With the end of the year fast approaching, conversation is quickly turning to 2019. This is especially the case in real estate, with agents, buyers, sellers, tenants, investors and even casual observers wondering what’s in store for Western Australian real estate in the New Year.
REIWA recently released its outlook for 2019, which provides an overview of the market conditions expected during the forthcoming 12 months. The Perth property market has been fairly subdued during 2018 and REIWA expects to see stable or similar results next year, with the rental market shaping as a notable exception.
Weekly sales have hovered at around 500 per week in Perth throughout 2018, while listings for sale were largely unchanged from 2017 levels, fluctuating between 13,000 and 16,000. Listings should continue to trend at current levels throughout 2019.
While we expect sales activity in 2019 to largely reflect what we’ve seen this year, there is a possibility rising consumer confidence levels, coupled with improved housing affordability, could translate into increased sales volumes in 2019. And if weekly sales remain at current levels or better, Perth’s median house price could improve during the next 12 months.
Tightening lending standards loom as a potential deterrent to any sales or median price improvement in 2019, as this could restrict the number of people who are able to purchase a property. Additionally, if the banks choose to increase interest rates again, this could adversely affect buying and lending conditions in WA.
REIWA analysis shows the upward trajectory of the Perth rental market should continue through 2019, with stable population growth and slowing new-building construction levels the key drivers for some marked improvement in this sector.
With population growth in WA expected to remain stable and new dwelling commencements slowing, Perth’s available rental stock should continue to decline. This should see competition amongst tenants increase, putting further downward pressure on the vacancy rate, which now sits at 3.3 per cent.
Remarkably, Perth’s overall median rent price has held at $350 per week since April 2017 – the longest period of stable rents Perth has experienced since REIWA first started recording rental data in 2001. If listings continue to decline and leasing volumes remain healthy, we should see the overall median rent price increase in 2019 for the first time since September 2014 – which will be a nice change of pace for landlords.
Pleasingly, the WA market appears to be stabilising and moving towards a recovery, however, REIWA remains cautious about expectations of rapid growth during the next 12 months.