The month in review: South West WA
By Herron Todd White
Agents in the main towns throughout the South West of Western Australia are reporting a reduced level of sales with a weakening of values throughout the lower and middle segments. The volume of sales however, generally remains steady with consistent stock movement in most localities. The top end of the market continues to be problematic, with continuing weak demand and an over supply of properties for sale coupled with a lack of prospective purchasers in that value range resulting in downward pressure on values. The rural residential market has also slowed with the majority of sales being below $1 million and experiencing extended selling periods.
Vacant land values have now started to decline slightly coming off the increases during 2014 and a levelling out through 2015 as building activity weakened.
Rents have fallen significantly in the past 12 months, particularly in the outlying residential estates.
Smaller lot developments in the new subdivisions have become popular due to their affordability and it is anticipated that this will be a trend going forward. We are seeing a move away from larger homes to the smaller, well appointed homes on small blocks, with limited gardens that have the ability to lock and leave.
Overall the word on the street is that it is likely the property market in the South West for 2016 will be slow. The swings of the Perth market during the last several years have been missed in the regions but we would recommend caution as the slow down in the state’s resource sector, continued weakness in Perth and general economic uncertainty could promote a more widespread downturn throughout the market.
Before looking at the crystal ball for the year ahead, a quick recap on the year just passed may assist in providing some indications for the months to come.
After a reasonably subdued start to 2015, market activity did improve towards the end of the year although as a whole sales volumes were down on previous years. As in 2014, volume in the sub $500,000 range was stronger than above in the first half of the year with sales above $500,000 finishing strongly in the second half. Values over all price ranges and property types in the broader Esperance townsite remained reasonably consistent however selling periods lengthened compared to previous years.
Vacant land sales remained stable with supply slowly diminishing. Values remained consistent with the preceding year and showed minor improvement in the localities now seeing a shortage in supply.
So, to the year ahead. At the risk of sounding like a broken record, much of the same is the prediction for 2016. A number of properties over all price ranges and property types are available for sale however demand is also relatively stable within all markets and regular sales are occurring. As with all areas, accurately priced property is attracting sound demand and typical selling periods are still less than six months.
The market prediction for the smaller centres in the broader Esperance region are more difficult to gauge. Hopetoun, 200 kilometres west of Esperance, has seen a substantial decline in values over the past five years with a combination of excessive oversupply of land, very low sales volumes and uncertainty of employment in the region all contributing factors. The land is slowly beginning to be absorbed and improved residential values at present appear to have stabilised within a typical range of between $250,000 to $350,000. Sales volumes are still very low and there is a large amount of property available on the market. It is likely that if sales volumes do not improve there may still be some downward correction to come as vendors who have had property listed for an extended period become more anxious to quit this market.
The small mining town of Norseman, 200 kilometres north of Esperance has had an interesting 2015 and will likely have an interesting 2016. Norseman gold mine, being the main employer in the town went into a care and maintenance program in June 2014 with most staff laid off and the town largely emptied. This is on the back of massively declining values since 2012 due largely to uncertainty over the future of the mine.
Since July 2014 however, the volume of sales in Norseman has exceeded nearly the whole of 2013 and first half of 2014 combined and this continued throughout 2015. Values are very low with a 4-bedroom home in a generally good condition likely to sell for less than $50,000 and typical sales for older homes in varying conditions ranging between $20,000 and $40,000. It has been suggested that Norseman provided the most affordable housing in the country and this could well be correct and a reason why sales volumes are improving. As to whether any capital growth may occur, it is unlikely until the local economy can stabilise with either the current mine reopening or new publicised mining ventures in the region gaining some momentum.