Perth To Lead National Property Market Recovery
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Perth To Lead National Property Market Recovery

The western capital is on track for impressive growth.

By Terry Christodoulou
Tue, Mar 9, 2021 5:33amGrey Clock < 1 min

Perth’s residential market is on track to record double-digit growth in 2021 for the first time in 11 years.

That’s according to CBRE’s 2021 Australia Real Estate Market Outlook Report which predicts Perth’s house prices to grow between 9% – 12% and unit prices to lift 5%-7% in 2021 which will lead the nation’s property market recovery post-COVID-19

The growth is forecast off the back of positive interstate migration, solid resources outlook and Federal Government incentives such as Homebuilder and additional State support packages that are boosting the construction sector.

“Supply also remains tight [in Perth] with vacancy already sub-1% which is leading to strong rental growth and providing attractive opportunities for investment in 2021,” said CBRE’s Head of Residential Research Craig Godber.

“For investor markets, the supply/demand imbalance will tip towards oversupply until international migration resumes, although, markets with low levels vacancy (e.g. Brisbane and Perth) will recover more quickly than the Sydney and Melbourne, where vacancy remains elevated.”

Sydney is expected to see house price growth of between 7%-10%, while units will experience a 0%-3% rise. Similarly, 7%-10% growth is forecast for Brisbane’s housing market and units are on track to record a 3%-5% value uplift.

The report predicts 5%-7% growth for both Adelaide and Canberra’s housing markets, with the former expecting a 3%-5% rise in unit prices and the latter tracking an uplift of 0%-3% for units.

A longer recovery is expected for Melbourne, with house prices expected to lift 3%-5% in 2021 and no increases for unit values.

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House values continued to fall last month, but the pace of decline has slowed, CoreLogic reports.

In signs that the RBA’s aggressive approach to monetary policy is making an impact, CoreLogic’s Home Value Index reveals national dwelling values fell -1.0 percent in November, marking the smallest monthly decline since June.

The drop represents a -7.0 percent decline – or about $53,400 –  since the peak value recorded in April 2022. Research director at CoreLogic, Tim Lawless, said the Sydney and Melbourne markets are leading the way, with the capital cities experiencing the most significant falls. But it’s not all bad news for homeowners.

“Three months ago, Sydney housing values were falling at the monthly rate of -2.3 percent,” he said. “That has now reduced by a full percentage point to a decline of -1.3 percent in November.  In July, Melbourne home values were down -1.5 percent over the month, with the monthly decline almost halving last month to -0.8%.”

The rate of decline has also slowed in the smaller capitals, he said.  

“Potentially we are seeing the initial uncertainty around buying in a higher interest rate environment wearing off, while persistently low advertised stock levels have likely contributed to this trend towards smaller value falls,” Mr Lawless said. “However, it’s fair to say housing risk remains skewed to the downside while interest rates are still rising and household balance sheets become more thinly stretched.” 

The RBA has raised the cash rate from 0.10 in April  to 2.85 in November. The board is due to meet again next week, with most experts still predicting a further increase in the cash rate of 25 basis points despite the fall in house values.

Mr Lawless said if interest rates continue to increase, there is potential for declines to ‘reaccelerate’.

“Next year will be a particular test of serviceability and housing market stability, as the record-low fixed rate terms secured in 2021 start to expire,” Mr Lawless said.

Statistics released by the Australian Bureau of Statistics this week also reveal a slowdown in the rate of inflation last month, as higher mortgage repayments and cost of living pressures bite into household budgets.

However, ABS data reveals ongoing labour shortages and high levels of construction continues to fuel higher prices for new housing, although the rate of price growth eased in September and October. 

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