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As first homebuyers return to the Perth market, hopes are high that capital growth will pick up in 2012.

The Perth market has been showing renewed signs of life during the spring selling season, with first homebuyers leading the charge.

Sales activity has been slow in the wake of the GFC, says REIWA president David Airey, but this upswing in first homebuyer activity is a much needed shot in the arm for the Perth property market.

“Sales transactions are probably down by 30% going back to 2008, but in the last couple of months first homebuyers have been driving the market,” he says.

“Interest rates are stable, there’s a lot of stock on the market, affordability has improved and wages in Western Australia have gone up.”

Strong rental market

For the time being, this increase in first homebuyers hasn’t had a dramatic enough effect on sales activity to hit the city’s solid rental market.

“The rental market is probably stronger than it’s ever been, and that’s down to the lack of sales activity,” says Airey. “It’s quite an unusual dynamic: the sales are slow, but rentals are strong.”

The increasing popularity of public transport is also well worth keeping an eye on, says Airey. According to Department for Transport figures, public transport use in Perth has increased by 67% over the past 10 years – three times the rate of population growth over the same period.

He notes that investors have been targeting those parts of the city that have good transport and infrastructure, but are also undergoing some form of urban renewal that will aid long-term capital growth.

“Anybody looking for short-term gain is kidding themselves,” he says. “This is not a short-term market; it’s a longer term recovery.”

Confidence issues

One factor that’s been keeping the Perth market in check, says BIS Shrapnel senior manager, residential property, Angie Zigomanis, is a general concern about how planned new tax regimes will affect the state’s mining industry.

“One of the reasons why prices are still weak is because they’ve got a Liberal state government versus a federal Labor government. So there’s probably a lot of negativity that gets bandied around because of the mining tax and carbon tax, and people are a bit petrified that their mining boom will be cut short,” he says.

He adds, however, that confidence – and capital growth – should pick up towards the end of 2012 as the state’s major mining projects take off.

“People have a lot of concerns that probably aren’t as well founded as they think they are,” he says.

Winners and losers

Regionally there have been some winners and losers in the Western Australian market in recent times. Airey notes that the state’s south-west, in particular, has struggled.

He picks out Mandurah, around 70km south of Perth, as one of the south-western towns that grew too fast too soon.

“Mandurah took off in the last 10–15 years because the government extended the electric train line from the city to Mandurah, which really opened it up,” he says. “A lot of people got burnt, and they’ve lost 40–50% in equity – mostly in off-the-plan purchases.”

The Pilbara region, however, continues to be Western Australia’s shining light. Housing shortages and inflated mining salaries have seen prices continue to rise in the key resource industry hubs of Port Hedland, South Hedland and Karratha, with Port Hedland’s median house price now tipping the scales at $1.3m, according to RP Data’s August figures.

Airey, however, points out that for those who can afford the high buy-in prices, it’s sky high rental returns that are now drawing investors into the Pilbara. “It’s more about the rents up there, and they are extreme,” he says

Source:  yourinvestmentpropertymag.com.au

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December quarter data from the Real Estate Institute of Western Australia show that Perth’s median house price increased slightly.

Although only a modest increase of around 0.5 per cent, this positive movement represents the first lift in median price since the market peaked in March 2010 and puts the current median at around $465,000; up by $5,000 on the revised September quarter figure.

 The data suggests that the fall in median price since March 2010 may have ended. 

REIWA President David Airey said the shift in median price was largely insignificant because it was triggered by an increase in trade-up buyers countering the influence of first home buyers. “First home buyers have been skewing the median downwards by generating large sales volumes of more affordable homes, but now this has been balanced with more up-grade buyers in the market who tend to purchase the more expensive properties,” Mr Airey said.

“REIWA data show that while first home buyers continue to be increasingly active in the market, we saw an increase in trade-up buyers during the December quarter and an increase in house sales of around 6 to 7 per cent which may have put a floor under prices.” 

“It’s a similar situation  with units, apartments, villas and townhouses also experiencing an increase in turnover and a 1 per cent increase in median price,” Mr Airey said.

The number of properties on the market fell by 12 per cent to 13,500 during December; the lowest level since May 2010. Perth’s long term average is around 12,000 listings. 

“The drop in listings is not unexpected and reflects a seasonal decline over the holiday period when some sellers remove their property from the market until the New Year. We may see listings swell towards the end of March as they have done in some previous years, so we’ll be watching that.”

“However, the encouraging thing is that listings are currently 12 per cent lower than the same time last year and well down on the peak of 18,200 we saw in April last year which pushed prices down,” Mr Airey said. 

The number of houses for sale has fallen to its lowest level since March 2010, while land remains over represented with 2,800 lots on the market.

“The housing market seems to be stabilising with an increasing number of sellers adopting more realistic asking prices, with both the number of sellers discounting and the average discount both coming down in the quarter,” Mr Airey said. 

REIWA data show that around 68 per cent of sellers are discounting by around 7 per cent, while the overall market discount, once you factor in those sales which achieved or exceeded the asking price, dropped to 4.2 per cent in the quarter.

Mr Airey said the rental market is the emerging pressure point in the housing system, with the vacancy rate tightening further and rents for houses increasing. 

“Our preliminary data show the vacancy rate dropping to 2.3 per cent in the quarter and well down on the 3.4 per cent from the same period last year. While the median rent for units and apartments remains steady at $380 per week, it has increased by $20 for houses to $420 per week,” Mr Airey said.

The overall median rent for Perth has reached $400 per week, representing an increase of 8.1 per cent over the last year. 

“It’s evident there is greater confidence retuning to the property market reflected in the increase in sales activity in the December quarter and the fall in listings we saw across 2011.

“This bodes well for a positive start to 2012, but we still maintain some level of cautiousness given the global economic situation despite WA having a more robust economy,” Mr Airey said.

Source: REIWA communications

The Oberthur Primary School Fete is only weeks away, and is set to be the biggest since the schools inception. Local business, Mallison Real Estate will be the event’s major sponsor. On the 30^th of September 2011 this partnership was made official with a cheque presentation at the final school assembly for term three.

 The Oberthur Primary School Fete this year will focus on community, and as a result the hard working P&C have been approaching local businesses to sponsor the event. The involvement of Mallison Real Estate is an obvious choice, since the business was established in 1988 they have been involved with the community from a grass roots level. The final assembly for term three was the perfect opportunity to make the partnership official. Bruno Adolphe, representing Mallison Real Estate, presented a cheque for $500 to Tracey Lewis, President of the P&C. Along with this cheque Mallison Real Estate is significantly involved in the advertising of the Fete and will assist on the day with the Auction (to be held on the oval) and sponsor the student Art Exhibition (to be held in the music room).

 The Fete committee were successful in obtaining a community partnership grant through the City of Melville, and as a result some free activities will be available for children and families, including the Scout Climbing Wall and an animal farm. Funds raised from the Fete will go towards further establishing the community kitchen garden project and providing new playground equipment for the kindy/pre-primary areas. Local businesses and community groups will have the opportunity to have a stall at the event. If you would like to be part of the Fete, please contact Lynette Field 0401 943 648.

 Other Fete attractions include:

FREE Science Show courtesy of Curtin University Chemistry Club, Entertainment including Southern Suburbs Symphony Orchestra

HUGE Book Stall, Plants, Preserves, Craft and Cakes. Pony Rides, Bouncy Castles, Face Painting, International Food Fair and much, much more.

The Fete will be held at Oberthur Primary School , Nicholls Crescent Bull Creek, on Sunday 13^th of November between 10am and 2pm. This is a community event so we encourage all local residents and their families to share this day with Oberthur Primary School and Mallison Real Estate.