The Perth property market was hit hard by the downturn in the resources sector in 2014, but 2017 has finally shown growing signs that the worst is now behind us.
Rental vacancies, (a lead indicator for the direction of the property market), started to fall during 2017 and there are now 9,000 vacant properties - compared to nearly 11,000 during 2016. This is a great sign... At the same time, 2017 saw the number of properties listed for sale in Perth stabilise, and recently, they've begun to fall!
The key drivers for the recovery have been improving economic conditions and a major slow down in new housing construction. Improving economic conditions are giving people greater confidence to buy a property while the slowdown in new housing construction has meant that the major oversupply in housing caused by the building boom between 2012 and 2016 is being absorbed by the market.
Suburbs that should most benefit from the continued recovery in the Perth property market during 2018 will be those areas in high demand from buyers where there is currently limited supply. Recent REIWA figures show that 40% of suburbs across the Perth region have a limited supply of homes for sale.
On average, suburbs across Perth have 1.3% of properties listed for sale. However, there are 95 suburbs which have a ratio below 1.3%. For example, in Nedlands and Greenwood, just 0.4% of properties are listed for sale. Established suburbs with current low levels of stock are generally located close to the City such as Mount Hawthorn, Leeming and Bullcreek all of which have just 0.6% of properties listed for sale.
There is also an undersupply of properties for sale in well-established coastal suburbs such as City Beach, Ocean Reef and Heathridge which only have 0.5% of homes currently for sale.
During 2018, we'd expect to see an upswing in property prices in these undersupplied suburbs of Perth while the overall market should remain steady with no further price drops. The rental market should also begin to recover during 2018 based on a further decline in the number of properties listed for rent. While rents overall may not increase during 2018, the huge discounting in rental prices that landlords have had to endure over recent years should come to an end over the coming year.