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 in February were. This year it appears we were reasonably close, in that the prediction was for a slowing market throughout 2015. While the market remained relatively steady throughout the first half of 2015, it began to weaken in the second half as the ripple effect from the Perth market eventually flowed through. That being said, while the market has slowed transactions are still occurring and properties are being sold if they are priced well.
The property market throughout the year has been driven from the bottom with sales to $500,000 being the majority. The top end of the market continues to be more problematic and is no doubt affected by the declining resources sector. The prestige market is characterised by an over supply of properties for sale and a lack of prospective purchasers in that value range resulting in weak market conditions.
Developers responded to a shortage of vacant land in 2013 and 2014 that was driving vacant land values up with further releases in Treendale, Millbridge, Dalyellup, Provence, Vasse New Town, Kealy and Dunsborough Lakes. Consequently, the vacant land market has started to decline as the balance has now swung to an over supply of land.
The rental market has reduced over the past 12 months with property managers reporting on over supply of properties for lease for the first time in numerous years. This has put downward pressure on rental prices having a negative effect on the investor market.
Further, we have seen a stabilising in building activity. Throughout 2014 the new housing market had picked up considerably in comparison to previous years but began to slow during the later part of 2015.
The south west market has been relatively resilient in the context of a slowing Perth metropolitan market. The south west market for an extended period of time bucked the historical trend of declining in line with the Perth market, perhaps because we did not have the same increases in values throughout 2013 as Perth did and a correction in prices was not necessary. However, the last half of 2015 has showed the south west market beginning to slow. Overall the market is beginning to weaken but is still considered steady.
Broadly speaking, the Esperance district fared well over the course of 2014 with stability in the rural sector underpinning the stability in the town. Sales volumes were lower than previous years however values over the various areas within the broader town site have remained reasonably consistent.
Vacant land sales continued with regular volumes for a market of this size and minor improvement in values as supply has gradually decreased. At present there is a good balance between supply and demand for residential land with rural residential land being more hit and miss due to limited properties available for sale and a large variation in quality of those on the market.
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 notable number now in the $180,000 to $230,000 price range which is 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.
The first half of the year saw an improvement in sales volumes for the over $500,000 price bracket compared to the corresponding time period of recent years. The second half of the year has seen a small number of sales over $500,000 and into the $600,000s with purchasers being a mix of owner-occupiers and investors. Sales volumes have slowed over the second half of the year however the transactions occurring indicate that consistency in values is being maintained.
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, has seen the local mine closed and placed in a care and maintenance program. The uncertainty within the town has seen values plummet over recent years however over the course of the year, sales volumes have improved with possibly the highest number of sales that has been seen for some time. Values are exceptionally low however at least there may be the capacity to set a base level with room to then gradually improve over time. A contributing factor is the affordability for low income earners to have their own home – there are not too many places you can purchase a home to live in for less than $50,000.
Hopetoun, 200 kilometres west of Esperance, was hit hard by BHP opening its 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 $180,000 and $350,000 over all property types for single residential dwellings. Although this is well down on the peak, at least transactions are improving in volume and there is the hope that stability is returning to this market.
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.