There’s no doubt that COVID-19 has imbued many facets of our lives with uncertainty.
For Perth’s property market, the virus pressed the pause button on what was an encouraging market recovery in early 2020, when we experienced four consecutive months of dwelling value increase – the longest stretch for six years.
Prior to COVID-19, WA in general was looking buoyant across a number of indicators. Unemployment was falling, jobs and population growth were trending up and housing supply was contained.
This positivity was flung immediately into doubt when the world changed as we know it. But while Perth dwelling values have fallen in the past couple of months, the falls have been slight, at less than 1%.
In addition, job losses across WA have been less than the eastern states. Our advantage stems from comparatively less exposure to industries which have been heavily impacted by COVID-19, such as arts, recreation, accommodation and food.
While, understandably, many of us remain uncertain about the state of the economy, consumer sentiment levels are already improving. WA’s excellent outcome in containing the virus, leading to relaxing of social distancing policies, has allowed many of us to look to the future with optimism.
While total listing numbers have not yet shown improvement, there is a rise in new listings, implying that new stock is being quickly absorbed by the market. Sales activity has bounced back quickly with 636 sales posted in the last week of May – a 16% increase on the same time last year;
The link between mining and WA’s prosperity could provide a clue to market stability. As resources investment declined following a steel glut in China earlier this decade, job losses and resident departures resulted in a continued downswing in property values.
With China housing the initial virus outbreak, it has also been the first to recover and its economy is already running at around 90% of pre-COVID 19 levels. Chinese steel producers look set to increase production, resulting in growing iron ore demand on the back of strong iron ore prices.
As such, the mining-property link which has dogged the Perth market in recent years could be the very thing which supports ongoing stability and even growth in coming years.
Coupled with this is our comparative affordability of housing – Perth’s median house value was just over $465,000 at the end of April, the lowest of any capital city.
The balance of affordable housing and comparatively resilient economic outlook underpins a case for cautious optimism in Perth’s housing market.
This article was written by Matthew Hughes, Managing Director of Capital Property Advisory, a property buying, acquisition and development company based in Leederville. Matthew holds a triennial certificate as a licensed Real Estate and Business Agent, and a Diploma of Finance and Mortgage Broking Management. He is accredited by Property Investment Professionals of Australia (PIPA) as a Qualified Property Investment Adviser(QPIA®). He is also the Chairperson of the REIWA Buyer’s Agency Network Committee.