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WA Property Market Update May 2023
The end of the first half of 2023 is nearly upon us, and with it, the WA Property Market Update for May 2023. A slightly unexpected 25 basis point interest rate rise from the Reserve Bank of Australia (RBA) in May has seemingly not hampered the positive momentum of the broader property markets around Australia. That being said, any impact it does have will take a while to reveal itself. What is expected, though, is that conditions in WA will continue to press ahead with strength in both the residential and commercial property markets, as demand remains high and stock remains low.
WA Residential Property Market Update May 2023
Despite the cooling off on rate rises from the RBA, the residential market in Perth is still moving along at speed. Supply issues still prevail, demonstrated by the continued downward trend of listings and median selling days across the metro area. Couple this with high interest rates bringing in greater barriers to entry for would-be buyers, and you have the sustained upward pressure on prices we’re seeing now. Investors with the capital to pick up a decent quality property to add to the rental market can bring in very attractive yields as the rental crisis deepens. Median days to rent continue to hover around the 15-day mark; and median house and unit rental prices are up to $550 and $500 per week respectively.
Lower-end properties in desirable suburbs are proving attractive for investors and owner-occupiers alike. This is thanks in part to the lifestyle factors on offer in these established suburbs, as well as the long construction lead times in building a new home elsewhere. These properties are, of course, harder to come by as prices go up, but they do represent great value for those able to secure one.
WA Industrial Property Market Update May 2023
The beginning of 2023 marked a significant point for the industrial property market in Western Australia, as it reached what could be considered the peak of its property cycle. Although there was ongoing construction activity in newly-established industrial land estates like Tonkin Highway Industrial Estate and Roe Highway Logistics Park, the limited availability of land in these and other key industrial areas restrained the volume of construction. As a result, industrial land values showed positive movement due to the scarcity of new land releases in the Perth metropolitan region. Additionally, there was a rise in new projects in peripheral locations like Neerabup, which were previously overlooked. Demand for older industrial space also revived, with previously vacant areas now being occupied.
The full impact of the Reserve Bank of Australia’s consecutive cash rate increases since May 2022 on the industrial construction sector is yet to be determined. There will be a time lag as the market absorbs the implications of higher interest rates on funding structures. However, the main determinant of the industrial market’s performance for the rest of 2023 is likely to be the persistent scarcity of supply in terms of development-ready land and modern built-form facilities. This limited availability will play a crucial role in shaping the sustainability of the industrial market.
As interest rates level off through the year, as they are expected to do, we should see some increased activity in the market as buyers are more confident of their repayment obligations. Sellers who were waiting on rate rises to slow or stop may now find this the opportune time to put their house on the market, as they’ll better understand what they can afford to move into.
Data From: HTW Month in Review May 2023; REIWA WA Market Insights
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