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Will the WA market turn a corner in 2013?



The 2012 real estate market in WA was largely characterised by skyrocketing rental prices in inner city suburbs, as well as a growing shortage of properties for sale.  But, what does this mean for the market in 2013? Will this drop in supply result in upward pressure on property prices?  Will the market turn a corner driven by low interest rates and a strong economy?  To gain more insight, we interviewed two key experts in the WA property market:


Hayden Groves
, Principal, Dethridge Groves Real Estate
 
James Limnios
, CEO, Limnios Property Group
 


Generally speaking, what are your expectations for the WA real estate market in 2013?

Hayden Groves – In brief, “steady as she goes”.  Residential property supply levels are below 15 year averages at around 11,000 Perth metropolitan wide and appears to be stabilizing at this level.  First home buyer activity is strong, making up about 30 per cent of the buying populous and we’re slowing seeing this bottom end activity creep through to higher priced property. Investors remain spooked by GFC fall-out despite rental yields improving throughout 2011 with low interest rates and vacancy rates at less than 2 per cent. I can’t see much upward pressure on property values for the year but, equally it would be surprising to see prices fall in real terms.

 

James Limnios – 2013 will be the best year for the Perth property market since the last property boom. We have a growing shortage of properties for sale, falling interest rates, a strong economy and Australia’s fastest population growth rate. Properties listed for sale in the inner city market are already 50% below this time last year and we are already seeing an upward pressure on prices. Investors will become very active in the property market during 2013 as the lure of high rents and rising property prices combined with low interest rates will make buying a property in Perth irresistible.

 

What are some of the key opportunities for buyers to look out for in 2013?

Hayden Groves – Building costs are likely to rise as demand for builders in the Metro area rises on the back of a flurry of vacant land sales in the later part of 2011. Buyers can negotiate a good deal with builders now but might be paying more later if they delay. As mentioned, residential investment property yields are looking attractive; many offer positive gearing situations with high rents and low outgoing costs on cheaper properties. Perth city apartments are also a sure bet with the CBD undergoing a significant renaissance with the major Elizabeth Quay development, East Perth re-vitalisation and Perth railway / Northbridge re-link positively affecting Perth’s live and work appeal.

 

James Limnios – Look for areas where there is planned new infrastructure that may take a few years to become a reality. A good example is The Metropolitan Area Express (MAX) which will provide opportunities for astute property investors and property developers in a same way as the construction of the Perth to Joondalup and Perth to Mandurah railway lines.

The $1 billion MAX project will have a positive impact on the properties which adjoin its route. MAX will run from the Balga TAFE campus south along Alexander Drive and Fitzgerald Street to the CBD and then divert west to the Queen Elizabeth II Medical Centre in Nedlands and east across the Causeway.

Although construction is not scheduled to begin until 2016, now is the time for astute property investors to purchase homes along the route of MAX and achieve strong capital growth when the project is completed.

 

Which key suburbs do you predict will have good growth in 2013?

Hayden Groves – Growth corridors in Perth along the southern railway line offer great opportunities and I particularly like near coastal suburbs like Hamilton Hill, Coolbellup, Spearwood and Munster as these established suburbs take advantage of the exclusive re-development of Port Coogee. There will also be great opportunities to snap up top end properties selling at realization prices in Blue Ribbon near river and ocean western suburbs like Dalkeith, Claremont, Cottesloe, Crawley and Swanbourne as those still affected by the economic downturn cut their losses.

 

James Limnios – The Perth near city suburbs should perform extremely well due to major new investment in the inner city area such as the City Link, Perth foreshore development and East Perth entrance redevelopment.

Top end suburbs should also rebound strongly as they are undervalued and recent auction results indicate that buyers are now moving quickly to purchase homes above $1 million.

My pick for the top ten performing suburbs are: Northbridge, East Perth, West Perth, South Perth, Maylands, Coolbinia, Nedlands, Dalkeith, Cottesloe and Applecross.