The month in review: South West WA
By Herron Todd White
As we near the middle of the year, agents in the main towns throughout the South West of Western Australia are reporting a stable level of sales throughout the locality with a levelling out of values throughout the lower and middle segments and a slight increase in land values.
The top end of the market continues to be more problematic with continuing weak demand and is characterised by an over supply of properties for sale coupled with a lack of prospective purchasers in that
value range. The rural residential market has also slowed. The majority of the sales are below $1 million and properties are also experiencing extended selling periods.
Developers are responding to the lack of land supply with further releases in new subdivisions such as Treendale, Millbridge, Dalyellup, Provence, Vasse New Town, Kealy and Dunsborough Lakes which is likely to see the demand supply balance improve.
The rental market has eased over the past six months, however continues to be relatively tight with low vacancies. Historically high rents put upward pressure on the first home buyer market and this is bringing investors back into the game.
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. A move away from larger homes to smaller, better appointed homes on small blocks, with limited gardens and the ability to lock and leave is on the rise.
Overall the word on the street is that the property market in the South West is likely to slow for second half of 2015. This is on the back of the Perth metropolitan market slowing significantly throughout the last two quarters of 2014 and the first quarter of 2015. The Perth market historically has had a flow on effect to the South West market. Nevertheless, the South West market to date has remained relatively steady, however is expected to weaken throughout the year.
As we head towards the middle of the year, it is time for a mid year review of the market performance in the Esperance district. In short, erratic is the best way to describe it. Short bursts of activity then nothing have been the norm for the past six months and a smoother spread would be welcomed.
After a promising end to the 2014 year and start to this year, activity in particular over the most recent month has nearly stopped. Part of the reason is seasonal with cropping programs well underway after a reasonably traditional break to the season.
With relatively low interest rates continuing and a broad spread of affordable housing, the lack of recent activity is hopefully only temporary and regular volumes will return in the near future.
The residential market in Esperance has seen sound sales volumes and values in the lower socio economic areas as purchasers realise these areas provide some of the most affordable housing in the region, are well located close to schools, shopping and recreational facilities and can provide the best return on investment for residential property with correspondingly high rentals relative to capital outlay. Values typically range between $180,000 and $220,000 in this area with increased sales compared to the same period last year.
The mid tier market of say $300,000 to $450,000 has seen consistent activity and this range is well represented in volumes and values with a relatively stable correlation between supply and demand.
Absent from the market for a short period of time were sales over $500,000 however recent months have seen strong sales above this value and into the mid $600,000s. Prestige residential property is limited in this area with no $1 million plus sales for over 12 months.
Rural residential lifestyle properties have maintained their consistency in sales volumes with realised sales
over all price ranges noted. Lower end property with modest houses and negligible outbuildings have achieved prices within the $400,000 to $500,000 range with other sales pushing upwards to the $900,000 range for more substantially developed properties.
The satellite localities of the Esperance shire have had little to no activity over the first half of the year with limited supply being a factor.
Encouragingly, the small coastal town of Hopetoun has seen sales volumes increase slightly over varying value ranges which is giving some hope that values there may have stabilised. There is still an issue of
extensive oversupply of property, especially rural residential land, but in time it is hoped that supply will gradually reduce and allow values to recover.
To the north, Norseman is still struggling with uncertainty over the local mining operations however sales volumes have been strong in comparison to recent years, although at the low end of the market with most transactions typically ranging between $20,000 and $40,000 for established homes. A general consensus is that although there is a lot of uncertainty in the local market, Norseman still provides some of the most affordable housing in the state, if not the country, for an isolated town having a moderate level of local services.
So, market activity over the first half of the year has been erratic and quietened off lately but overall sentiment is still positive for this region. Later in the year we will provide another summary and see how things have changed between now and then.