievable to get positively geared property. In fact we sold two units late last year to an East Coast investor because they are positively geared.
When you look at all the factors, the REIWA prediction for 2023 is very achievable!