South West WA February 2018

The month in review: South West WA

By Herron Todd White
February 2018

In 2017, the number of house sales in the South West’s regional centres gradually fell. This was expected following the continued downturn and low levels of sales in the Perth market. Significant reductions in value were expected to flow into the South West market, however in general these have only been minor. The better performing suburbs were the coastal suburbs in the Busselton, Dunsborough and Margaret River regions.

The Bunbury locality had the greatest reduction is value with a sharp drop in the median house price in February. While it has recovered somewhat since then, it is still sitting below the previous five year average.

Agents across the region are noting a drop in the number of listings with many suggesting that this could be as a result of vendors picking the bottom of the market and holding off selling for the time being.

Vacant land values have seen some minor reductions in value and the number of vacant land sales is decreasing in most areas with the exception of Australind.

There has been some movement in the top end of the market, however these have generally been for very well presented prestige properties above $2 million. There continues to be limited demand in the $1 million to $2 million section of the market.

The rural residential market has been active with a higher number of sales towards the end of 2017. While there has been no significant shift in value to date the number of rural residential listings are currently very limited which could place upward pressure on value. The trend in the rural residential market has been towards cleared lots over bush lots.

The rental market is very weak with an increasing number of vacancies which has seen rental values reducing.

Moving forward we would expect the market in the South West to stabilise and slightly strengthen. This is on the back of the general consensus that the Perth market has now bottomed and is expected to improve. If this eventuates, the South West would see an increase in investor activity as Perth property owners would contemplate leveraging or liquidating their properties to secure a holiday home or investment down south. In addition, the property market would continue to be fuelled by the region’s population growth. The South West population grew in 2017 and we would expect this to continue in 2018.

Opportunities for capital growth would lie with established coastal suburbs along the Geographe Bay. As the region continues to grow at a strong rate, this well located section of land will continue to grow in desirability and affluence as the urban sprawl continues to be pushed further away from the coast line. This consequently will result in good capital growth over the medium to long term as an increase in population will lead to stronger demand of a product that has limited scope to increase in supply. However, it is the outlying urban sprawl around Bunbury that we would expect to weaken in values. Whether or not it has reached the bottom remains unclear. Overall we expect the majority of the market to be level and stable with some well-located regions having potential to grow and other outlying fringe suburbs to reduce.


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