Best suburbs to invest in Perth 2019

Perth, it’s a picture-perfect city and the only major Australian city to gaze out at the vast Indian Ocean from the west coast. Perth has a slice of paradise all to itself and its unique setting has given it a distinguishing character of its own.

There’s no question that Perth is slightly isolated from the country’s busier capitals, however, in terms of real estate, being less attached to Sydney and Melbourne is not necessarily such a bad thing right now. Most of the country’s capital cities have been seeing a steady thawing in property prices this year, with Sydney and Melbourne property markets having been hit the hardest.

That’s not to say that Perth hasn’t been affected, however, the city has had its own problems for many years, largely due to a post-mining boom recession. But although oversupply is still an issue, many experts believe it will bottom out quickly and turn around with a steady and confident return.

Most of the data points towards Perth hitting its lowest property prices early and with a new mining boom gearing up and population growth rising, it looks like now is a better time than ever to look to the west and consider investing in the Perth real estate market.

What did the property market in Perth look like in 2018?

It goes without saying that 2018 was an anticlimactic year for the Australian property market. Most markets around the country slipped, with Sydney and Melbourne having been hit the hardest. Stricter lending measures, less foreign investors and a drop-in clearance rates all led to fewer buyers in the market and lower investor confidence.

But what about the Perth property market? Is it all doom and gloom?

Well, anyone from our most westerly capital could tell you, the whole state has been in decline since its peak in the first half of 2014. To put this in perspective, the Sydney housing market hit its peak at the end of 2017.

The Perth housing market has taken a 13% slide since the last mining boom when the median house price peaked at $616,000. Interest in the resource sector blew away in the dust, and the miners who flocked to mining towns from all around the country cleared out. Perth and WA, in general, was left with an oversupply problem, with many units that were built during the boom left vacated.

According to the QBE Australian Housing Outlook 2018-2021, Perth’s median house prices dropped -0.8% this year, which isn’t all bad considering they dropped -5.6% in 2017. In fact, Perth was actually the third lowest decrease behind Brisbane and Canberra, which were both also below 1%. Sydney, on the other hand, experienced a -7.6% hit.

Units, however, have not been as favourable for Perth this year, as they were down -5.4%, which was the country’s second worst result behind Darwin. This is unsurprising considering Perth’s oversupply issues.

“Units, however, have not been as favourable for Perth this year, as they were down -5.4%”

According to Louis Christopher’s Housing Boom and Bust report, rentals in Perth have actually started to increase. After falling to a low of $410 a week for houses and $321 for units, a small but encouraging comeback has been reported, as rents have risen to $423 for houses and units remaining steady. Another sign of turnaround is that vacancy rates in rentals are down to 5.6%, from a peak of 7.3% a year ago.

With property listings in Perth also up 5% for the month of December, many believe that the market is finding its bottom, and with a new year in sight, things could turn around very quickly.

Perth property market forecast 2019

According to the QBE Australian Housing Outlook 2018-2021, the general consensus on Perth’s real estate market is that by mid-2019, there should be clear skies for growth through to 2021. However, there are a few factors at play next year that may affect when and how Perth’s property market will bounce back.

Some major factors include:

• Continuing regulation by APRA restricting the access to credit, and continuing to make lending difficult to buyers and investors. The restriction of interest only loans has already led to a significant drop in investors over the last year.
• The Reserve Bank’s decision to drop or raise interest rates. At the moment interest rates remain steady, but with pressure from the big four banks, as well as US interest rates mounting, the RBA may consider raising rates if markets are steady next year.
• The trade war between US and China, which could lead to a decline in the demand for Iron ore. Any drop in the price of iron could stamp out any recovering in Perth’s iron ore industry which has just begun making grounds. As mining in Western Australia makes up 29% of gross state product, it has a direct effect on Perth’s housing market.
• If the Labor government succeeds in passing a Negative Gearing Repeal. Although economists are not clear of the immediate effects of repealing negative gearing, many claims that it will affect rent prices, which could be detrimental to Perth’s rental market that is just starting to claw back lost grounds.

Despite these factors presenting their own issues, most experts believe Perth is geared for a market recover next year. Economist Trent Wiltshire stated in his latest report that many things look positive for Perth’s housing market.

“This outlook is underpinned by better economic conditions: new mines are being built, commodity prices are higher, population growth is increasing and employment prospects have improved.”

How are Perth property prices expected to change in 2019?

According to QBE’s Housing Outlook, property prices in Perth will continue to bottom out with a drop of -1.7% mid 2019, before coming back +1.9% in early 2020, and an impressive 4.8% in 2021 – taking the medium house price in Perth to $550,000.

QBE’s predictions point towards an overall growth of 5% in the next two years, which is respectable, considering for the same period Sydney and Melbourne are both predicted to fall -1.2% and -2.5% respectively. This sentiment, combined with an impending mining boom, should have keen investors looking westwards by mid next year.

“QBE’s predictions point towards an overall growth of 5% in the next two years…”

Wiltshire’s report is even more optimistic, with the belief that prices don’t have a lot further to fall and that within a year, Perth could experience a whole 5% growth, and 3% the year thereafter.

“We expect that Perth house prices will grow faster than most other markets in 2019 and 2020 after falling in recent years”, states Wiltshire.

Is unit oversupply an issue in Perth?

The last mining boom pushed demand for units up significantly, much more than the demand for houses, but when the mining industry staggered, many transient workers returned home, leaving many units unoccupied. Unit prices have since taken the largest hit post-mining boom – having dropped -5.4% over the last year – however, they too seem to be bottoming out.

Although unit prices are expected to bounce back eventually, the recovery is likely to be more modest, along the lines of 2% by 2020 and another 2% the year after.

Bankwest’s Chief Economist Alan Langford stated that he believes an oversupply in dwellings in Perth may lead to a slow market return, and although he believes the market is bottoming out, he states that there is still a long way to go.

“Bankwest’s Chief Economist Alan Langford stated that he believes an oversupply in dwellings in Perth may lead to a slow market return…”

“Affordability in Perth compared to Sydney and Melbourne is a big plus, particularly for first-home buyers, but very soft population growth (especially compared to when resource construction was booming a few years ago) means that all of the adjustment to the excess supply over demand is occurring on the supply side,” said Langford.

Despite Langford’s comments, Perth’s population growth rate has risen for the first time in almost a decade to 1.0% in the last year, and with a renewed interest in mining, it seems this figure will only increase – acting as good news in response to Perth’s oversupply issues.

Best suburbs to invest in Perth

With house prices remaining low but a strong consensus on growth (particularly in the stand-alone housing market), Perth is predicted to shape up to be an investor favourite over the next few years.

But where are the best places to put your money?

According to QBE’s Housing Outlook, middle Perth suburbs such as Stirling and East Fremantle performed the strongest this year, clocking in 1.9% growth, where in comparison inner city Perth slipped -0.9%. Outer Perth suburbs slipped further to -2.6%, so there is a definite sweet spot between the two.

In 2019, look out for suburbs within 8km -15km of the CBD that are not only close to rivers and the coast, but can also be bought for under $450,000. Some great examples of places to watch are Stirling, Cottesloe and City Beach, all of which have great potential for steady growth.

The suburbs of Kardinya, Coolbellup, Bedford, Kelmscott and Harrisdale have also recorded large increases in renting activity and should be strongly considered for investors looking to lease properties in Perth.

Source: Luka Osborne, Open Agent,  https://www.openagent.com.au

The best place to start when planning an event or wanting to attend one, would be the Perth Convention Bureau.

Funded by the West Australian Government through Tourism WA and by the City of Perth, the Perth Convention Bureau drives the business events sector in Perth and Western Australia by securing large, high yield NFP conference events and marketing the City and State as a premium business events destination.

For an extraordinary conference destination, look no further than Perth, Western Australia. The breathtakingly beautiful city is situated between lush wine growing country of the South West and the hypnotic Australian outback in the Kimberley region of the North.

Set on the banks of the spectacular Swan River and overlooked by Kings Park, which was recently ranked the sixth best park in the world by Trip Advisor, Perth is one of Australia’s fastest growing urban centres. With a number of significant infrastructure projects nearing completion Perth is a city waiting to be rediscovered.

As the capital and heartbeat of Australia’s largest state, Perth is a world class city of nearly 2 million people offering all the elements necessary to make your meeting or conference a success with conference venues and facilities that can cater for up to 5,000 delegates.

The delightful climate also lends itself well to unusual and exciting conference events such as gala dinners held in a limestone quarry or under the stars in a purpose-built marquee overlooking the lights of the city or on rolling lawns of a picturesque winery.

Delegates can also enjoy truly Western Australian experiences such as traditional Aboriginal ‘Welcome to Country’ ceremonies, seeing kangaroos and koalas and other native wildlife, river cruises, swimming with dolphins, whale watching and many more.

As a major capital city Perth is serviced 18 international airlines, 5 domestic and 11 regional airlines making it very accessible.  There are 267 international flights in and out of the city every week connecting travellers to over 50 destinations around Australia and overseas.

Perth Convention Bureau can provide information for you on a wide range of venues and event services from large stadiums, convention centres in the city to conference facilities and meeting rooms in more beautiful scenic surroundings.

Perth Convention Bureau (PCB) has been helping not-for-profit associations, corporations and agents bring their conferences and incentive groups to Western Australia for more than 40 years.

Their charter is to market, in conjunction with local organisations, Western Australia nationally and internationally as a destination for conventions, exhibitions and incentive travel groups. They want you to hold your conference in WA and they can help you do so.

 

The Bureau’s bank of in-house expertise and industry knowledge ensures that your meeting, incentive or exhibition planner will have access to current market intelligence, local support and assistance to help bring an event to Western Australia.

They know what their great State has to offer, and they know what you need to stage a successful event.  So, let them help you make your next conference the huge success you want it to be.

They can arrange:

Professionally produced bid documents expertly researched and custom designed

Personal letters of invitation from dignitaries

Promotional literature on Perth and Western Australia

A general promotional video

They can also help with:

Venue and accommodation advice

Site inspections for decision makers to see the destination for themselves

Current data on convention planning

Advice about sponsorship/funding options

Ideas and promotional material to increase delegate attendance

Convention/events calendar

Touring and special programs

Delegate research and boosting

Check out  the website at https://www.pcb.com.au, where you can download detailed extensive material on High Yield Delegate Research and other relevant information and start planning your next event in this wonderful city.

Mortgage Choice is the latest property-exposed business to detect signs the property market is turning, with loan applications up “significantly” in recent months, in stark contrast to a year in which its profits were battered by falling house prices and tighter credit.

The listed mortgage broker on Thursday pointed to early indications of a recovery in the home loan market, highlighting the May federal election result, back-to-back interest rate cuts in June and July, and a rule change that has lifted consumers’ borrowing capacity.

“We have seen our loan applications rise significantly since June 30, I think everyone has seen that, and the feedback I’ve gotten from the banks is that they are as busy as they have ever been,” chief executive Susan Mitchell said.

“There’s a lot of activity, I think we still need to see that activity come through into settlement results, which will obviously take another few months.”

The cautiously positive commentary from Ms Mitchell comes after small rises in house prices in Sydney and Melbourne in recent months, while the latest official data showed a slight lift in loan approvals in June.

The comments add to other commentary from mortgage-related businesses, with Aussie Home Loans founder John Symond saying last week he believed the housing market had settled down and the outlook was fantastic” compared with 12 to 18 months ago.

The Reserve Bank’s board minutes this week also noted the pick-up in loan approvals for investors in June, which it said was consistent with indications the market had “stabilised.”

For the year to June, however, housing market conditions weighed heavily on Mortgage Choice, which slashed its dividend after it settled fewer loans and saw its total portfolio contract.

Its cash net profit fell 40 per cent to $14 million, in line with guidance, while loan settlements were down 18 per cent to $9.4 billion.

Morningstar analyst David Ellis said a sustained recovery in house prices could help the broker, but it faced a tough grind ahead nonetheless.

Mr Ellis said an overhaul of Mortgage Choice’s remuneration model for brokers last year had led to a “permanent drop” in company profits, and on top of the weak economic backdrop it had also struggled to attract new franchisees.

“It’s going to be a tough outlook for them,” said Mr Ellis, who has a hold recommendation on the stock.

Ms Mitchell said the decline in loan settlements had accelerated in the second half of the year, which was the worst for loan approvals across the industry since 2013.

Mortgage Choice offset some of the decline in its revenue by slashing operating expenses by 17 per cent, or $6 million, which included scrapping short-term bonuses for the year.

Mortgage Choice chief Susan Mitchell says home loan applications are up significantly since June. CREDIT:PETER BRAIG

The company will pay a fully franked final dividend of 3 cents a share on October 15, down from 9 cents last year. In its outlook, the company said it was seeing signs that the market was “turning,” and it expected higher settlements in the coming financial year.

Mortgage Choice shares were down 1.3 per cent at $1.13 as of 1:22pm AEST.

The company’s biggest shareholder is the Commonwealth Bank, which owned a 16.5 per cent stake at June 30. CBA this month reiterated it would try and sell the shares at some point.

Source: Business Reporter: Clancy Yeates at www.watoday.com.au