The highly anticipated recovery of the WA market was widely assumed to be a dramatic and prolonged experience. In recent months, a number of key indicators, however, have begun to show positive trends. While it is still too early to say things are re-correcting, data from the last quarter are providing signs of encouraging alignment in the marketplace.
These realignments have been noticed across a variety of market factors;
•Whilst sales volume remains about 30% below the decade average and values are about 22% below the 2014 peak, the rate of decline has now slowed and is improving.
•The median price for housing in WA is now the most affordable in Australia and is undervalued at $452k.
•Stock levels remain tight, sitting roughly 14% lower than last year, with the flow of fresh stock to market the lowest since 2012.
•Rental growth is the strongest of all capital cities, with the exception of Hobart due to particular circumstances.
•Whilst negative equity is still a challenge for some owners, credit flow is improving, with the current cost of finance allowing for more homeowners to refinance and move forward.
•Federal Government infrastructure stimulus spend in WA is strongly anticipated for 2020. This spend will be in addition to the promised pipeline of State Government capital investment, such as Metro Net.
Last quarter also saw improvements throughout the population and income aspects of the WA economy. Population growth came through an increased intake of interstate and overseas migration, all the while, employment opportunities also improved. Wage growth continues to plateau; however, interest rates are now at 1950’s pricing; making access to capital attractive.
This combined shift in affordability and flow of capital will entice investors to take advantage of low vacancy rates, improving returns and the expectation of forward capital value growth in the WA property market.
When speaking with Realmark Director, John Percudani, he explained that from his experience “market corrections are usually fragile, and often undergo correctional tests before consolidating. From the extremes of this last decade, the prolonged plateau was to be expected, but is still a unique period.” Mr Percudani went on to say that “whilst we all wish for a rapid recovery this is not likely, but rather a progressive positive consolidation of the market through 2020 and into 2021”. This has been suggested for some time by Mr Percudani, as well as other market leaders, with the data appearing to confirm these notions, rather than that of those making premature statements about market recovery.
Mr Percudani explained that “at Realmark, these anticipated conditions and timings have been planned for; much of the ongoing decision making and investment is to ensure we collectively are well placed to take benefit from the improving market”. While the business and its leaders recognize the need to remain cautious as it moves forward, Realmark does so with optimism towards the West Australian market.