Some bumps likely for coastal property markets

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New infrastructure investment in Yanchep and Two Rocks is having a positive impact on property values but there are some clouds on the horizon.

WHETHER the coastal suburbs of Yanchep and Two Rocks emerge as two prime property hot spots during 2019 could depend on how the WA economy is influenced by factors such as consumer confidence and unemployment as well as the risk of a global trade war.

On January 25 the Chamber of Commerce and Industry WA (CCI WA) said the risk of an all-out trade war loomed over the global economy and Western Australians should be concerned with threats of trade wars and a slowing China to hurt WA more than any other state.

The CCIWA said the WA economy was showing signs of improvement but it expected a bumpier road to recovery.

“Consumers are more confident about the future of the economy but continue to report a difficult economic climate,’’ a CCIWA statement said.

“Businesses are also more confident but expect a decline in profits in 2019 due to higher costs, including wages and weak demand growth. “A further decline in the east coast real estate market could drag on Perth house price recovery, slowing growth in dwelling construction.

“We expect unemployment to weather the storm, declining slightly to 6.0 per cent this year, due partly to new jobs being created.

“Many people are still leaving the state for the east coast, which is keeping the unemployment rate lower than if they had stayed.

“As unemployment decreases slightly wages are forecast to increase, which we expect will grow by 2.2 per cent the following year.’’

Property Council of Australia WA executive director Sandra Brewer said business confidence in the WA property sector had fallen slightly after steadying results during the past 12 months.

The ANZ-Property Council Survey index for WA for the March 2019 quarter is 129, which represents only one index point drop from the previous quarter,’’ she said.

“A score of 100 is considered neutral.

“Over the previous 12 months, the WA property industry’s confidence index has edged back by 11 index points.’’

Ms Brewer said confidence in the WA property sector remained strong but the latest dip in sentiment reflected an industry that was continuing to ride the bumpy road to the state’s full economic recovery, despite upticks across most property sectors.

“Expectations around economic growth are very positive and there has been an upward shift in sentiment in favour of the state government’s performance.

She said the survey results showed the expected economic recovery in WA was still in its early stages but building momentum.

“It is now critical to continue to press on with important policy initiatives such as Infrastructure WA and Metronet, which will provide industry much needed certainty and lead the way to our state’s recovery.

Atlantis Beach and Capricorn Beach estates project director Jarrod Rendell said the hundreds of millions of dollars in new infrastructure investment in Yanchep and Two Rocks was now beginning to have a positive impact on property values in the area.​

Mr Rendell said the latest REIWA figures for the September 2018 quarter showed Two Rocks was listed fourth in the top 10 performing suburbs in Perth for house price growth while Yanchep was listed third overall for the biggest increase in land prices.​

Out of more than 350 suburbs in Perth, Two Rocks was ranked fourth after achieving a 6.4 per cent increase in its median house price rising to $360,000 during the September 2018 quarter.​

Yanchep was listed third in the top performing suburbs for land price growth with  the median price of a lot of land in Yanchep jumping by 5.5 per cent to $210,000 during the same period. ​

He said the new infrastructure planned for Yanchep and Two Rocks area combined with housing affordability was a key factor in the positive result for both suburbs. ​

“The areas of Yanchep and Two Rocks are proving very popular with buyers due to major new transport infrastructure in the area that will significantly cut commuting time to the city centre such as the planned $220 million freeway extension to Romeo Rd, the current duplication works on Marmion Avenue between Butler and Yanchep, and the committed $440 million new rail link to Yanchep.​

“Other important new infrastructure that has been recently developed in the area includes the new Atlantis Beach Baptist College in Two Rocks, the recently opened Yanchep Secondary College, Yanchep District playing fields, as well as the new Yanchep Surf Club. 

​”In addition, a wide range of other new facilities are expected to open in the coming months covering child and health care.

“There is the strong potential for current property buyers in the Two Rocks-Yanchep area to achieve strong levels of capital growth moving forward because property prices in this prime coastal strip are still well below average Perth property prices.’’ 

Mr Rendell said the ABS employment figures for October 2018 showed the number of people in full time employment surged by 10,700 through the month to reach the highest number since early 2015. ​

But last week Age national economics reporter Shane Wright said the trend rate of growth in full time jobs in WA was slowing as the latest figures showed the smallest increase since it turned around in early 2018.

Mr Rendell said the state’s improving economy was evident at Atlantis Beach estate with the majority of recent land buyers being FIFO or mining related workers who were now being employed in greater numbers due to big new investment in the resources sector.