The month in review: South West WA
By Herron Todd White
As we come to the end of the year, we get the chance to reflect on how close to the mark our predictions were in February. This year it appears we were reasonably close, in that the prediction was for a slowing market throughout 2016.
Throughout the first half of 2016 the market in the main towns of the South West of Western Australia experienced a reduced level of sales with a weakening of values throughout the lower and middle segments. The top end of the market continued to be problematic, with continuing weak demand and an oversupply of properties for sale. This coupled with a lack of prospective purchasers in that value range resulted in downward pressure on values.
The rural residential markets also slowed with the majority of sales being below $1 million and most experiencing extended selling periods.
It was at this point we recommended caution and stated an opinion that the remainder of 2016 would be slow as it appeared the swings of the Perth market during the past several years, affected by a slow down in the state’s resource sector, had finally caught up with us in the regional areas.
During the middle of the year the major centres throughout the South West started to see sales volumes increase and values level out. The inland townships, top end of the market and the rural residential localities are still weak but there is ongoing demand for well located properties that present to a high standard.
Vacant land values have now started to level out after seeing a correction throughout the first half of 2016, however volumes are down slightly from previous years.
Rents have now started to stabilise after a decline in rental values over the past 12 months.
Construction of new homes was slow during the first half of 2016 but we have seen a stabilisation in building activity.
Overall the property market in the South West has been slow, however it is starting to stabilise after the decline seen in the early part of 2016.
Market activity over this year for our region has been quite erratic with bursts of frenzied activity interspersed with periods in the doldrums that seem to have dragged on too long. There has been no real consistency for the whole 12 months, yet some good sales have been achieved. For example, early in the year we had two residential sales in West Beach for $1.1 million and $1.28 million. It has been some years since we saw sales in excess of $1 million for residential property in the town.
Recent months have seen three sales in excess of $600,000 in Castletown, again a rarity in the 12 to 18 months prior. A variety of vacant land sales in established residential areas has occurred as well as in developing residential areas. Values in the main are holding, albeit with minor fluctuations in specific parts of town, notwithstanding the erratic nature of transactions.
Improved residential sales have again covered all value ranges. The lower valued area of Nulsen has seen a relatively good volume of sales with a wide spread of values from $85,000 to $270,000 which is broadly an improvement on recent years when $200,000 was a ceiling that could not be broken. The adjoining suburb of Sinclair has similarly seen a sound volume of sales for what is a small locality but quite under-rated with some good quality established housing close to local shopping and schools.
West Beach and Castletown are the main residential areas in the broader Esperance town site and have also seen a wide variation in realised values. Older homes in need of renovation and modernising are very affordable and give potential purchasers the ability to get into these localities and improve values through implementation of refurbishment programs. Newer, more modern homes are stable through the mid $400,000s to mid $600,000s value range.
Rural residential property is regularly traded with a reasonable volume for a market of this size. Values again vary considerably with a mix of accommodation ranging from substantial homes and infrastructure to habitable sheds. There has generally been a sound level of consistency in rural residential values now for some time. Larger rural lifestyle properties have also seen some minor activity. Very few of these properties are ever available on the market and tend to attract a sound demand when listed.
Within the broader south east region of Western Australia serviced by this office, there has been some cautiously encouraging activity. Firstly, the small mining town of Norseman, approximately 200 kilometres north of Esperance, saw the local mine closed and placed in a care and maintenance program in 2014. The uncertainty within the town resulted in values plummeting however over the course of this calendar year sales volumes have improved with possibly the highest number of sales seen for some time. Values have also improved albeit coming off a very low base. A contributing factor is the affordability for low income earners to have their own home – there are not too many places you can purchase and live in a home for less than $50,000.
Hopetoun, 200 kilometres west of Esperance, was hit hard by BHP opening up their mining operations and just as quickly closing them all at the same time as the GFC hit. Values initially skyrocketed, a massive supply of property hit the market and then it all fell apart. However, the latter half of this year has seen some improvement in sales volumes, with values largely ranging between $160,000 and $300,000 over all property types for single residential dwellings. One beacon was a rural residential sale for $485,000. The worst affected part of this market is the rural residential vacant land sector that is now seeing sales in the low $40,000s due to the chronic oversupply and low demand.
So all up, a sound if somewhat subdued year in this region. Wishing you all the best for the festive season and the year ahead.