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WA Property Market Update July 2023
Happy New Financial Year! 2023-24 is finally here and with it, varying views on the likely outcome of upcoming RBA meetings to determine any cash rate movements. Economists and commentators from across the country seem to hold different ideas as to when rate rises will come, how many are on the cards, and when we may see some relief. The most recent RBA meeting led to a pause in interest rate increases, but more are expected over the remainder of the 2023 calendar year. As always, we’re here to look at the WA property market, so let’s see where things are at as of July 2023.
WA Residential Property Market Update July 2023
The first half of 2023 in Western Australia has been defined by a significant supply shortage in the housing market, resulting in soaring housing costs for certain segments of the population. The disparity between those who can weather the crisis and those who are struggling is widening rapidly, with rising default rates and overwhelmed financial assistance programs adding to a pretty bleak situation.
In the Perth metro area, the median house price has increased by $20,000 to reach $550,000 in the past year. However, this rise is largely due to the abundance of properties below the median house price coming to the market. The main sources of supply are investors who were previously in negative equity positions and are now selling for a profit, as well as investors cashing in significant capital gains. The $1 million to $2 million market in Perth experienced a slight pause in April but surged strongly in May and June, with properties in this price range in high demand. In some suburbs, selling agents no longer provide price guidance, leaving it up to buyers to determine the property’s worth.
The apartment market in Perth has seen steady value growth over the past year, primarily driven by attractive rental returns that appeal to eastern states investors. However, the lack of quality supply has stabilised the price growth. Prestige property values have remained stable over the last six to twelve months. Perth’s northern suburbs have not experienced as significant growth as other areas, mainly due to limited available stock, causing properties to be tightly held. Older units in places like Scarborough are becoming attractive to investors due to their strong yields.
A Reminder About Fixed Rate Periods
As you may have seen in our recent article, plenty of homeowners are coming to the end of their fixed-rate mortgage periods. When you lock in part or all of your home loan for a specific period, the repayments for that portion remain unchanged, providing short-term certainty about your monthly payments, and shield you from the multiple interest rate rises we’ve seen since May 2022. However, once this fixed period ends, you can choose to re-fix or switch to a new variable rate. In this economy, both options will come with a higher interest rate than you might have enjoyed 18 months ago or before, leading to higher repayments. The increases can be significant, and the change can be surprising and unwelcome for homeowners, particularly if they have grown accustomed to the stability of fixed-rate repayments.
If the fixed-rate period on your mortgage is due to mature soon, please reach out to the Finance team at McKinley Plowman as soon as possible so we can explore your options and get you the best deal possible for your circumstances. Even in this tricky climate, we have secured savings for many clients, sometimes to the tune of tens of thousands of dollars annually. You can find us via our website, or feel free to call us on 08 9325 2411 (Perth) or 08 9301 2200 (Joondalup).
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