THE Perth property market is in recovery mode and tipped to draw buyers back, according to a new report.
Residential Property Spotlight: Perth, compiled by property investment consultancy Momentum Wealth, analysed the key demand and supply indicators influencing property prices.
It concluded the worst was behind the market after a three-year cyclical downturn where supply outweighed demand amid record-high housing construction and slower population growth.
Momentum Wealth managing director Damian Collins said supply and demand were starting to rebalance, which would help buoy property prices.
“On the supply side, the report shows that the number of properties for sale has hit a two-year low, meanwhile the amount of new properties being built has returned to average levels after dwelling starts hit a record high in 2015,” he said.
“After three years of an imbalance, this tightening of housing stock will allow demand to catch up to supply and subsequently will help underpin property price growth going forward.”
Record-high housing construction in 2015 was driven by favourable government incentives for first-home buyers to build rather than buy established stock, while demand was weaker with slower population growth in the aftermath of the resources construction boom.
This created a significant imbalance with supply outweighing demand, but this was now starting to equalise.
In addition to improving supply-side fundamentals, there were increasingly favourable signs on the demand side.
“The report explains that although Perth’s population growth has slowed with the end of the resources construction boom, it’s expected to rebound as the city’s labour market continues to strengthen,” Mr Collins said. n