Strong rental demand signals economic uptick yet engagement with Asia a missed opportunity
A strong increase in rental demand and lifts in Perth’s premium suburb prices indicate the WA economy is beginning to turn around, however engaging with the Asian market is a missed opportunity for the State.
These were the key messages from Nerida Conisbee, Chief Economist from REA Group who spoke at Property Council WA’s Residential Property Recovery Breakfast this morning.
“We have seen a drop in house prices by 2.2 per cent over the past 12 months – but overall we think Perth is back in the game,” Ms Conisbee said.
“The problem for Perth has been jobs. That’s something that is really turning around. Jobs are being created here and they have been growing quite strongly over the past couple years,” she said.
“Obviously, the housing market hasn’t fired up, but there’s indications it’s beginning to. What we are starting to see is prices in premium Perth suburbs increasing. Places like Nedlands, Dalkeith and North Fremantle are seeing over 15 per cent in price growth. When you’re looking at a market that’s in recovery, you look at how the best suburbs are performing – at least initially.”
Ms Conisbee highlighted how an increase in rental market demand is a direct indication that buyers are returning.
“Perth rental demand is really starting to increase as well. Measuring by rental demand is a bit purer, because if you look at who rents, it’s commonly people who are moving here for jobs. People don’t typically buy before they move, so an increase in rental demand is an early indication that the buyer is back,” Ms Conisbee said.
“In 2014, we saw a 34 per cent drop in rental demand in Perth following the mining boom and now we’re in a much different position with demand increased to over 20 per cent – which we haven’t seen over the past 4 years,” she said.
“We are seeing a significant draw-back in foreign buyers, so it’s not an ideal time to be introducing a stamp duty surcharge on foreign buyers. If they are starting to leave the market without it – you don’t want to damage things even further.”
Attracting foreign investors is a missed opportunity for the WA property market, one that should not be overlooked while our neighbours in Singapore turn their heads toward us, Ms Conisbee explained.
“There are an enormous number of Singaporeans looking at Perth property, even favouring it over Sydney property,” Ms Conisbee said.
“Singaporeans are an enormously important market to Perth which really needs to be embraced, particularly around education. A lot of Asian buyers are very focused on suburbs that are close to universities.”
WA Property Council Executive Director, Sandra Brewer said “Whilst the majority of homes are sold to owner occupiers, many projects and jobs wouldn’t exist without foreign buyers buying-off-the plan. The introduction of the foreign buyer stamp duty surcharge will stop new projects getting out off the ground.”
“The Property Council will continue to advocate for reversal of this decision, and for policy that drives jobs, prosperity and ultimately, creates thriving communities for WA.
Panelists who contributed to the discussion included: Paul Lakey - Regional General Manager West (WA, SA, NT), Peet Limited; Tiffany Allen – Director Land & Housing Construction Department of Communities; Paul Blackburne – Managing Director, Blackburne; and Richard Jeffcote – Director of Capital Transactions, MRA; and Gavin Hegney - Property Analyst as Moderator.