Is Perth in a "Property Bubble?"

October 08, 2013
Donna Sims

The latest talk around the traps is that Perth is currently in the grips of a property bubble, but is that really the case?

Recent REIWA figures released show that Perth house prices rose 9.2% for the year in the lower end of the market, buoyed by first home buyers, and by 5.5% in the upper price range.

But unlike in previous upturns, investors have not been as active in this current cycle. And, according to figures released from the Office of State Revenue, the number of First Home Owner Grant applications has peaked, even before the State Government reduced the amount available for those purchasing an established property. If there is a distinct lack of interested parties to compete over available properties, then it is most likely that property prices will remain steady, rather than climb at unsustainable rates.

One interesting fact to come out of a recent Depro survey was, of those investors that were active in purchasing in this time, the number of first time investors outstripped repeat investors. 

It is possible that the US economic situation may yet again have an effect on our financial markets. The US continues to increase its debt level, with the statutory limit ceiling expected to be reached on October 17. It is expected the limit will be raised rather than letting the debt default, which would have a disastrous kick on effect to other economies. This would also mean that interest rates on investments would be kept low, having a negative impact on those self-funded retirees or those who hold high cash reserves. It may mean these investors will look to other forms of investment for their portfolio mix - no doubt the growth in property will appear as an attractive alternative.

Posted in: News

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