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WA Property Market Update – October 2021
Welcome to the October 2021 instalment of the MP+ WA Property Market update. This month, we’ll take an overview of the residential market in the state, as well as how rental prices are faring in the leadup to Christmas. As you may have read in previous editions of our property market update, prices have been on the rise for some time now, as demand for properties remains strong and stock remains low. This has also seen an increase in median rental prices, but is that trend changing? Let’s find out.
Residential Property Market Update October 2021
Median house prices have been on the rise nation-wide for some time now, and although it might not feel like it, Perth is actually now the most affordable capital city in the country, with Darwin recently overtaking our median house price. Perth’s median house price makes it the only capital city coming in under $600,000, with Darwin passing that mark in the June quarter of 2021. Through the sharp price rise over the past 18 months or so, listings have picked up, particularly since the September quarter 2020. Theoretically, this should increase available stock and place downward pressure on prices – which could be further impacted once borders open and those wishing to move out of WA are able to do so. For now, though, it would certainly appear that there is no better place in Australia to buy a house right now than WA, and there is every possibility this will continue.
As far as affordability is concerned, there has been some interesting data released through CoreLogic. Over the past 20 years, wages have increased at a far lower rate than house values. In practice, this means the average household will struggle to save money at a rate that will help them accumulate a sufficient deposit to secure their own home. That being said, the gap between house value increases and wage increases in WA is much smaller than in the likes of Victoria and New South Wales, but this may bring limited comfort to those hoping to put down a deposit on a home using their savings alone.
Rental Property Market Update October 2021
Where median house prices have been on the rise, so have median rental prices – and Perth renters have had to face significant rental increases as a result of the market surge. The Government moratorium on rent increases softened the blow for a while, but once that expired there was a significant increase in the median rental price and a sharp decrease in vacancy rates to match. Since then, the median price has only gone up further, however now there are signs that this is starting to stabilise. The median unit rental price in Perth remained at $380 per week for the previous two quarters, while median house rental prices were also steady at $450 per week over the same period.
So, what does this mean for renters? Well, in the short term at least, probably not a lot. While lease agreements remain in place and vacancy rates barely shift from around 1.0%, there is little chance of prices going down in the near future. However, there is data that suggests there may be an influx of investment property purchases in 2022, as property prices continue to rise and interest rates remain low.
Note that interest rates are expected to rise late next year, with some analysts predicting the real estate market to cool down as a result. However, this may not be felt as strongly in WA given our dependence on the resources sector, which continues to improve. Given how likely it is to really heat up in the investment property market in 2022, now is the time to start getting your ducks in a row should you wish to start or add to your portfolio. The Finance team at McKinley Plowman are on hand to assist you with finding the best loan for your circumstances, or review your existing loans to potentially take advantage of the low interest rates on offer at the moment. Give us a call today on 08 9301 2200 (Joondalup); 08 9361 3300 (Victoria Park); or you can contact us via our website.
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