According to CBRE’s Australian Residential MarketView Q1, 2013 report, Perth’s shortfall of housing, coupled with nation-leading population growth, is driving major growth in the real estate market, as well as the construction sector.
The report showed that resource-rich Western Australia, along with Queensland, recorded the most improved levels of buyer activity during the first quarter of 2013.
CBRE Senior Research Manager Sam Reilly did however say that the gap in the two-speed economy would narrow as mining investment shrinks over 2013/2014.
“Despite this, Perth is expected to see growth in the property sector, with building approvals trending up as demand levels for vacant land continue to build,” Mr Reilly said.
“Following a sustained period of low activity levels in the residential construction sector, prospects are improving, which may in fact attract some construction workers back to Perth from areas such as the Pilbara as new job opportunities begin to arise.”
In the 12 months to March, 2013, the median house price in Perth rose 1.8% to $496,000. However, strong population growth and higher levels of buyer interest is expected to place upward pressures on property prices in the medium to long term.
Illustrating the improvement in buyer interest has been the sales volume increase, with the 12 months to March 2013 showing house sales lifted 16.2%, while the unit market recorded a 20.9% jump. This was significantly higher than the national averages, which sat at 6.1% and 6.9% over the same time period.
Capital growth reflected the heightened level of transaction activity in the unit market, with the median unit price increasing 11.4% over the 12 months to March.
Mr Reilly said the improved demand dynamic for Perth property was more pronounced as it followed a sustained period of fairly subdued buyer activity in the market.
Increased demand for residential property in the Western Australian capital has seen a reduction in the number of incentives offered by developers, while demand for infill developments has surged.
Perth’s existing housing market has also seen renewed activity, with properties in the low $1 million range experiencing high levels of movement – driving up competition in the market as a result.
The southern metropolitan area has seen considerable demand for properties up to $500,000, with this expected to translate into price growth over the short to medium term.
CBRE Director of Residential Valuations Michael Veletta said a shortfall of adequate accommodation in Perth was enticing more investors into the market.
“In particular, there is strong demand for units across Perth, which is prompting investors to look at future medium to high density development opportunities,” Mr Veletta said, adding that the current fiscal environment had made financing more accessible.
Over the 12 months to March 2013, house rental prices lifted 6.8% to $470 per week – offering yields of up to 5.0%.
By comparison, units recorded rental growth of 12.7% to $445 per week.
“The rapid rise in rental growth has acted as a greater incentive for first home owners to move out of rental properties, which has served to further stimulate buyer activity,” Mr Veletta said.