Over recent years it has been very apparent that there has been a polar opposite effect on the Australian property market from the East Coast compared to the West coast, and with the continuous growth in the East, or lack of growth in the West, recorded monthly by CoreLogic, it is safe to say that the divide in market performance will not be changing in the short to medium term.
There are multiple factors that have influenced the current stagnant situation that the Perth property market finds itself in, however, the most predominant factor would be the slump in commodity prices and the end of the WA mining boom, which the State depended on for so long.
ABS data from September 2016 shows a significant decrease in the Perth population with over 9,000 individuals packing their bags and heading back to the East coast after the end of the resources boom. This decrease has heavily influenced the housing market. How you ask? It’s all about supply and demand. When there is a shortage of supply and plenty of demand, as was the case during the boom times, house prices and rents naturally inflate. However, when with a significant shortage of buyers and renters, and ample supply available, values fall and vacancy rates increase.
At this point in time, with a median house price of just $481,500 (CoreLogic May 2017), Perth has created an open door for those locked out of the Sydney and Melbourne property markets. With Sydney’s median house price of $872,300 (CoreLogic May 2017) and Melbourne’s median sitting at $665,000 the reality for homebuyers is that there becomes a very lengthy wait in saving for a deposit as well as sacrificing their lifestyle in order to secure their future as a property owner. Perth is very close, if not already, in reaching the bottom of the property cycle so to buy now would be a tactically smart time to buy.
Not only are Perth house prices low, but the Western Australian Government is moving on a variety of projects including investment in Perth’s infrastructure, starting with the Thornlie to Cockburn rail link, and with a major focus on job creation as well as debt reduction, this will in time only boost the WA economy and it will flourish.
We believe Perth has a bright future and represents an appealing option for homebuyers – it offers a great opportunity for people to own and pay off their homes faster and enjoy the benefits of a growing city