We predict the first half as one of mixed and moderated results whilst the second half as opportunistic, with a positive change in activity if interest rates stabilise and potentially reverse in response to economic shifts.
Notwithstanding, the outlook for the local residential market remains one of the most positive and healthy in Australia for good reason.
Interest rates have impacted mortgage cost and loan capacity, consequently having a direct and varying effect on all residential markets. FOMO is no longer a motivating factor of buyers, but it is for tenants.
However, it is wise not to over generalise this aspect, especially as the WA market is adjusting differently to the major east coast markets, which are attracting most of the recent media coverage about market distress.
By comparison to other capitals, Perth prices have held firm since June and this trend is likely to remain whilst strong buyer and tenant demand continues against continued low inventory rental and sales stock across most markets.
The first home market will likely moderate due to the level of bought-forward demand activated by COVID-driven government intervention.
Other market segments such as upgrade and lifestyle-motivated buying is likely to continue, with houses to outperform apartments especially those in high density, median priced complexes.
We anticipate the interest rate impact will potentially be more evident in the first half of next year. Borrowing capacity will be reduced and the increased mortgage repayments will affect some cost sensitive buyers, which will moderate demand and plateau prices.
However, due to household savings and housing affordability in WA, the interest rates will not have the same level of impact as other Australian states.
The rental market will continue to be challenged due to elevated demand verses restricted supply.
Rental values will continue to rise, but at a reduced rate of increase, and a likely correction is predicted in the second half of 2023 as rental stock may increase off the back of new builds being delivered.
The other aspect of the rental market to consider is the attraction for investors.
With the local market recently delivering the highest gross rental yields of all capital cities, WA will continue to attract investor attention. This is already evident from high east coast investor activity we are noticing.
It is anticipated this strong yield trend will continue in 2023 and attract increased investor buying activity.
Property buyers, whether for owner occupation or investment, should have a confident outlook in relation to WA property.
To read the full special report published in Saturday's West Australian newspaper, featuring Realmark Managing Director, John Percudani and 10 industry experts who presented their insights for this year's residential property market, follow the link here: https://edition.thewest.com.au/html5/Default.aspx