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WA Property Market Update January 2023
Happy New Year! Throughout 2020, 2021 and 2022, the COVID-19 pandemic impacted economies and markets across the world in very different ways. In that time, however, the WA property market performed well. Median house prices rose from $485,000 to $545,000 (+12%), with a lack of supply being the major driver of this. We’re continuing our WA Property Market Updates through 2023, so as we close out January, we’ll focus on the trends in the market and what this year may bring.
What Might 2023 Look Like for the WA Property Market?
According to Performance Property Group, the four main factors that will likely dictate the fortunes of the housing market this year are as follows: RBA Cash Rate stabilisation; housing supply; affordability metrics; and net migration. Here’s a brief overview of the impact of each metric.
Interest Rates: inflation appears to have peaked at 7%, and although December’s data is yet to be released, inflation may start to decline soon as the impact of interest rates rises through 2022 start to have the desired effect. The expectation is that the RBA will impose further cash rate rises, but this should cap out somewhere around 3.5% to 4%. Should this be the case, the WA property market will remain relatively affordable, and increased buyer demand should reflect this fact.
Supply: There is still a lack of stock on the market at the moment, which has been pervasive throughout the pandemic; and new home builds are slowing too. Many homebuyers are holding onto their assets as the likelihood of finding a suitable home to move into is low. If this supply issue continues, it will only put further upward pressure on prices.
Affordability: Compared to other Australian capital cities, Perth has remained an affordable place to live when looking at the proportion of average income used to service debt (known as the affordability index). The current affordability index for Perth is 26%. As a result, rising interest rates won’t necessarily cause a drop in property values, as there is room to manoeuvre in terms of affordability, especially given Perth’s average household income is the highest in the country. This suggests much more room for growth in 2023.
Migration: Across the combined private and public sectors, job vacancies are around 60,000 – around three times what they were from July 2018 to March 2020. Adding to this is a low unemployment rate of 3.2%, meaning there are too few people in WA to fill too many jobs, and resourcing them requires net positive migration into the state (from either interstate or overseas). If this migration does occur, those entering the state will inevitably need a place to live. In turn, the already-stretched rental market will be put under further strain; while buyer demand for houses will also likely increase. That means if you are in a home of your own, or have an investment property, values will be pushed up even further which is always welcome news.
How MP+ Can Help
As outlined above, the outlook for 2023 is positive if you’re in the position of owning your own home, and/or have an investment portfolio. A number of factors should continue to contribute to strong growth in the property sector this year, even if interest rates continue to rise. On that note – if you’ve been receiving letters from your bank about interest rates going up, now is the time to review and look to re-finance your loans. The Finance team at McKinley Plowman can help you do just that – contact us today on 08 9301 2200, or get in touch via our website.
Data from: Performance Property Group Outlook for 2023
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