As WA opens its doors to the rest of the country and the world, we caught up with Damian Collins, our Managing Director and President of REIWA, for his views on how the border re-opening will impact Perth’s property market.
How do you believe the border re-opening will impact demand levels in Perth?
There’s no doubt Perth is an attractive place to be right now. WA currently has one of the strongest-performing economies across Australia, and the lowest unemployment rate – with over 60,000 jobs that industry needs to fill.
This is likely to attract plenty of migration into the state as people relocate or move to WA both from interstate and overseas.
All these new arrivals need somewhere to live, and this will drive an increase in demand among buyers and renters, particularly in the second half of 2022.
Where do you anticipate this demand will come from?
We can expect to see more people returning/relocating to Perth from a broad variety of regions. Some will be looking to buy an owner-occupied home. Others will need rental accommodation.
Perth’s rental market is already very strong, and high rental yields coupled with low vacancy rates will fuel investor interest.
While we’re already seeing an uptick in activity from local investors, the easing of travel restrictions will no doubt encourage more interstate investment too, especially as buyers outside of WA will now be able to visit properties in-person.
When it comes to interstate buyers, I expect to see particular interest from investors based in Sydney and Melbourne – two cities where there are significant affordability constraints.
Which areas are most likely to benefit from increased demand?
Perth’s Western suburbs and coastal areas will be popular among owner-occupiers, especially buyers relocating as part of an executive role, who will be attracted to the better affordability of Perth relative to similar neighbourhoods in Sydney and Melbourne.
Suburbs such as Victoria Park, Carlisle and Bayswater that offer close proximity to key employment nodes – including Metronet stations and Perth Airport, are also likely to be favoured locations as they offer easy commuting, especially for FIFO workers.
What impact will this have on stock levels and selling times (days to sell)?
The volume of stock listed for sale in Perth is already well below what we would regard as a ‘balanced’ market.
In late February for instance, fewer than 8,000 homes were listed for sale in Perth. Add in increased demand when borders re-open, and supply and demand principles tell us we can expect upwards pressure on property prices.
The supply of new homes is being constrained as the construction industry faces labour shortages and supply chain issues impacting the availability of materials. So, while there will be new homes built in 2022, it simply won’t be enough to keep up with the demand generated by increased migration into WA.
As competition among buyers intensifies, selling times are set to become even tighter, especially in high-demand suburbs. The latest data from the Real Estate Institute of WA shows homes across Greater Perth are selling in just 16 days on average, with many investment-grade and premium suburbs experiencing average selling times as low as 7 days.
The upshot is that buyers need to be prepared to act quickly when they find a suitable property. In this sort of market, engaging a buyer’s agent can be a smart strategy to gain a competitive advantage in property negotiations – by the time a property appears on popular selling sites, it may already be under offer.
What impact do you believe the border re-opening will have on WA’s apartment market?
Even before the border re-opening, we’ve been seeing growth in WA’s apartment market. In the final quarter of last year alone, data from Urbis Loop showed 484 apartments were sold in Perth – a 54% increase on the previous quarter.
Apartments are gaining popularity particularly amongst downsizer demographics in WA, with many seeking alternative but high-quality housing options in premium locations such as the Western suburbs (suburbs such as Shenton, Crawley and Nedlands).
Looking forward, there is still very little supply of quality apartments in prime locations, and the re-opening of WA’s border will see an increase in interstate and overseas investors competing with local buyers. This places the stock in these locations in a strong position for future growth.
Apartments are especially attractive to foreign buyers. Since December 2015, non-residents have only been able to buy new residential property, established dwellings for redevelopment or vacant blocks of land for development. In addition, the 50% off-the-plan rebate for new apartments (which has been extended to October 2023) applies to the 7% foreign buyer surcharge.
With this buyer activity set to increase, the border re-opening will likely accelerate demand and price growth. In addition to the western suburbs, I expect to see this growth in other key established areas close to amenity and public transport, such as Burswood, Rivervale and Maylands.