Strong property conditions expected in WA 2021: REIWA

After hitting the bottom of the market during 2020, REIWA’s 2021 outlook indicates the Western Australian property market should experience steady growth in both the rental and sales market - something not seen since the strong conditions in 2013.

REIWA President Damian Collins said 2020 has been an unusual year for property, however despite the lull experienced during the start of the COVID-19 pandemic, WA is showing extremely positive signs.

Perth sales market

“Sales activity in Perth at the start of the year was sitting at approximately 2,900 transactions per month followed by an uptick where we are now seeing nearly 4,200 transactions,” Mr Collins said.

“Listings for sale have reached a 13- year low with just over 10,000 listings for sale on reiwa.com, putting upwards pressure on prices.”

Agents on the ground have reported that recently it is not uncommon for sellers to be receiving multiple offers, including being offered thousands more than the advertised price, something which has not been seen since 2013.

“With record low interest rates looking like they will be around for a while, many buyers are finding it cheaper to buy than rent. This is one of the reasons why we can expect sales activity in 2021 to continue gaining momentum,” Mr Collins said.

“In 2020, Perth was the lowest median house value of any capital city in Australia and with the increase in population growth due to people returning to WA from overseas and interstate, this could change in 2021.

“While house prices were largely stable over the last 12 months, it is expected that prices will increase between six and 10 per cent over the next 12 months.”

Perth rental market

After an unexpected 2020, Perth’s rental market has reached crisis levels with the vacancy rate reducing to below one per cent due to the flow on effects of COVID-19.

“Population growth increased 1.5 per cent during the 12 months to March 2020 and with more than 1,000 international arrivals expected per week, plus the domestic borders opening, the rental market could get more competitive for renters at the start of the year before it gets any better due to the low levels of available rental properties,” Mr Collins said.

The limited stock of rentals available has resulted in an upward pressure on rents with the median rent increasing from $350 to currently sit at $380 per week in the last few months, which is an 8.5 per cent increase.

“We can expect rents to grow an additional 10 to 15 per cent throughout 2021, however even with this increase, WA is still the most affordable capital city to rent in across all Australian states and territories” Mr Collins said.

The positive outlook for the Perth rental market, will hopefully attract an increase in investors looking to take advantage of the favourable market conditions. This will help boost the available supply of rental properties thereby keeping rent increases to reasonable levels.

Regional WA

REIWA expects the overall market conditions to improve in regional WA during 2021 as a direct result of population growth and change in lifestyle preference due to the COVID-19 pandemic and general market conditions.

Mr Collins said we have already seen significant improvements in Karratha, Port Hedland and Kalgoorlie Boulder during the latter half of 2020 with increased rental demand and sales activity.

“Increases in certain mining areas are due to companies moving their staff closer to the mining sites to live while the borders are closed. While this has put upward pressure on the rental and sales market, other regional centres are also experiencing lowered vacancy rates, limited rental stock and an increase in median rents,” Mr Collins said.

According to reiwa.com data, at the latter end of 2020, Albany’s vacancy rate dropped from 0.9 per cent to 0.4 per cent, Bunbury was down from 3.1 per cent to 0.7 per cent and Geraldton was 5.1 per cent to now sit at 1.5 per cent.

“While decreases in rental stock can be explained by higher population growth and low investor activity, it will be interesting to see how working from home impacts lifestyle choices and if we see an increase in demand for regional properties in 2021 due to people opting for an alternative lifestyle while working from home,” Mr Collins said.