When it comes to property prices across Australia, the news is mixed. Over the past year, there has been a noticeable slowdown that holds a soft but real threat of continuing for the next 12 months. Real estate agents are blaming it on the high supply levels, a reduced investor segment and stringent banking regulations.
However, there are some pockets of optimism. Victoria and New South Wales have shown a reassuring upswing with the Melbourne and Sydney markets bringing in some cheer. South Australia has seen Adelaide swinging between moderate growth rates to a minor decline. Brisbane and Darwin have faced periods of moderation in their prices.
Price slump in Perth
Bucking the national trend of marginally rising or even periodically stable property prices, the one city that has been witnessing a consistent fall is Perth. So much so that the median house price has dropped consistently since 2013. The end of the mining boom from this period has put a brake on the housing prices, analysts say. In just the last year, Perth real estate prices saw a 5.6% drop in some suburbs. However, analysts say that the picture is mixed across suburbs, with some showing a different story.
Mixed picture across suburbs
Despite the current declines, there is actually an ongoing uptrend in some suburbs. Leading this charge are Fremantle, Yanchep, Como and Falcon who have been recording growth percentages between 6 % and 10 %. With a leading 9.3 % growth rate, Fremantle is right up there with a median of $805,000. While Perth unit prices saw a drop of 7.8 % annually, Fremantle has even recorded instances of beach facing apartments going at double the city median1. Of course, the suburb’s image as a throbbing beachfront has, no doubt, helped its cause.
To invest or not!
Experts have cautioned against entering the Perth real estate market with a short term view on returns. Instead, those with a longer investment horizon are suited to the volatile nature of the market here. In other words, Perth represents a low risk environment to those who want to buy property with a long term plan in mind.
The rental scene is also no different. While most cities, with the exception of Sydney and Canberra, registered either a flat or a declining growth rate at a per unit level, Perth led the negative list too. The June 2016 quarter showed a 2.5% decline, which was attributed to the slowdown in the mining economy in the region.
However, it is good news for tenants as they can take the opportunity to upgrade to newer, more modern homes for the same amount of rent, unless they’re looking closer to the CBD. Leasing activity in the Perth metro area has actually increased significantly and is higher than they were at the same time last year.
Be a smart investor
Though a surplus of properties still remain on the market, property market observers say that property prices in Perth will start to improve in early 2017 and will return to moderate growth. With interest rates at record lows and a plentiful supply of affordable homes to choose from, if you are a smart investor there are plenty of opportunities for you. All you need to do is to research the market well. You could end up buying good properties at bargain prices.