WA Property Market Update June 2021
Happy New Financial Year! We’re starting off the 2021-22 Financial Year with a look back at how the WA property market fared in June and provide a timely update on the state of the residential and commercial sectors at the halfway mark of 2021.
The doom and gloom of the WA property market in the past few years appears to be fast becoming a distant memory. Throughout the residential and commercial sector, there is a lot to be optimistic about, either because of a measurable uptick in prices or because of a noticeable level of excitement about what the future holds in a post-pandemic world. As a little bonus for the property market update for June, we’ll touch on a few important tax-time rental property tips (‘tis the season, after all), and also address how the resurgence of the property market is affecting housing affordability for renters.
Commercial Property Market Update June 2021
As we’ve covered in previous property market updates, our June edition reiterates the mixed bag that is WA commercial property. Demand has been firm for modern, well-equipped fabrication, transportation, and logistics facilities, while those owning office-based assets have found long-term, reliable tenants a little hard to come by given the impact COVID-19 has had on businesses. Low interest rates have helped abate some fears among commercial property owners, as a period without a tenant (or a situation in which a tenant defaults) won’t have as significant an impact on the hip pocket as it once would have.
Opportunities abound for commercial property investors who are willing to take a punt on a slightly older asset at a lower level of capital outlay, with a view to potentially redeveloping and securing a stable tenant along the way. A lack of prime, modern industrial/commercial stock within sight of the CBD makes a refreshed older asset even more enticing for a good tenant, and therefore for investors as well.
Residential Property Market Update June 2021
For the first time since December 2018, the median house price in Perth has risen above the $500,000 mark. This is testament to the incredible resilience of the WA economy and renewed confidence in the property market. Another important factor influencing this price rise is the chronic undersupply in Perth at the moment, with listings down a whopping 28% compared with this time last year. Median selling days are down to a measly 16 (a drop from 23 in December 2020; 50 in June 2020) and this looks set to continue while stocks are low. It’s a case of good news for sellers, bad news for buyers.
The upward pressure on prices has been felt in the rental market as well, with a jump in median rental prices from $370 per week in June 2020 to $430 per week in March 2021. Pair this with an almost 80% reduction in available rentals, and you have the perfect storm for an incredibly tough and competitive market for those looking for a rental property to live in. In fact, according to Mortgage Business, servicing a mortgage is cheaper than renting in 36.2% of Australian properties. So, while it may be harder to secure a property to purchase, those who do are finding it less expensive to realise the dream of home ownership compared with renting and paying off someone else’s mortgage. Given the economic and pandemic-related conditions in WA and globally, this looks set to stick around for some time.
June Property Market Update Bonus – Investment Property Tax Tips
It’ that time of year again, to get your tax returns lodged and draw a line under it all for another 12 months. If you own an investment property, you’ll likely already be aware of the deductions you can claim. While it is by no means exhaustive, the list below shows some common deductions claimed by the savvy property investor:
- Interest portion of the property’s home loan
- Repair and maintenance of the property
- Managing agent’s fees and leasing-related fees (e.g. advertising)
- Landlord insurance & building insurance
- Water and council rates
- Strata fees (if applicable)
Note that some costs can be claimed as a deduction the year they are incurred, while others can be used to offset capital gains upon selling the property. Depreciating assets within your investment property may also be eligible to claim deductions in accordance with the ATO’s rules. Is it important to remember that to get the best out of your investment property from a tax perspective, you should speak with the tax team at McKinley Plowman.
Looking to the future, while international borders remain tight, the WA economy soars, and property stock remains low, we should continue to see upward pressure on prices and downward pressure on vacancy rates in the residential and rental markets. The commercial sector appears to be plodding along nicely, with a less competitive but potentially lucrative environment in which good investments could pay off in a big way – just not necessarily in the immediate future.
Those in a position to take advantage of the record-low interest rates on offer and get into a home of their own may find themselves in a stronger financial position owning their own home rather than renting. To see what you could achieve in this market, whether you’re looking to buy your first home, secure an investment property, or refinance your existing home loan, the Finance team at McKinley Plowman (Paul Moran and Paul Tate) are the people to talk to. They’ll look after you with a competitive tendering process, with access to over 30 lenders so you can be confident you’ll get the best deal. Get in touch today via our website or call us on 08 9301 2200 (Joondalup) or 08 9361 3300 (Victoria Park).
Data from Herron Todd White Month in Review June 2021
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