Clarkson and Eglinton stand out in the northern suburbs

The median house price in Clarkson and the median weekly rent in Eglinton stood out in November according to REIWA.

Clarkson was one of the suburbs to record an increase in its median sale price in November, according to the Real Estate Institute of Western Australia.

REIWA president Damian Collins said while the rental market had been the highlight of 2019 due to steady leasing activity levels and a plummeting vacancy rate, it was now possible to start to see the flow on effects to the sales market.

Mr Collins said overall, the median sale prices held up well in Greater Perth with one in four suburbs achieving an increase in median price in November.
The suburb to see the biggest spike in median was Floreat with a 3.1 per cent increase to $1.34 million.

This was closely followed by Wembley, Willetton, Clarkson and Spearwood.

He said data also showed that one in four suburbs had an increase in median weekly rent.

The top performing suburbs by median weekly rent price were Eglinton, Clarkson, Wannanup and Willetton which all had increases of $10 a week.

“With the vacancy rate currently sitting at a low 2.4 per cent and listings for rent are 16 per cent lower than a year ago, we can hopefully expect see rent prices continue to increase,” he said.

“Leasing activity has declined in November, however this is a trend we usually see as we near the end of the year and as sale activity traditionally picks back up in the first few months of the year, we should continue to see the rental market remain on an upward trend.”

On December 4 Property Observer published Bureaucratic stroke of pen boosts Perth, Gold Coast by chairman Georg Chmiel where he outlined why he thought property investors should care that Perth and the Gold Coast were now considered “regional” towns instead of “metro” cities.

The re-classification by the Morrison Government of its regional migration program came into effect on November 16 and means smaller cities, the regions and Perth and the Gold Coast will now have access to 25,000 visa places, priority processing and international university graduates who live in these locations will be eligible to apply for more time in Australia on a post-study work visa.

Mr Chmiel said the change won’t mean more transactions tomorrow but during the next 12 to 24 months the change could add several thousand additional sales to the real estate markets in Perth and the Gold Coast creating both opportunities and risks for investors.

The online property site chairman said immigration was one of the reasons Australia’s economy had kept growing year after year, for the past 27 years.

“In Perth last year, there were about 26,000 sales,’’ he said.

“An additional 3000 sales in a year would be more than a 10 per cent increase in annual transactions.

“An extra 10 per cent in transaction volume would help put a floor under prices and help stimulate new construction.

“The change will also give the Gold Coast and Perth a boost in the battle to displace Melbourne and Sydney as the top destinations for Chinese migrants, students, and property buyers.

“Both cities are struggling to increase the share of foreigners they attract.

“Their retailers want more residents, their universities want more students, and their developers want more property buyers.’’

Mr Chmiel said if he was a property investor in Perth or the Gold Coast the change would reassure him.

On December 2 CoreLogic said in a significant turn of events for the Perth market, values edged 0.4 per cent higher in November – the first month-on-month rise in dwelling values since the downtrend took a pause in early 2018.

The CoreLogic update said dwelling values had been trending lower since mid-2014, down a cumulative 21.3 per cent through to the end of November.

“Over the past thirteen years, Perth has seen house values move from being the most expensive across the capital cities to now be the lowest; great news for first home buyers, however Perth home owners have seen a material reduction in their wealth over the past five and a half years,’’ the update said.

Tim Lawless from CoreLogic Research said a variety of factors were supporting the strong gains in housing values.

“The synergy of a 75 basis points rate cut from the Reserve Bank, a loosening in loan serviceability policy from APRA and the removal of uncertainty around taxation reform following the federal election outcome, are central to this recovery.

“There’s also the prospect that interest rates are likely to fall further over the coming months and an improvement in housing affordability following the recent downturn are other factors supporting a lift in values.”

In Perth premium value properties are outperforming lower value properties.

“The stronger performance across the higher value end of the market can likely be attributed to a combination of values falling more in this sector during the downturn, as well as recent adjustments to serviceability rules which has boosted borrowing capacity.

“Additionally, the scarcity value of detached homes in many of the blue-chip property markets is another factor supporting strong capital gains.’’

Mr Lawless said as housing values became less affordable in the high-end markets, demand was likely to ripple outwards to the more affordable areas.

He said based on data to June from the Australian Bureau of Statistics, there was a reduction in the number of people leaving Western Australia.

This meant more affordable housing options in Perth could be attractive to interstate residents, but jobs growth and the employment rate was generally weaker relative to the bigger cities which remained a barrier to higher housing demand.

“With interest rates likely to track lower in 2020, we could see additional stimulus counteracting some of these headwinds.

“Mortgage rates are already at their lowest level since at least the 1950s which is one of main factors supporting increasing market activity.

“If rates do move lower, no doubt policy makers will be watchful for any triggers that could provoke a policy response limiting housing credit.

“Previous rounds of macro-prudential have had an immediate slowing effect on market activity.”

On December 3 Housing Industry Association executive director Cath Hart welcomed the McGowan Government’s announcement of a $150m housing investment package, including the construction of more than 300 new public housing units, the refurbishment of 70 existing properties and a 6-month extension of the Keystart threshold changes announced in the May State Budget.

Ms Hart said the support package would help sustain jobs and businesses in WA’s residential construction sector after several years of incredibly challenging conditions.

“Over the past year, we’ve heard many stories about businesses and tradies reducing shifts, reconsidering staying in WA or simply hanging up the tools – they have really been holding on, waiting for things to improve,’’ she said.

“(The) announcements will give confidence to the thousands of hard-working West Australian employees and businesses in the residential construction sector to stay the course, to continue in their trades and to retain their staff.

“This is critically important so that we have sufficiently skilled workers ready and able when WA’s residential construction starts to increase to more sustainable levels in coming years and so that we don’t face skills shortages.

“The six-month extension of the Keystart changes announced in the May budget and the swift start to the housing investment package will effectively be a bridge for industry as our market recovers.”