Ripple effect indicates second stage of recovery for Perth property market

Friday, 28th Sep 2018
Categories: Market News, Newsletter

Recently released statistics suggest the Perth residential property market is entering its second stage of recovery.

Following reports of initial price growth in Perth’s premium suburbs, the latest data released by the Real Estate Institute of Western Australia (REIWA) indicates this growth is now shifting into surrounding areas, a trend known colloquially as “the ripple effect”.

Momentum Wealth’s Research Advisor Shaun Strickland says this trend is driven by investors seeking to take advantage of the market’s relative affordability to secure high-quality investment opportunities.

“Due to their relative affordability, aspirational suburbs have seen an increase in demand, which has now stemmed outwards as potential buyers may be missing out on investment opportunities or starting to look at more affordable alternatives in surrounding suburbs,”

“The fact we are now seeing growth in these secondary suburbs is a strong indication the market is entering the next stage of recovery, with demand expected to extend outwards from here,” he said.

Secondary suburbs trending

While premium suburbs such as Bicton, Nedlands and Subiaco experienced some of the highest levels of growth in the year to June 2018, quarterly statistics reveal a new progression for the Perth market.

Leederville, Lathlain, Inglewood and Como were amongst the suburbs to benefit from higher levels of growth in the June quarter, with Leederville boasting the highest preliminary quarterly change at 43.8%.

“These suburbs hold obvious appeal to buyers who are still able to benefit from close proximity to amenity and nearby activity centres, but without the high price range often associated with Perth’s premiere suburbs,” Mr Strickland said.

Annual growth statistics showed seven of the ten highest-growth suburbs for the year were priced upwards of $1 million, with recent quarterly statistics identifying suburbs with price points between $700,000 and $950,000 as the more prominent growth areas for the June quarter.

Momentum Wealth’s Managing Director Damian Collins said buyer’s agents are already noticing an increase in levels of competitions during property negotiations.

“With the Perth market warming up and attracting more interest from both interstate and local investors, our buyer’s agents are seeing a definite increase in competition for premium housing stock”

“Investors looking to take advantage of these key investment opportunities will need to act soon or risk losing out on their property of choice at current prices,” he said.

Not all properties are equal

Whilst this trend presents a key opportunity for investors to benefit from these suburbs, Mr Collins warns investors need to remain vigilant in their investment decisions.

“Not all properties within these suburbs are going to be good investments, so investors need to make sure they are still doing the research and making objective decisions,”

“With rising levels of competition, it’s easy to miss red flags or pay too much for a property, so my advice is to crunch the numbers first and stick to your buying strategy, or work with a professional buyer’s agent to ensure you’re making an informed investment decision,” he said.