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WA Property Market Update March 2022
Since our last WA Property Market Update in February, we’ve finally seen the State’s border open up (in early March), ending the debate and waiting game around when in 2022 that might occur. Now that the hard border has come down, it appears that the sharp rise in COVID cases has been arguably less severe than many had predicted. Furthermore, estimated net migration into WA is positive according to the Australian Bureau of Statistic (ABS), where other parts of the country are seeing negative net migration – that is more people are leaving the state than entering. The effect this has on the property market remains to be seen. However, it stands to reason that both the residential and commercial markets will be impacted.
Residential Property Market Update March 2022
The impact on the residential property market of more people coming into WA seems fairly predictable – even greater demand than currently exists, and further pressure on a rental market that is already incredibly competitive. As a result, the residential property market should see increased activity from investors. Those able to secure an investment property in the current market can expect strong yields, often around the five to six per cent mark. Properties in some regional areas (such as South Hedland) are even seeing yields of 11 per cent in a few cases. While this is by no means commonplace, it is indicative of the significant demand in the market right now, paired with historically low interest rates. Median selling days remain at historic lows, currently at 16 days compared to an average of 57 in mid-2019. Rental prices over the last 12 months for houses has risen by an average of 9.8 per cent, while for units it has grown 10.8 per cent over the same period. Tenants are really feeling the pinch here, with the prospect of finding a cheaper deal elsewhere slim to none at this stage.
It continues to be a great time to own and invest in property, but not an ideal time to be renting (or looking for a rental). Predicted interest rate rises in 2022 may slightly soften investor activity, but as long as stock remains low and debt funding remains at affordable levels, these trends in the WA property market look set to continue through March and beyond.
Commercial Property Market Update March 2022
One arguably positive thing that COVID-19 has brought to the working landscape is the flexibility of people to work remotely. Even in the absence of lockdowns and restrictions that once enforced working from home policies, a wide range of businesses are now offering their staff the option to work from home on a regular basis. This has been great for some in terms of work-life balance, looking after children, reducing the environmental impact of travelling to the office each day, and arguably slowing the spread of COVID by reducing the number of people in an enclosed office space. However, it has also impacted the commercial property market in WA.
Currently it is unknown and very hard to predict with certainty the ongoing approach to working from home, and how businesses will use such policies in the longer-term. Conceivably, if a business has a workforce that entirely or predominantly works somewhere other than the office, their demand for larger office space (or any space at all) will decrease. Positive net migration into WA brings with it an increased number of skilled workers, but also an increased risk of higher COVID case numbers. As this uncertainty prevails, and with a likely increase to interest rates before too long, rental yields for commercial property investors may reduce in the coming months. Therefore, the ongoing response to COVID in WA will play a significant role in the demand for commercial property, vacancy rates, and overall market performance throughout the year.
As the Reserve Bank will likely increase the cash rate once or twice in 2022, major lenders will almost certainly do the same with their interest rates. The low rates we have seen recently will not stick around for too much longer, so it’s smart to see how you might be able to take advantage while you have the chance. Whether that’s getting into a home of your own, refinancing your current home loan, or looking at investment – there’s never been a better time to speak to the Finance team at McKinley Plowman. You can reach us via our website or on 08 9301 2200.
Data From: HTW Month in Review March 2022
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