Perth Monthly Market Wrap - May 2019

by: Brett White

With the winter finally creeping in, Perth’s climate is starting to get chilly and so with the property market. To start, there were 6,636 properties sold in Perth during the March 2019 quarter, resulting to a rise of 1.1 per cent compared to the previous quarter; but this is still a mediocre increase if we base it with last year’s March quarter. Unit median is also stable at $380,000 which is not as high, but fortunately there is an increase of 0.6 per cent on the median house price to $500,000 in this recent quarter.

Western Australia has a weak market condition for the past few years and is in a hard place currently. According to Herron Todd’s Monthly Review, “our stock levels are so high and population growth so low that any further development, greenfield in particular, will only result in greater depression of property prices for already struggling suburbs on Perth’s outskirts”. This highly affects land values that are now in an all-time low. You can now purchase as low as $99,000 for a 156 square metres of vacant lot in Two Rocks, $130,000 for a 180 square metre lot in Alkimos and a number of other vacant lots in other suburbs.

The Herron Todd Monthly Report also added, “Construction prices have also been exceedingly low, which along-side the First Home Owner’s Grant, has helped to create a fair amount of activity in the first-home buyer segment”. Since building a new home with your personal specification is affordable now, people would tend to build a new home rather than buying a 4-year old property that is previously lived-in. This trend affects the selling periods of properties in Perth making them stay in the market for an average of 72 days. And properties that are in the market for a long period of time, are forcing sellers to lower the price in order to sell.

On an end note, Herron Todd have stated it perfectly “land + build does not always equal value, however when you consider the location and perception factors, the gap is closing”.