Perth Property Market Update September 2020
The spring period in Western Australia is usually filled with a flurry of optimism. The sun begins to rise earlier and fall later, our bodies thaw out from the harsh winter chills (not that we get very much of that throughout much of the state) and residents think about making housing decisions to settle in before the heat of summer arrives. For these reasons and many more, activity on both the purchaser and vendor side can increase significantly. Since there are more homebuyers about, many vendors take the opportunity to sell as increased buyer activity creates higher demand, a competition for property and makes for a swift marketing campaign.
This has been statistically proven. In our spring edition of the 2018 Month in Review, we gathered raw data from The Real Estate Institute of Western Australia (REIWA) and found that, indeed, the average number of selling days does decrease in the late spring season. The data is skewed due to quarterly data not aligning perfectly with the four seasons (the December quarter includes October, November and December, whereas the spring season includes September, October and November), however it is still statistically significant.
As seen in the Average Listings and Selling Days graph, total listings declines throughout the year, generally reaching the floor late in November. Average listings peak in the March quarter, coinciding with the holiday period.
The COVID-19 pandemic has thrown the proverbial spanner in the works and it will be interesting to see what happens with listings, sales volumes and selling periods over the next year and beyond. Less people will be travelling due to border restrictions so we may see a flattening of statistics across the board, i.e there could be less change than usual between the quarters and seasons.
The other pertinant factor for activity levels in Western Australia is the current government stimulus. Vacant land is selling at an astounding rate – July saw an increase of 121 per cent for vacant land sales compared to the month of April. If land sales continue at this rate, we will experience a shortage of vacant lots by the end of the year. In some established localities, we are already seeing the prices paid for land being higher than improved properties where the dwelling is considered to still offer functional utility. We are also seeing vacant lots that have been listed for sale for some time be removed from the market, only to re-appear with a higher listing price.
We do still expect to see a further uptick in activity during spring throughout the wider market. Even though phase 5 restrictions have been delayed until at least 24 October, we are still in a far better situation compared to our eastern state counterparts and this will bode well for the property market as a whole. The volume of sandgropers returning home over the past few months has created an unexpected surge in demand which has seen a market that was starting to improve pre-COVID-19 start to surge during the pandemic.
The established market located within a 20 kilometre radius of the Perth CBD generally experienced a decrease in listings over the winter period due to the uncertainty caused by the COVID-19 pandemic, however demand remained at a healthy level and has increased dramatically recently. Properties that are well presented and fairly priced are selling in a number of days compared to weeks or months previously. Owneroccupiers are more prevalent in the current market and demand is starting to have a visible effect on values in many sought after localities
The coastal pocket located 17 kilometres northwest of Perth is typically a sought after area given its proximity to popular beaches and amenities whilst offering affordable housing options. Listings remained very low over the winter period, with the existing stock being cleared quickly and supply lacking. We expect this trend to continue during the spring period however it is difficult to predict what will occur once the government income support for businesses concludes. Typical homeowner properties within this area which consist mainly of four-bedroom, two-bathroom dwellings situated on spacious blocks are expected to perform very strongly. These properties typically range between the prices of $500,000 and $1 million and include suburbs such as Duncraig, Carine, Karrinyup, Trigg, North Beach and Hillarys. We are seeing the early stages of value increases in these areas. 9 Ambridge Street, Hamersley sold for $545,000 in June after only being on the market for eight days. The previous owners purchased the property for $480,000 in 2016, which represents approximately a 13 per cent price increase in selling price over the four year period. Whilst this doesn’t sound much, it’s actually quite significant given the oversupply issues affecting Perth for many years. The first home open received six offers. Six months ago, the property was estimated to be worth less than $500,000 which shows the drastic change in current market conditions.
Similar conditions are present south of the Perth CBD. Melville and Fremantle regions in particular are suffering from low levels of supply and growing demand. This is currently leading to strong purchase prices and the market showing signs of strengthening. Spring traditionally becomes a more active market in this area given it has good accessibility, popular amenities and luscious parks. Over the past six months, the established market of this region has been performing strongly, in particular green titled and survey strata lots. These properties are expected to continue their performance into the spring period and listings are likely to remain tight. A valuer reported that a property in East Fremantle sold in December 2019 for $1.1 million and was then purchased for $1.2 million in July 2020. The purchase was conducted through a real estate agency and the buyer wanted to secure the property prior to it entering the market given the current levels of competition.
117 Darley Circle, Bull Creek was listed for sale in June with a starting price of $849,000. The house is a circa 1974 renovated five-bedroom, twobathroom dwelling with a double garage situated on a 683 square metre lot. It was only on the market for five days and sold for $855,000, which is a stark contrast when the same property was listed for sale in March 2018 for $885,000 and was on the market for 72 days with no recorded sale. Properties similar to this example are expected to perform strongly over the spring period as demand for these asset types in similar established suburbs remains healthy.
The Mandurah region is located 71 kilometres south of Perth and is also traditionally more active during the spring. As a large proportion of the marketplace is within close proximity to a beach, estuary or canals, people look to be settled in their new house before summer. Over the past couple of months, listings have reduced and purchaser activity through June and July remained strong. We expect listings to increase over the spring period with potential sellers being encouraged by the number of sold stickers labeled on for sale signs. With improved weather conditions, low interest rates and holiday travel being restricted to the state, canal properties are expected to perform well. Modern dwellings built post 2015 are currently attracting strong interest throughout the Mandurah suburbs and this is expected to continue throughout spring. Demand appears to be vastly weaker in comparison to the older style dwellings with extended selling periods currently being witnessed.
Demand and sale rates for vacant lots have grown astronomically within the Peel and Mandurah regions thanks to the government incentives. In some cases, we have also witnessed a rise in prices for these products. For example, a vacant lot in the suburb of Golden Bay sold for $225,000 in March after being on the market for 467 days. Another lot of similar size and shape on the same street was under offer for $280,000 in August after two days on the market. This represents a 24 per cent rise in the listed price for near identical lots in the space of five months. The suburb of Madora Bay has another similar example. 23 Abeona Parade, Madora Bay is a beach front 422 square metre vacant lot that sold for $362,000 at the end of June, having been on the market for 51 days. In contrast, 57 Abeona Parade, Madora Bay is another beach front 423 square metre vacant lot that sold for $348,000 in May after being on the market for a total of 239 days. This represents a four per cent increase in sale price in the space of one month for two similar products on the same street.
The winter period and COVID-19 have affected Perth’s prestigious western suburbs with recorded listings currently down in comparison to previous years. Purchase demand within the area has remained buoyant, however this has not translated to an increase in prices in some areas yet.
Activity within the upper prestige market (above $3 million) has been subdued over the past few months. Entry level properties in these areas would represent the strongest performers currently which includes properties below $1.5 million and to some extent sub-$2 million. For example, this property in Senate Street, Claremont sold for $1.53 million in June after being on the market for 43 days. The dwelling is a circa 2011 three-bedroom, twobathroom dwelling with a double garage situated on a 561 square metre lot. Internally the property is constructed to a modern and elegant style that attracted a high level of purchaser interest with four other buyers missing out.
Looking at regional Western Australia, Kalgoorlie is located 595 kilometers north-east of Perth with a population of more than 30,000 people. Regional areas such as Kalgoorlie are affected mainly by local economic factors as opposed to seasonal influences. Local agents have reported that current listings are at their lowest point recorded over the previous five years, with transactions improving significantly. Additionally, the rental vacancy rates are similarly at their lowest levels recorded over the previous five years. It is difficult to predict if the number of listings and transactions will increase anytime soon as most of the previous stock has been cleared.
Dated properties that are incorrectly priced and have poor presentation currently are experiencing weak buyer demand. This is in contrast to dwellings built from 2005 onwards, which have been the strongest performing product within the market recently. For example, this property on Nganka Way, Hannans which is located five kilometres north of the Kalgoorlie CBD, sold for $455,000 in June having only been on the market for 23 days and sold $10,000 below the original asking price. Improved on site is a circa 2007 four-bedroom, two-bathroom house with a double garage situated on a spacious 712 square metre block. Internally the property is presented in a neat modern style and additionally has a large undercover area for entertaining as well as a powered workshop.
Geraldton is another regional city in Western Australia located 424 kilometres north of Perth and has established itself as a contemporary costal hub. As the spring season sets into this region, there is expected to be an increase in people attending home opens as the weather drastically improves. Recently the market in Geraltdon has been slowly improving with local agents reporting more attendances in home opens and subsequently more offers being presented. Compared to this time last year, there have been more transactions occurring recently within the area.
Properties listed towards the lower end of the market are well priced for first home buyers with an abundance of affordable options available. Suburbs such as Mount Tarcoola, Wandina and Sunset Beach are more recently established suburbs with dwellings ranging from circa 2010 onwards which we anticipate to see an increase in interest. For example, 21 Mandalay Loop, Wandina sold for $340,000 at the beginning of July having only been on the market for seven days. The property improved is a circa 2010 four-bedroom, twobathroom dwelling with a double garage located on a 684 square metre block. Additionally, the beach is a five-minute drive from the house which was another strong selling point.
Continuing further north, the Pilbara region experienced a slow start to the year due to COVID-19 and the effects of a tropical cyclone in February. Over the past two months however, transactions have increased which has resulted in a current shortage of stock available in the market. Winter typically is more productive compared to the spring and summer periods, given the weather is more comfortable at around the mid 20 degrees. Entry level properties for local residents and land sales for potential new builds are expected to perform strongly. Our valuer reported that there was a property in the suburb of Baynton that was under contract in the first week of June for $555,000, however the sale subsequently fell through. The property is now under offer for $575,000 which is approximately a four per cent increase in the offer price over the space of two months.
Western Australia’s south-western region is a very popular tourist hotspot that offers a variety of spectacular holiday experiences. From magnificent beaches, lush farmlands to having some of the world’s finest wineries, there are plenty of options available for holidaymakers to enjoy once the weather starts to warm up. Popular tourist areas such as Augusta and Margret River are areas influenced by tourism and seasonal factors.
September in past years has seen an increase in tourism flowing into the holiday region with improved weather conditions as well as school holidays being towards the end of the month. With the increase in foot traffic, the idea of a holiday home in the south-western region begins to form which leads to an increase in demand and therefore more market activity. With COVID-19 forcing the Western Australian government to close the state borders, Western Australians have been traveling to their own tourism hotspots.
Market activity within the area has been strong since June after the announcement of the government stimulus packages. Previously, the supply of vacant land was limited and given the increase in demand for these lots, they were all snapped up within the first few weeks. Purchasers who missed out on the vacant blocks turned their attention to the established market with the mentality that they did not want to miss out on a block of land. Purchasers who were also looking at properties during the uncertain period of April and May are now active in the current market so competition is fierce. There has also been an increase in Perth buyers looking for an ideal holiday home as well.
The remaining stock received plenty of interest and sales activity increased due to the increase in demand. Agents are now working hard to make new stock available in response to the growing demand for properties within the area. In addition, people took their homes off the market during the height of the COVID-19 uncertainty period so they will be looking to re-list their dwellings. Agents have also been advising that this currently is a great time to sell given the healthy demand and with this information we expect the number of listings to increase in spring.
Dunsborough is a coastal town in the south-west of Western Australia, located 254 kilometres south of Perth. It is considered a popular holiday spot due to its location in close proximity to other major hotspots as well as having some of the best cafes, bakeries and restaurants within the south-western region of the state. The area has been subject to some of the highest level of demand within the area for prospective buyers. There was already an undersupply of stock and purchase prices in some cases have exceeded original listing prices.
21 Oakmont Crescent, Dunsborough is a circa 2007 four-bedroom, two-bathroom home with a double garage situated on a 635 square metre block located within a popular section of Dunsborough. The property sold in July for $499,000 after just 17 days on the market. The property was also listed for sale in May 2018 for a similar price, however it did not sell during the 171 days it was listed for sale. This is an example of how the market has changed in this region recently and how competition has increased.
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