The property market in Perth showed signs of stabilising in the December quarter, after values remained fairly steady easing just 0.2% to $510,000 for the period.
Overall, the average dwelling price dipped 3.7% in 2015, with the March quarter having a big impact when prices dropped 2.7% alone.
December showed some green shoots for the market, though, as the average dwelling price rose 2.3% for the month and the market stabilised following a year in which conditions had eased.
At the end of December, the number of listings for sale dropped to 14,551, following a peak of 16,969 in November.
It’s not uncommon for listings to decline during this period, as sellers remove stock from the market over the holiday season.
However, the data to date shows that listings have remained stable since with about 14,990 properties for sale in early February.
Reports from our acquisitions team reinforce this theme with many of our specialists seeing lower buyer activity over the Christmas period before a noticeable pickup in the New Year.
Our acquisitions specialists have reported that much of this activity has been from owner occupiers, particularly young families who are seeking to trade up or move into specific school catchment areas.
The median rental price dropped $10 to $400 per week for the December quarter, with the average house and unit obtaining $410 and $380 per week, respectively.
Rental listings also increased to 9,532 in December, from 8,267 the previous quarter.
As such, investors need to meet market expectations around pricing or face long vacancy periods, which will ultimately cost more in the longer run.
Weaker commodity prices, and subsequently less resources-based investment, as well as slower population growth are continuing to result in short-term headwinds for the Perth property market.
However, the long-term fundamentals of the economy remain strong as it continues to transition to a more diversified market by growing other, nonresource related sectors, such as health, tourism, education, technology and professional services.
Given these slower conditions, investors can’t rely on the entire property market to increase in value.
Subsequently, it’s important to conduct thorough research to find properties that will outperform the market now, and into the future.
While the overall market in Perth dropped 3.7% in 2015, there can be large variances in the performance of individual suburbs.
For instance, during the calendar year 2015 there were 10 suburbs where the median dwelling price rose more than 6% and 5 suburbs where the median dwelling price dropped more than 10%.
This illustrates the importance of acquiring investment properties that will continue to record consistent capital growth for many years.