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WA Property Market Update November 2022
The countdown to Christmas is well and truly on – and in a time of rising cost of living pressures, additional Christmas spending will be a daunting prospect for many West Aussies. As a result, looking at property is unlikely to be at the top of many peoples’ lists. In our WA Property Market Update for November 2022, we’re taking a look at the parts of our state that are outperforming the cooling housing market, how borrowing power has been impacted by interest rate rises, and the outlook for the retail sector. We hope you enjoy the update.
WA Residential Property Market Update November 2022
Throughout 2022 we’ve seen strong growth, and now slight cooling off in the WA residential property market, and from November onwards we can expect the reduction in growth to continue. The strong resources sector coupled with low interest rates gave the market a significant boost early in the year, but the consistent raising of the cash rate from the RBA has seen the market correct itself over recent months. Median property values in some parts of Perth are still experiencing strong growth in spite of the cooling market, particularly around the Rockingham, Kwinana, and Mandurah areas. There are a few regional towns that have seen exceptional growth over the last 12 months, including Northam, Manjimup, Collie, and Jurien Bay.
Rental demand is still strong, with some Perth suburbs seeing gross rental yields of nearly 7 per cent, concentrated predominantly in suburbs around Armadale and Kwinana. Several regional centres are seeing up to nearly 13 per cent yields, typically in mining hubs such as Karratha and Kalgoorlie/Boulder.
Climbing interest rates have, however, impacted borrowing capacity which is in turn having an effect on the housing market, compounded by additional cost of living pressures. Potential borrowers of all types (interest only, principle & interest, and borrowers with existing debt) will have seen a reduction in their borrowing power, up to 60% if the interest rates increase by 400 basis points (4%). What this means for the housing market is that at least in the short term, buyers are having to lower their expectations and budgets when searching for a home, and many might choose to wait until things settle down before committing to anything.
WA Retail Property Market Update November 2022
Retail assets in Perth have existed in a state of uncertainty throughout 2022, starting in that vein with hard border restrictions in place earlier in the year. The predicted influx of intrastate and overseas migration didn’t eventuate, so staff shortages in retail and hospitality establishments continue to be pervasive in their respective industries. In turn, some businesses have fallen by the wayside as they are simply not able to attract staff, especially when locals are predictably more attracted to higher-paying resources sector jobs.
Investors in the retail sector are still looking for local retail assets in neighbourhood shopping centres, with Eastern States buyers remaining interested in the WA market. However, the combination of rising interest rates, worker shortages and other economic factors means that the prevailing uncertainty in this sector looks set to continue into next year.
The fact that there we’re still seeing strong growth in values across pockets of WA mean that with the right team on your side, and good timing, opportunities abound. Even if you’re not looking to buy, but want to see what can be done to ease the pressure on household budgets, the Finance team at McKinley Plowman can help you. Whether it’s refinancing your existing loans, or getting you the best deal for your next property, it pays to have us in your corner. Call us today on 08 9301 2200 or contact us via our website.
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