2011 was a year characterised by fence sitting across Western Australia, with buyer’s exercising caution due to widespread uncertainty around the global economy. In particular, upgrade buyers sat on their hands, waiting for stronger signs for the market to improve. Many potential buyers opted to rent and this tightened the vacancy rate and pushed up median rental prices as a result.
Continued uncertainty gradually translated to a drop in turnover of 30%. Median metro prices also took a significant hit throughout the course of the year, decreasing from $505,000 in the March 2010 quarter to the current rate of $455,000.
Not all doom and gloom
As we closed out 2011, we saw a positive glimmer of light emerge with increased activity in the first home buyer’s segment. Taking advantage of falling prices, plentiful stock, eager sellers and a host of generous stamp duty concessions, first home buyers flocked into the market. In fact, the proportion of first home buyers increased from 20% to 28% of the market over the course of the year. Strongest growth was recorded in more affordable suburbs frequented by this segment, namely Maida Vale (14.9%), South Guildford (5.1%), Bicton (4.8%) and Ascot (4.7%).
While on the surface it appears first home buyers are the only segment reaping the benefits of the market slump, the increase in activity is expected to help gain traction in the upgrade market this year for those waiting to sell.
A step in the right direction
Whilst there were some positive movements in the more affordable end of the market, overall, 2011 was still a trying year for property in Western Australia. REIWA expects that things will be largely unchanged for the first half of 2012, but we are hopeful for signs of recovery by the June quarter. This will depend largely on how things work out with the European debt crisis in upcoming months.
There have been some small ‘green shoots’ of optimism, indicated by strong performance in October last year with a fall in the rate of discounting and a 19% jump in turnover.
This year we anticipate more affordable areas to continue to shine, which may result in some upward price pressure in the more sought after areas popular with first home buyers. In particular, areas such as Ellen Brook, Butler, Clarkson, Forrestfield, Baldivis and Balcatta are likely to be better performers, just as they were late last year.