Perth Residential Market – Reflecting on June 2020
July 17, 2020
June 2020 was a month of COVID-19 headlines across the country, but in Australia’s small town of Perth, those headlines were also dominated with mixed opinions about the Perth property market. To get our heads around what happened in June, we sat down with Lachlan Delahanty, Head Advisor at Performance Property Advisory to find out if what happened in June will stay in June, and exactly where things are headed in the months to come.
“The inconsistency in data interpretation is making everyone a little nervous. I’ve endeavoured to shed some light below on some of the more pronounced discussions in June.” Lachlan Delahanty, Head Advisor, Performance Property Advisory
Government stimulus driving activity
The significant spike in transaction locally was attributed to the Federal ($25,000) and State ($20,000) Government stimulus. REIWA.com.au reported 3,990 sales in June 2020, up 55% in comparison to May 2020 and up 45% more than June 2019. Land sales contributed to 1,471 for the month, an increase of 289% in the past year. However, what was more pleasing to see was the year’s 15% increase in dwelling sales to 2,519.
Although the increased activity in sales volumes aids consumer confidence, this house land activity looms as a potential danger to the already existing issue of urban sprawl and negative equity in fringe suburbs.
Limited supply holding prices
The median house price remained unchanged for June, which can be largely accredited to low stock levels across the board. To give context, in 2016, according to reiwa.com.au, there were almost 16,000 properties listed on the market here in Perth. Fast track to the last week in June 2020 and sales listings were recorded at 10,310. This significant reduction in stock is creating an influx in average home open attendance resulting in multiple offer scenarios.
A reduction in building activity in recent times in combination with increased retention in interstate migration numbers has put increasing pressure on vacancy rates locally. Perth and Darwin are the only two states to see a reduction in vacancy rates year-on-year on the back of COVID-19. According to reiwa.com.au, there were only 3,963 properties available for rent in the last week of June, down 47% from the same time last year. As a result, rents have held at $350 per week in June. Current legislation prohibits rental increase during COVID-19. However, once removed, increased competition and low stock levels will support rental growth moving forward.
To buy or to sell?
At Performance Property Advisory, it is our view that now is not the time to sell, and if you feel you are in a position where you need to sell, you should certainly reach out to an Advisor to discuss your options. We are still buying for our clients and are implementing their long-term strategies and seeing opportunities within the upgrader space. Although the stock is proving to be extremely limited within these pockets, we have seen a significant shift towards off-market transactions.
SQM Vacancy Rates gathered from REIWA.com.au
Monitoring the property market is a really important part of your home ownership and property investment strategy. There are also lots of other considerations to take into account when it comes to buying residential property. Download Credabl’s Home Buyers Checklist for guidance on what you should be considering if buying a home is on your radar.
The Credabl team is available to chat live on our website www.credabl.com.au or you can call one of our specialist lenders on 1300 27 33 22.
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