Perth Residential Market Insights – June 2020
As the Federal and State building grants provide a new stimulus for buyers in WA, our team take a deeper look into some of the key market trends from REIWA’s June property market data.
New stimulus driving uplift in sales
Having already returned to pre-COVID levels with the easing of restrictions, activity across Perth’s sales market accelerated considerably in June following the introduction of the new Federal and State building stimulus. At 3,990, the number of properties sold was up 55% in comparison to May 2020, and 45% higher than the number of sales recorded across June 2019. As anticipated, the largest increase recorded was in land sales, rising 289% monthly as buyers moved to leverage the new building grants.
Competitive market supporting price resiliency
The uplift in sales activity has contributed to a continued downward trend in stock for sale. Traditionally, Perth is considered to be a “balanced market” at around 12,000 listings for sale – to put this into perspective, total sales listings as at the end of June 2020 were recorded at 10,310 . While notable across most segments of the market, this reduction in sales stock has been stronger in some areas than others, with the North-West suburban corridor recording the largest annual rate of reduction at 31% at the end of June.
On the ground, our buyer’s agents are noting that these factors combined are translating into stronger attendance at home opens and an increasingly competitive buying market, with high-quality properties in tightly held locations moving quickly, often with multiple offers from buyers. Combined with the strong resiliency of sellers through the COVID-19 period, this has supported ongoing price stability, with REIWA data showing that median sales prices across Perth remained unchanged at $475,000 in June 2020.
Leasing activity remains strong
As we entered the second month of easing restrictions, activity across Perth’s rental market remained strong in June, with 4009 properties leased in total. While the overall number of leased properties was similar to levels recorded in June 2019, the proportion of total rental stock being absorbed has increased considerably year-on-year. In the week ending 28th June 2020, 24% of total rental stock was leased, compared to 13% of total rental stock over the same period in 2019.
Rental stock continues to tighten
Combined with limited new stock coming on stream due to low levels of construction and subdued investor activity, this continuation of strong leasing figures has driven a downward trend in rental stock, now at the lowest levels seen in over seven years. There were just 3,963 properties available for rent at the end of June according to REIWA data – a decline of 15% from the month prior and 47% less than June 2019.
Similar to the sales market, some areas have benefited more from this stock reduction than others. Perth’s North East suburban corridor, for instance, recorded an annual rate of reduction of 52% in the month to June 2020, compared to Perth’s Inner which recorded a lower reduction of 25%. This is largely due to the high composition of apartment stock in CBD areas, with apartments accounting for 82% of overall listings compared to 48% Perth-wide.
Median rents holding steady
While varying across individual suburbs and properties, the overall decline in rental listings has led to an increasingly competitive rental market in low stock locations, with our property managers reporting high attendance at home opens and offerings above asking price for some properties in high-demand areas.
This had led to ongoing stability in rental prices, with median rents holding steady at $350 per week in June. While rent increases remain prohibited for existing tenancies under temporary COVID-19 legislation, we anticipate this rise in competition will support rental growth in the longer-term once the emergency period is lifted. For advice on what this might mean for your rental strategy, including the key factors to consider when positioning your investment property on the leasing market, check out this article from our property management team.
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