The Western Australian housing market continues to be the most affordable compared to any other major Australian capital city, according to recent CoreLogic data.
But there is no doubt the rising cost of food, fuel, health and housing is causing a strain on the purse strings of many people searching for their perfect home.
Looking at what lies ahead for the WA residential property market in 2022, Realmark Managing Director and Founder John Percudani said the sentiment among buyers, sellers and investors remained positive.
“Perth is the fourth largest city in Australia and is now the most affordable city in Australia,” he said. “Interstate migration will be attracted to the WA housing market due to economic factors.
“The WA labour markets are tight, with unemployment sitting below four per cent and jobs growth rising at six per cent per annum, which is the fastest of any state in Australia, making the move to WA for employment a very attractive prospect.
“Combined with affordability and investment prospects, WA is a prime market to purchase property in Australia.”
Mr Percudani said listings continued to be low while the rate of absorption of new listings was elevated.
A major influence on the WA housing market in recent months was the border closure but, as the state borders are now open, the uptick in international and interstate migration will have a corresponding impact on rentals and buyer demand.
“Demand continues at a ratio of one to two sales per listing to be ahead of the supply,” Mr Percudani said.
“Listings that are being added to the market are clearing very quickly and this extenuates the apparent lack of stock available.”
In Perth, current listings were down 6.2 per cent compared to the same time last year due to transactional activity and demand for housing across WA.
“What we can see for supply are listing flows approaching average five-year trends and, underlying this, we are seeing increasing demand for market appraisals,” Mr Percudani said.
“This is normally a precursor for stock being added to the market.
“The market will continue to be ahead of supply in 2022 but the balance of this could make for more healthy and sustainable market conditions.”
Mr Percudani said rental stock had been tightening across Perth and major regional markets.
“The rental market continually has low supply and low vacancy rates and this underpins a clear indication on housing demand in WA,” he said.
“This trend is set to continue throughout 2022, with ongoing solid demand and sluggish supply of new rental properties.”
Housing prices consistently and substantially outpaced income growth, however demographic tailwinds, low inventory levels and ongoing demand for coastal or tree change housing options was keeping upward pressure on WA prices.
The affordability of the housing market created a restricted access to properties and, with limited supply in listing levels, it was difficult for first homebuyers to purchase a home.
“With more active and informed buyers in the market and pricing remaining positive, this continues to be a favourable sellers’ market in WA,” Mr Percudani said.
“If you’re a seller, you should be confident in the market; you have a better opportunity now to have a rewarding sale outcome.
“When buyers versus listings is at a one-to-two ratio, essentially a sales result is assured.”
However, it is important sellers do not always jump at the first offer.
“Ensure your property is not being put through a quick sales approach, as the data indicates properties sold off market or at the first open may risk a lower sale price,” Mr Percudani said.
“It’s about delivering a smart sale not just a fast sale.
“At the end of the day, if there was a time to leverage great sales, great marketing, an optimised time on market and property presentations, it’s now.”
The WA market had a high yield and security for investors and good growth prospects with a relatively affordable buy-in price, but investors are yet to take advantage of these conditions.
“If you’re an investor, don’t wait for the typical herd mentality,” Mr Percudani said.
“The conditions in WA – be it property values, vacancy rates, yields on investment and moderating competition, combined with a solid economic background – all suggest that investing in the WA rental market would be a good move at this time and a sector of investment to move into not out of.
“WA has been on a different COVID-19 management timetable to other states and, due to the dramatic impact from the previous mining boom, investors may be distracted by previous cycles but the fundamentals suggest a positive investment story, rather than a negative one.
“It will be a much better financial decision to invest in WA in comparison to other states, where markets are offering lower yields and up to twice the buy-in cost.”
With the roll out of vaccinations and a significant easing in social distancing restrictions, an uptick in foot traffic for home opens and auctions has been occurring.
“As the population cautiously adapts, there is likely to be a shift in household spending and a slowdown in savings that may have previously gone towards a deposit for a home as WA is able to travel again,” Mr Percudani said.