- The mining boom saw house prices skyrocket and then slide over the last four years as market values declined.
- Perth’s property market is the most affordable it’s been in 17 years and there are signs that we’re approaching the bottom of the property cycle.
- Increasing job availability is a lead indicator for property price increases and will help drive the Perth house market into the next growth cycle.
- Our property team believes that certain areas of Perth are showing investment value in the long-run.
We are happy to announce that we are launching our first Perth property in mid-February. With this upcoming launch, we’d love to dive into Perth’s culture, economy and property space with you.
When you think of Perth’s economy, what comes to mind?
Mining. And quokkas. But mainly mining.
It’s well known that Perth’s economy is predominantly built on the mining industry with the boom of 2003-13 seeing the GSP (Gross State Product) flourish, unemployment rates decline and disposable income grow exponentially1. This was paired with similarly lofty increases in house prices – the median price more than doubling over the decade2.
As mining started to decline, median house prices slid 10% over the past four years (2014-18) and the housing market sat oversupplied 2.
However, there are now signs of stabilisation and recovery for Perth’s economy and property market:
Number of job vacancies across the public and private sector are at their highest levels since February 20133. This upward trend is a lead indicator for property price increases and will help drive the Perth house market into the next growth cycle.
Iron ore spot price:
The commodity is trending upward from 2015-17 after declining in the 4 years preceding. Perth’s median house price has historically shown correlation with iron ore spot prices given Perth’s heavy reliance on mining for its economic output4.
Beyond the economic indicators, our property team believe certain areas of Perth are showing investment value due to:
According to the Affordability Index by Performance Property Advisory, Perth properties are the most affordable they have been since 2002 with only 24% of the average income required to pay off the average mortgage5 .
According to Nerida Conisbee, Chief Economist for REA Group, Perth has the third-highest demand growth out of all Australian capital cities at a 6.4% increase in 2018 (based on the number of property pages viewed on realestate.com.au)6. This is usually seen as a sign of upturn and is supported by house vacancy rates dropping over the last two years to 4.1% in 20187.
The Perth market has the 3rd highest rental return (3.9%) out of the five major capital cities (in front of Melbourne and Sydney) and Perth’s median house price has consistently stayed behind these two large cities8.
Alright, Alright enough with the numbers!
What is it like to actually live in Perth?
Perth was ranked the 14th most livable city in the world in 2018 according to the Economist9 and locals love the laid-back and easygoing vibes. In and around Perth, you can find some of the world’s best beaches and enjoy watching the colorful sunsets over the water. The city also has a growing culture of small bars, boutique cafes and eateries, with locals taking full advantage of the 72% sunshine throughout the year10.
Kings Park (a larger and more manicured version of New York City’s Central Park) boasts a panoramic view over the CBD and is home to 1,000s of species of native flora in the adjoining botanical gardens. A half-hour drive west, you can find the historic seaside suburb Fremantle and visit the national institution known as the Little Creature Brewery. And no trip to Perth is complete without visiting Rottnest Island to cycle, snorkel and catch a selfie with those lovable little quokkas!
Watch this space for the property reveal coming soon!
- Reserve Bank of Australia – https://www.rba.gov.au/publications/bulletin/2014/dec/pdf/bu-1214-3.pdf
- CoreLogic Hedonic Home Value Index – Greater Perth W
- ABS – Job Vacancies https://www.abs.gov.au/AUSSTATS/[email protected]/DetailsPage/6354.0Nov%202018?OpenDocument
- BIS Shrapnel
- Residex – CoreLogic Housing Market Update
- Realestate.com.au – https://www.realestate.com.au/australian-property-market/property-report-july-2018/#WA
- SQM Research
- CoreLogic Hedonic Gross Rental Yields Apr 2018