The two-speed property market
The Perth market has entered into a recovery phase but not as one homogeneous property market. With prices in outer suburbs still stalling, Perth has become a two-speed property market.
There is currently a very diverse property climate in Australia’s most Western capital, with property prices in some areas going up when other suburbs struggle along, trying to shake off excess supply and falling house prices.
The first home buyer’s grant policy is also not making it easier for the Perth market. The grant of $10,000 is currently only available for new builds, resulting in a market where first home buyers prefer to buy land and build a new home further away from the city over buying an established property.
As a result, outer suburbs which feature a lot of development are contributing to oversupply, putting downwards pressure on prices in those areas. This in turn brings Perth overall median prices down.
But a different scenario unfolds when we look at suburbs closer to the CBD, and particularly in the second or third home buyer tiers. Houses in the $700,000 plus price bracket in more established suburbs closer to the city are selling fast. Prices in these suburbs are rising.
Damian Collins, managing director of Momentum Wealth, comments: “There is no doubt that in the established market at a higher price point we are seeing the start of a recovery in the market.”
This can be explained to some extent by the renewed confidence in the economy and increased job security. Buyers who had been sitting on the fence are taking advantage of the lower prices to upgrade and get into what are traditionally more expensive neighbourhoods.
While we do not expect the market to run away any time soon, we do know that often this kind of recovery causes a ripple effect, with areas neighbouring popular suburbs seeing increased demand and price upticks as people are being priced out of their first suburb of choice.
There are however still bargains to be had in Perth. You just need to know where to look and have the negotiation skills to get them. Our buyer’s agents have picked up on the increasing competition for investment grade stock. While prices in certain areas may not have started to move yet, savvy investors are snapping up opportunities before word gets out, cashing in on the capital growth that will occur once others do catch up.
It will not come as a surprise that by buying at a time when the market is bottoming or even in the early stages of recovery you have the best chance of getting accelerated capital growth. If you have been thinking about investing in Perth, now’s the time to get yourself organised. Contact us to find out how we can help.