Perth Residential Market Insights – July 2020
Perth Sales Market
Sales activity continues to trend higher
Sales activity in Perth’s property market continued to show sustained improvement in July, further accentuated by increasing demand in the land market following the introduction of government building stimulus (REIWA reported that land sales were up 121% compared to April). This surge in buyer activity saw property sales peak at 1,318 sales in the week ending 5th July, with the total number of sales across the month exceeding those recorded in July 2019 by 75%. While returning to more sustainable levels towards the end of the month, this activity continues to track around 40-45% higher than levels previously seen in 2019.
Sellers leveraging favourable conditions in land market
While buying activity continues to trend higher, stock for sale recorded a marginal 3% increase across the month. This was driven predominantly by a rise in land lots for sale – likely as sellers look to leverage increased buyer demand from the new government building grants. Despite the overall increase, existing housing stock has continued to tighten off the back of strong buyer activity, causing a further reduction in average days on market to 44 days (down from over 70 days in late 2019). Overall stock levels now sit 25% lower than the same period in 2019, leading to an increasingly competitive buying market in some areas.
Leading indicators for some suburbs
On the ground, our buyer’s agents continue to note high attendance at home opens and strong competition for quality stock, with a number of areas showing leading growth indicators in the form of high online property views and considerably low days on market (averaging as low as 12 days for some suburbs). While this is yet to translate into headline growth, a number of areas are already seeing the impact of these improved conditions, with REIWA reporting that one in three suburbs in the Perth metro region experienced median price increases across the month.
Perth Rental Market
Improving rental conditions supporting favourable rental returns
While the overall number of properties leased declined marginally across July, the proportion of total rental stock being absorbed continued to increase, with 24% of available rental stock leased in the week ending 2nd August compared to 15% across the same period in 2019. The strong resilience of this market, combined with the relative affordability of Perth property prices, has led to increasingly favourable rental yields, with CoreLogic’s July report showing gross rental yields of 4.3% and 5.2% respectively for houses and units in Perth – considerably higher than the combined capital city averages of 3.3% and 3.9%.
Rental prices remain resilient as stock continues to tighten
At 3552, the number of properties available for rent in Perth at the end of July was down 49% in comparison to the same period in 2019. Looking back a further year, this marks a stark difference from conditions in August 2018, when properties available for rent peaked at 10,646 and the resulting average vacancy rate sat at 7.3% (currently trending at 2.2% in July 2020). On the ground, our property managers are seeing this reduction of stock translate into increasing competition at home opens, often resulting in multiple offers from tenants for properties in high-demand locations. While COVID-19 legislation has placed a temporary halt on rent increases for existing tenancies, we anticipate this tightening of stock and the accompanying rise in competition will support rental growth in the longer-term once the emergency period is lifted.
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