THE Perth rental market is likely to be the WA property market’s shining light next year, according to REIWA.
The institute expects stability for the sales sector in 2019 with some notable improvements in the rental market.
President Damian Collins said conditions throughout 2018 had been fairly subdued, with the most significant improvements occurring in the rental sector.
“We’ve seen weekly sales in Perth hover at around 500 per week throughout the year, while listings for sale were largely unchanged from 2017 levels, fluctuating between 13,000 and 16,000,” he said.
“Listings should continue to trend at current levels throughout 2019.
“While we expect sales activity in 2019 to largely reflect what we’ve seen this year, there is a possibility that rising consumer confidence levels, coupled with improved housing affordability, could translate into increased sales volumes in 2019.”
Mr Collins said Perth’s median house price could improve during the next 12 months if weekly sales remained at current levels or better, but this could be impacted by changes to lending conditions.
“If lending standards tighten further, this could restrict the number of people that are able to purchase a property, which could negatively impact sales and prices,” he said.
“Additionally, if the banks choose to increase interest rates any further, this also has the potential to adversely affect buying and lending conditions in WA.”
While sales remained fairly steady in 2018, the Perth rental market improved, with stable median rents, declining listings and a plummeting vacancy rate.
REIWA expects its upward trajectory to continue through 2019, with stable population growth and slowing new-building construction driving the ongoing improvement.
“With population growth in WA expected to remain stable and new dwelling commencements slowing, available rental stock should continue to decline,” Mr Collins said.
“This should see competition amongst tenants increase, putting further downward pressure on the vacancy rate, which recently dropped below four per cent for the first time in four years.”
Perth’s overall median rent price has been $350 per week since April 2017, the longest period of stable rents experienced since REIWA started recording rental data in 2001.
“If listings continue to decline and leasing volumes remain healthy, we should see the overall median rent price increase in 2019 for the first time since September 2014,” Mr Collins said.
While REIWA’s 2019 outlook for the Perth rental market is positive, Mr Collins said any changes to negative gearing could pose a risk for both the rental sector and wider property market.
“In the short term, the improvements we’ve observed in the rental market could see investors returning to the market, however if changes to negative gearing are legislated, this will likely dampen investor activity and have a detrimental effect on the wider WA property market just as it is starting to find its feet,” he said.
“As the next Federal election nears, REIWA will continue its efforts to ensure politicians do not meddle with negative gearing to ensure a healthy and sustainable rental market into the future.”
There were also positive signs for the regional market, with improvements in the mining sector expected to lead to an improvement in overall market conditions.
“Port Hedland, Karratha and Kalgoorlie are areas to watch, with the new mining projects going a long way to restoring confidence in these regions,” Mr Collins said.
“These projects are expected to create thousands of new local jobs, which should continue to support population growth, improve demand for housing and aid recovery.
“The WA government’s push for tourism looms as another positive for regional WA as it could provide some much needed support to tourist-focused regions, like the South-West.”
Mr Collins warned against expectations of a quick upswing in the market.
“After a prolonged period of turbulent conditions following the slowdown in the mining sector, the WA market appears to be stabilising,” he said.
“While the worst appears over, REIWA cautions against expectations of a rapid recovery during the next 12 months.”