Many Perth suburbs still recording good growth: Terry Ryder

The Perth market is a good illustration of the need for investors to delve a little deeper with their research when assessing a market.

Many commentators give us sweeping generalisations, with comments about the state of play nationally or for a major city as a single market. This can disguise myriad differences in sub-markets and is often highly misleading.

Perth is top of mind because I flew there this week to address a seminar with the Blackburne Property Group.

The generalised figures show that Perth overall is a stagnating market. In the past 12 months, the median house price for the city overall has grown only 1% or so.

Perth, along with Darwin, was the national leader on price growth in 2012 and early 2013, before Sydney took over. Since then, Perth has gradually faded.

This shows up not only in the city median price data but in sales volumes – which peaked in Perth in mid-2013 and gradually declined since then.

But, as is always the case, there are many local differences. While there was little growth in the Perth median house price last year, many individual suburbs had good growth. Some recorded double-digit rises in their median house prices.

The areas that have continued to deliver good growth are mostly those who fit the simple formula I often write about: affordability plus infrastructure plus jobs nodes.

The suburb of Armadale recorded 350 house sales last year at a median price of $325,000, an annual rise of 7%. The suburb, and the LGA of the same name, is in the far south-east of the Perth metropolitan area, and is an example of markets that tick many boxes for home buyers and investors: affordable homes, good transport links, plenty of amenities, new infrastructure spending and proximity to jobs nodes.

Gosnells is another downmarket area that Perth people like to denigrate, often with the question: who’d want to live there? Well, someone does, because 439 houses sold there last year at a median price of $390,000, an annual rise of 8%.

Other suburbs around Perth did as well or better. Bentley was up 11%, Girrawheen 14%, Harrisdale 12%, Kewdale 17%, Mt Hawthorne 15%, Willard 13%, Langford 17% and Maddington 11%. There are many others. Not bad for a city where, according general media coverage, the market is dead and bereft of growth.

As an aside, a number of WA regional markets also did well in the past year, including Busselton, Mandurah and, surprisingly, previously-depressed Kalgoorlie.

So, what of this year? The sales trends suggest there will a lot of steady markets, based on their consistent sales patterns, and a smaller number of group suburbs, where sales activity is still rising.

The growth markets include a number of suburbs in the Armadale LGA including Kelmscott, the Rockingham LGA including Waikiki and the municipality of Wanneroo, including Tapping, Banksia Grove, Butler and Yanchep.

One of the standout features of the Perth market is the number of suburbs which produce highly consistent sales. That’s significant but suburbs that deliver the same numbers quarter after quarter have good price growth records.

High Wycombe is a good  example. Sales in the past nine consecutive quarters have been 84, 81, 89, 81, 80, 77. 83, 83 and 89. That’s a remarkable level of consistency. High Wycombe’s long-term capital growth record is 9% per year and it lifted its median house price 7% last year.

And there’s a suburb near High Wycombe that stands out for a variety of reasons. Forrestfield has a very good track record of growth and has increased its rate of sales significantly in the past 12 months, so further growth is likely. And there is a major boost in its future, with the $2.2 billion Forestfield-Airport Rail Link due to start construction next year.

TERRY RYDER is the founder of hotspotting.com.au. You can email him or follow him on Twitter.