WA Property Market Update – March 2021
By just about every conceivable metric, Australia’s economy appears to be getting back on track. This has been further reinforced by the International Monetary Fund’s (IMF) recent upgrade to their assessment of the country’s post-COVID recovery. WA continues to perform well, unemployment is falling, interest rates remain low, the resources sector keeps plugging away, and there has been a further increase to the average house price across the state. Industrial, residential, and rental markets are in the spotlight for the WA Property Market Update for March 2021 – let’s get into it.
WA Industrial Property Market Update March 2021
Predictions are that industrial assets will continue to push ahead of retail and office property within the commercial sector through 2021. Short-term lease demand may remain steady, but there are some green shoot starting to appear. An upswing in economic activity may be cause for some tenants to consider upgrading their facilities to larger, more modern, and more sophisticated premises. A great example of this is the increase in activity in the e-commerce area, which in turn has increased demand for larger-scale warehousing and transport facilities – such that potential investors in the commercial space have had their interest piqued.
Industrial property is also likely to benefit from the shift some investors are making away from traditional investments such as bonds and term-deposits (which are offering very poor yields in this environment) towards property investment. If you consider this increased appetite alongside significant projects in WA like NorthLink increasing accessibility to industrial areas, you have a winning combination in the industrial property market.
WA Residential Property Market Update March 2021
Much has been made of the increase in demand for owner-occupier properties, particularly with new builds taking advantage of generous government incentives. For this month’s WA Property Market Update, we’ll focus more on the great opportunities out there for savvy investors. Starting with perhaps the most critical point, affordability is a big factor in the resurgence of the WA property market. If you compare the current median house price to the average salary, WA stacks up nicely on the affordability front, certainly more so than our Eastern States counterparts. In turn, this has afforded many West Aussies more borrowing power, especially with low interest rates on offer, so it seems to be prime time for getting into the market as an investor.
REIWA predicts that the price of houses in WA will increase by an average of 15% by the end of this year, up from their initial assessment of a 10% increase for 2021. The fundamental imbalance between supply and demand is the primary reason for WA’s lack of stock, but those who do manage to get in somewhere are looking at fantastic potential rental yields should they choose to rent out their property. WA’s north-west (particularly Karratha and surrounds) currently has a critical lack of stock as mining companies ramp up operations and look to house their workers permanently – putting upwards pressure on rental prices and giving investment property owners some very healthy returns.
WA Rental Property Market Update March 2021
As above, property supply and demand has put significant upward pressure on rental prices. Vacancy rates are critically low, prices have soared, and competition for rentals has increased to levels we’ve rarely seen before. This has left WA renters in a precarious position – either stick where they are and absorb the likely additional costs (especially since the expiration of the moratorium on rent increases); or try to move further out to a more affordable location if they can get in anywhere at all.
The median rent in WA has increased by $45 per week, and the ten cheapest suburbs to rent are far from centrally located. These are Armadale, Camillo, Medina, Mandurah, Midland, Orelia, Parmelia, Safety Bay, Gosnells, and Kelmscott. Even for these “cheaper” suburbs, the median price has gone up. Rental yields make investing very attractive in this climate, and the way things are going it looks set to continue – which isn’t great news for those not in a position to buy.
How MP+ Can Help
Whether you’re looking to refinance your existing home loan, or invest in or purchase a commercial or residential property and take advantage of the great rates on offer, the finance team at McKinley Plowman – Paul Moran and Paul Tate – can help you explore your finance options.
Call us on 08 9301 2200 (Joondalup), 08 9361 3300 (Victoria Park), or contact us via our website.
Data from: HTW Month in Review March 2021
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