Blink and you’ll miss it.
- In November, properties across Perth sold at the fastest rate since 2006
- One developer sold a year’s worth of blocks following government stimulus
- Property forecasters say more investors are likely to enter the market in 2021
As Stephen McVey made the jump into property investment this year, houses were moving fast.
“You’d wait your turn, have a quick look around. You go home and think about it, and you’d come back and it’s gone,” he said.
Mr McVey and his wife want to self-fund their retirement, and started looking into property as interest rates dropped.
They settled on a place in Halls Head, near their own Mandurah home.
Outer suburbs driving biggest house value increases
Three Mandurah suburbs — Wannanup, Lakelands and Dudley Park — feature in CoreLogic’s list of the greatest 12-month change in value for houses in greater Perth.
It is a turnaround from earlier this year, when the region saw higher falls in property prices with the onset of COVID-19 than anywhere else in Australia.
Market values were down by 2.2 per cent from March to May, with dwelling values 38 per cent below their 2006 peak.
Local real estate agent Frank Lawrence said the area was coming off a very low base.
“Mandurah’s been undervalued for a long time,” Mr Lawrence said.
“I think when you look at a market like Mandurah that’s low in supply but high in demand, then you’ll see an increase in prices follow, and we’re already starting to see that slight increase.
In the unit market, Broome’s Cable Beach has seen the biggest 12-month change in value, up 22.3 per cent.
Units in the redeveloping inner suburbs of Perth have also recorded a boost in value, with Mount Pleasant, Ascot and Burswood seeing significant growth.
Big growth in greenfields, infill
Mr Lawrence said the rush for land once COVID-19 building incentives were announced was enormous.
“We act for a land developer at Madora Bay — we typically sell between 70 and 80 blocks of land a year,” he said.
“We went from an historic low to an historic high basically overnight. There was a 211 per cent increase in new home sales from May to June, which is simply extraordinary,” she said.
“We’re seeing a lot of activity in the greenfields areas … but we’re also seeing really interesting activity in some of the infill areas — places like the City of Stirling, which we think is bowl-over activity.
The Housing Industry Association’s heatmaps show a flurry of house sales in Swan and Wanneroo in the north metro area, Armadale, Cockburn and Rockingham in the south metro area, and Busselton regionally.
Investors still missing in action
Despite the low rental vacancy rates — REIWA reported 0.8 per cent in November, equalling the lowest rate ever recorded — and historically low interest rates, experts say investors like Mr McVey are in the minority.
“The latest finance figures show a lot of owner-occupiers coming through, but not as many in the investor space,” Ms Hart said.
The forecasting group called out concerns about a lack of housing stock heading into 2021, particularly with the end of the moratorium on evictions coming up in March.
“We’re watching it closely, because that was one of the key issues we called out because we’re quite concerned about what might happen after those measures end,” she said.
Eliza Owen, CoreLogic’s head of research for Australia, said she expected the continued growth in the market to create a rebound in investment activity.
“Rents across Perth were up 8 per cent over the year to November, and that’s just a huge increase relative to other capital cities, and relative to historic growth rates in Perth,” she said.
“That’s probably going to entice more investors into the market.”
Flurry of new builds causing delays
Ms Hart said 2021 was set to see a lot more titled land coming on the market, which would help ease one of the issues stemming from the building incentives.
“What we saw was a couple of key pinch points — a shortage of titled land, shortages of labour, and potential delays with processing from lenders and local government,” she said.
Build times are still set to be longer than usual — Ms Hart estimates around eight weeks extra continuing throughout 2021 to 2022.
“We’re still seeing some pinch points around labour, obviously the challenges around borders continue to pose issues for people coming into WA to work, but the industry is getting organised,” she said.
“They’ve just got to sequence the work and do what they can.”
Ms Hart said some of the glut had been smoothed out by the State Government announcing a longer period to begin building in order to qualify for a grant — while contracts still need to be signed by December 31, site works now have a year to commence.
2021 looking largely positive for buyers
Experts are upbeat about the 2021 property market in WA overall.
“We’re expecting this to be a positive year, with good activity in the established market and the new build sector,” Ms Hart said.
Ms Owen said the market’s interrupted recovery was on the up again after early shutdowns from the pandemic, but warned it might not be all smooth sailing.
“It seems pretty clear that Western Australian property markets are coming into an upswing, but that could be disrupted by a resurgence in cases of COVID-19, as well as disruptions to the mining sector, which could occur out of trade tensions with China.
“It just depends on how those sorts of deals are navigated in the year ahead.”