For anyone keeping a keen eye on the property market, you might have noticed that Western Australia is typically a few steps behind the East Coast when it comes to the property cycle. As you can see in the infographic below, the eastern states are nearing their peak before heading for a steadier market and then onto a decline, whereas WA is at, or almost at, the bottom and ready for our upswing.
In the past year, Sydney and Melbourne have both enjoyed home value hikes to the tune of 13.2% – 13.9%. Perth on the other hand has continued to fall by 4.2% over the same period. Currently, the median apartment sale prices in Perth has dropped 4.5% to only $425,000 – the lowest we have seen since 2011.¹
So what does that mean for us? Essentially, it’s indicating that while the East Coast market is on the way up again, Perth is well and truly nearing the bottom of the cycle…. and if you’re looking to buy, now might just be your time, as it won’t be long before our market follows suit and is on its way back up again.
So How Do We Know We’re At The Bottom?
Kim Bamford at Bam & Co Real Estate says, ‘’we know we’re nearing the bottom of the market… but how far away is the true bottom from now? How long should you wait to buy? In all honestly, we’ll never really know we are at the exact bottom until we are looking back at it, on the way up again. Remember, if you wait too long, you could miss it altogether!’’
Damian Collins, Managing Director of property investment consultancy, Momentum Wealth, predicted that property prices in Perth will start to improve as of early 2017, and the market will slowly return to moderate growth after that.²
While many of the mining towns in WA have experienced severe price crashes of up to 50% in the past few years, Perth has the ability to bounce back stronger than ever. New infrastructure projects, including major rail and road upgrades, the Perth Stadium & Sports Precinct, the $1.2 billion Perth Children’s Hospital and the New Museum WA project, as well as the redevelopment of Elizabeth Quay and Scarborough, mean the liveability in Perth is about to increase dramatically. Increased liveability is always a strong draw card for both investors and local buyers alike – so it really is only a matter of time before buyers catch on and the prices start rising again.
For buyers looking to purchase, the current state of the market presents an ideal time to do so at an affordable price while the cycle is still at the bottom.
If you’re wondering whether you should hold out and hope prices move south a little bit more – don’t! There are countless indicators and predictions of the market turning around in early 2017.
Plus, if you’re planning on holding the property for a length of time, it doesn’t matter if you buy in at exactly the bottom. Buying now, while the market is at this end of the cycle, will ensure you purchase for an affordable price. If you take the risk of waiting for it to potentially drop lower, you take the risk of the market rapidly turning around and missing your chance altogether.