Perth Property Investment
Over the past year, Perth property investment recorded value growth of just three per cent, according to RP Data. This poor property investment performance in Perth seems to have slowed further in 2015.
It’s not a surprise to see negative sentiment dominating the Western Australian property market at the moment.
After all, there hasn’t been any let up in the flow of gloomy reports about the resources sector.
When you throw in a dose of weak statistics - such as falling population growth, rising unemployment and overall slowing economy - into the mix, you’ll end up with a lot of wary investors.
“There is a lot of negativity in the Perth housing market at the moment, which is understandable,” says Andrew Wilson of the Domain Group. “Perth recorded nearly two years of strong price growth before affordability kicked in. The local economy is really having an impact.
There’s a huge rise in unemployment, and the unemployment rate in WA is now higher than NSW for the first time in a long time.
Wilson says that while the fundamentals have dramatically shifted downwards, the situation is nowhere as dire as many people believe.
“The fundamentals don’t look good. The economy will continue to struggle, and affordability issues will still bite. But I don’t think we will see price falls this year,” he says. “I think these weaknesses will wash themselves through the system. First, homebuyers are particularly active, at around 18% of all activities in the state.
I think the Perth property investment market may not have an exceptional year, but it will have a reasonable year with 3-4% growth this year.
“I believe there’s just too much negativity in the Perth market,” he continues. “All we need is a turnaround in resource prices, and that economy will pick up again. There’s also a lot initiatives from the local government to boost economic activity. The market will be flat and sluggish, but I’m not convinced that prices will fall. I believe Perth has reasonable prospect, and I can’t see any longer term shakeout.
Projections: 2015 and beyond
Despite warnings by valuation firm Herron Todd White that Perth's inner city may suffer from an oversupply in 2015, some property analysts say these fears are unfounded, that upcoming tighter Governmental regulation and financing requirements will ensure builders meet, rather than exceed, buyer demand.
We have had strong property market growth over the past 12 months and Perth has experienced a significant increase in unit development and a lot of construction is underway. There is a down turn in the mining sector and this is having some effect on the rental market. However, we should see renewed activity in oil and gas in WA taking up some of the slack.
Contact us for more information on recommended suburbs and locations in the Perth property investment market.