PERTH MARKET RECOVERING
HOUSING CONSTRUCTION DRIVEN BY FAVOURABLE GOVERNMENT INCENTIVES
THE Perth property market is in recovery mode and tipped to draw buyers back, according to a new report.
Residential Property Spotlight: Perth, compiled by property investment consultancy Momentum Wealth, analysed the key demand and supply indicators influencing property prices.
It concluded the worst was behind the market following a threeyear cyclical downturn where supply outweighed demand amid record-high housing construction and slower population growth.
Momentum Wealth managing director Damian Collins said supply and demand were starting to rebalance, which would help buoy property prices going forward.
“On the supply side, the report shows that the number of properties for sale has hit a two-year low; meanwhile, the amount of new properties being built has returned to average levels after dwelling starts hit a record high in 2015,” he said.
“After three years of an imbalance, this tightening of housing stock will allow demand to catch up to supply and subsequently will help underpin property price growth going forward.”
The record-high housing construction in 2015 was driven by favourable government incentives for first-home buyers to build rather than buy established stock, while demand was weaker following slower population growth in the aftermath of the resources construction boom.
The report said this created a significant imbalance with supply outweighing demand, but this was now starting to equalise.
As well as the improving supply-side fundamentals, there was also increasingly favourable signs on the demand side.
“The research report explains that although Perth’s population growth has slowed following the end of the resources construction boom, it’s expected to rebound as the city’s labour market continues to strengthen,” Mr Collins said.
“Add to this the city’s encouraging housing affordability, which is the second best in the nation only behind Hobart, and the report explains that more buyers will increasingly return to the market as job stability firms and the economy continues to gain momentum.”
This included investors, who typically comprised one-third of the Perth market but had dropped to one-quarter of buyers in the recent downturn, according to the report.
“As the jobs market continues to adjust in the aftermath of the resources construction boom, we can expect buyer confidence to return to normal levels and strengthen as the local economy diversifies into tourism, agriculture, technology and education,” Mr Collins said.