WA Property Market Update July 2022
Over the past few WA Property Market Updates, we’ve covered rising interest rates and the potential impact on the property market – and the July 2022 issue is no different. Earlier in the year, predictions concerning rate rises from the Reserve Bank (RBA) generally outlined one or two increases for the year, in an attempt to rein in inflation. However, we’ve already seen three rate rises from the RBA, of 0.25% in May, and 0.5% in June and July respectively. The cash rate now sits at 1.35% with further increases predicted for the remainder of 2022. While this undoubtedly puts pressure on households with rising repayments, the longer-term impact of high inflation would ultimately have much more severe consequences. So, how are the residential and commercial property markets holding up in the current economic conditions?
Residential Property Market Update July 2022
According to data from REIWA, the volume of house sales in Perth has remained relatively steady over the last few quarters, while median house prices have increased. The level of growth in the market may not be as strong as other parts of the country, but property in the Perth residential market remains more affordable than most places. Listings and selling days remain low, indicating a continuation of the trend we’ve seen since the pandemic began – supply isn’t meeting demand. However, as interest rates rise there is a strong likelihood that activity in the market may cool slightly as potential buyers and investors wait to see where interest rates end up and assess their options at that stage. This is evidenced by only a 0.4% increase in Perth house prices in June. Properties that are proving popular at the moment are older, established homes on large blocks with subdivision potential. While the high cost of construction may motivate investors to hold off on major renovation or rebuild projects, it seems that there is still strong demand in the building industry.
Commercial Property Market Update July 2022
Within the commercial sector, industrial property has performed extremely well throughout 2022. Much like the residential and rental markets, lease and purchase demand is strong, but supply of high-specification stock is limited. Also mirroring the residential market is the impact of extended construction periods and rising costs, leading to increased interest in established, older stock with scope to update or renovate. A lack of development-ready industrial land is also putting upward pressure on prices, and until more becomes available for development, this trend should continue. Eastern states investors are still prevalent in this market, with the potential for strong rental yields and continued high demand being a sound recipe for successful investment.
It appears that in spite of rate rises and economic uncertainty in Australia and across the globe, the WA property market is still in a strong position. While the rapid growth we’ve seen over the past two years or so will likely cool off slightly, the fact that supply still isn’t meeting demand should make for increasing values in both the residential and commercial property markets in the months to come. Further rate rises are expected, so if you would like to see what other deals are available for your loans, don’t hesitate to get in touch with the Finance team at McKinley Plowman on 08 9301 2200, or contact us via our website.
Source: HTW Month in Review July 2022
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