Perth September 2017

The month in review: Perth

By Herron Todd White
September 2017

Over the previous 18 months, we have often used terms such as subdued to describe the Perth residential market, but there are definite signs that this is changing. Whilst the Real Estate Institute of Western Australia’s June quarterly results indicate that sales activity is at a five year low, the weekly sales rates indicate that there are blips of activity in the market. Discussions with selling agents reveal more frequent incidents of multiple offers on properties and a higher level of open home attendance at lower price levels. The number of properties advertised for sale has declined over the previous 12 months, from 14,000 to 13,200 – with the market commonly interpreting 12,000 as a balanced market. Given that in an average week, 500 sales are recorded in the Perth metro area, a short period of undersupply could lead to a market correction in a very short period of time.

The market appears to be at the stage of understanding that the window of opportunity to pick the bottom of the market is narrowing, with a level of optimism becoming apparent.

First home buyers remain tempted by incentives and rebates being offered in urban fringe locations, with such incentives ranging from small cash bonuses all the way to free cars and outrageous claims of tripling the first home buyers grant – for free. Such incentives can be difficult to track and can also be inconsistent throughout various estates, which makes it very difficult for buyers to interpret which estates offer the best value proposition. We urge all such buyers to consider advice from an independent property professional to sort through what are genuine offers – and what is actually a bitter bit of candy. Whilst it’s a great time to get into the market, if a buyer is only able to jump in by relying on convoluted finance offerings or side incentives, we strongly urge restraint.

For those in a stronger financial position, there are many sectors showing the effects of an increase in demand and prices remain historically low.

At the lower end of the market, we are seeing an increase in activity in established areas such as Thornlie in the south and Padbury in the north. Whilst well presented properties appear to be attracting the most interest, there has also been an uplift in transactions of renovators delights with buyers appearing to be leapfrogging more traditional first home buyer areas located further from the CBD. We consider both areas to offer an appealing mixture of affordability, proximity to infrastructure and traditional style housing on traditional sized allotments – all within reasonable proximity to the CBD.

In the middle price brackets, the market is more discerning, but there are also signs of green shoots. Duncraig in the north and Willetton/Bull Creek in the south are all experiencing an increase in activity, with stock levels fluctuating accordingly. These areas remain price sensitive and incorrectly priced properties are floundering, but well priced properties are often transacting in the initial weeks of marketing.

At the upper end, activity remains patchy, but very strong in certain areas. Nedlands in particular appears to be experiencing a surge of demand with stock levels declining. Similar activity has been seen through Cottesloe and Applecross and appears to be driven by owner occupiers upgrading into particular pockets that they have been aspiring to achieve.

All in all, the market is ripe for owner occupiers to make a purchasing decision. Many speculators have already called the bottom of the market and they may well be right – just not in all areas. Many areas remain price sensitive, but the ability to snag a bargain is becoming harder by the week.

Share on:

DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.