SYNCHRONISED growth in Australia's property market has prevailed over the past year, reflecting a growth phase that hasn't occurred in a decade.
That's according to CoreLogic research director Tim Lawless who said, "the last time we saw a sustained period where every capital city and rest of State region was rising in value was mid-2009 through to early 2010, as post GFC (global financial crisis) stimulus fuelled buyer demand".
One of the factors that has been driving house prices higher is low advertised supply levels.
Focusing on Western Australia, both the Perth and regional markets have performed well over the past year.
One of the factors driving the market has been a drop in advertised properties for sale.
Perth housing market:
Perth is experiencing a "rising housing market", according to Herron Todd White.
The Real Estate Institute of WA (REIWA) reported that listings had dropped to a 10-year low, with only 7899 properties listed for sale at the end of the month.
REIWA president Damien Collins said this was the seventh consecutive month listings for sale had declined in Perth.
"We've seen an extraordinary decline in listing volumes in a relatively short amount of time," Mr Collins said.
"In the span of a year, listings have dropped 36.5 per cent to now sit below 8000 for the first time in about a decade.
"Buyers are very active in the market and soaking up stock at a rapid rate."
CoreLogic data confirmed that Perth dwelling prices rose by 1.5pc during February and 4.6pc over a year.
These values indicate that the Perth market has been performing better than some other States over 12 months, with Melbourne (-1.3pc), Sydney (2.8pc) and Brisbane (5pc).
REIWA data showed that Perth's median house price in February was $490,000.
"There were 50 Perth suburbs that saw their median sale price increase in February," Mr Collins said.
"The suburbs with the biggest increase were East Fremantle (up 5.7pc), South Yunderup (up 5.2pc), Seville Grove (up 3pc), Cloverdale (up 2.7pc) and Ballajura (up 2.5pc)."
The median time to sell a property during February was 21 days.
Mr Collins said this pace was on par with January, but 25 days quicker than it was in February last year.
"The last time we saw houses sell this fast was in 2006," he said.
"It's a hot market and buyers are understandably feeling pressure to make a swift decision.
"While it's important to act fast on a property you're interested in, I encourage buyers to use caution and not panic buy to get themselves into a situation where they pay over and above what the property is worth.
"Yes, property prices have increased in the past six months, but they remain below what they were five years ago so there are still good deals to be had."
Perth housing market outlook:
Looking into his crystal ball for what lies ahead for the Perth residential market, Herron Todd White (HTW) director Chris Hinchliffe predicted that the $500,000 to $1.5 million price range in established suburbs will be a key market segment to watch.
"The owner-occupier market has been very hot lately and it will be interesting to see what it does over the next 12 months as investors also re-enter the market," Mr Hinchliffe said.
"Pinpointing specific suburbs that will see growth in 2021 appears to be a hard task when the whole market and most market segments are on an upward trajectory."
Looking at the investor market, Mr Hinchliffe said buyers seem to see value in villas in well-located suburbs, such as Scarborough, Wembley and Churchlands.
Other areas to keep an eye on include Maylands, Midland, Parkwood and Thornlie.
Perth vacant land market:
State and Federal government home building incentives introduced in 2020 have "supercharged" the Perth property market, said Mr Hinchliffe.
Also aiding the construction industry, the incentives have led to a huge increase in demand for vacant land.
The City of Swan, Wanneroo, Cockburn, Armadale and Rockingham have seen most of this activity.
"These local government areas are situated on the fringes of Perth and are well-known for their cheap, affordable land with many of them having numerous large, competing new estates," Mr Hinchliffe said.
"This indicates to us that first home buyers are being pulled towards building in outlying suburbs, as this is where the bulk of available land is."
For the six-month period of March 2020 to September 2020, Mr Hinchliffe said the company saw an "astonishing" 117pc increase in land sales and median land prices rose by 1.6pc.
Despite the recent growth in the market, he still had reservations.
"Our concern here is that significant supply is being added to areas which are only just recovering from the last period of oversupply," Mr Hinchliffe cautioned.
"Many of these areas have experienced high levels of negative equity due to declining market values since 2014.
"Recent sales activity has finally seen a reduction in stock on the market in these areas and price growth has returned - but only just."
He remains nervous about how this could play out into 2021 when new homes are completed which could add "significant competition to a vulnerable sector of the market".
Developer activity has also been on the rise and likely to continue, Mr Hinchliffe said.
"The established market is seeing mum-and-dad developers entering the market to help fill the shortage of land, with suburbs including Craigie, Ocean Reef, Mullaloo, Edgewater, Kallaroo and Beldon all seeing an upsurge in land subdivisions, which have been selling like hot cakes according to our valuers on the ground," he said.
The activity has been echoed in suburbs south of Perth, including Kardinya, Hamilton Hill, Spearwood, Coolbellup, Riverton and Lynwood, along with areas east of Perth and along the foothills, such as Forrestfield and High Wycombe.
"The general market sentiment for vacant land in Perth is that the market has peaked for the outer, establishing areas, although there may be some run left in infill locations as those who want to build within their current location continue the hunt for the right block," Mr Hinchliffe said.
"The overall consensus however is that a retraction or correction in land prices is a string possibility throughout 2021 as the majority of demand was brought forward into 2020 by the government stimulus package."
Perth rental market:
Currently described as a lessor's market, Perth was the fastest growing rental market, according to CoreLogic in December 2020.
Increasing rental demand from 2020 has continued into 2021, with REIWA reporting median rent prices being at a five-year high of $400 a week in February, which is an increase of $40 from February 2020.
There were 2839 properties for rent in Perth at the end of February.
"This marks the sixth consecutive month we've seen listings sit below 3000," Mr Collins said.
"Perth desperately needs an influx of rental stock in the market to provide renters with more housing options."
According to REIWA data, 258 Perth suburbs experienced an increase in rent during February, including Subiaco up $23 to $723, Scarborough rose by $20 to $520, Ellenbrook increased by $10 to $370, Belmont up by $10 to $380 and Greenwood rose $10 to $410.
Leasing activity has also remained strong, with 186 Perth suburbs recording an increase during the month.
Beeliar saw the most notable increase in leasing with a 29pc increase in activity compared to the month prior.
Other suburbs that performed well included Innaloo (up 22pc), Greenwood (up 14pc), Gosnells (up 9pc), Rivervale (up 8pc) and Canning Vale (up 4pc).
The median time it took for a property to be leased during February was 19 days.
"Median leasing days are the lowest they have been since June 2013," Mr Collins said.
"Like we are seeing in the sales market, with so few available listings, tenants are having to act quickly to secure a rental."
Perth's rental crisis set to ease:
Perth is in dire need of more rental stock to help ease rental shortages and it's crucial that, in order for this to happen, investors need to be enticed back into the market.
The current rental crisis is partly due to the State government's extension of the rental moratorium on evictions and rent price increases, which led to demand falling from residential investment buyers, according to Mr Collins.
"While the end of the rental moratorium later this month (on Sunday, March 28) will remove one of the barriers for investors, more needs to be done to encourage residential property investment in WA and ensure there are enough rentals in the market to keep up with rental demand," he said.
"Since the announcement (of the rental moratorium) in September 2020, the Perth vacancy rate has dropped below 1pc - the lowest level we've seen in 40 years.
"Thankfully, once the moratorium ends investors will have more incentive to buy property in WA.
"This should increase the number of properties available to rent and help create a more balanced market."
From Sunday, property owners will be able to increase rent prices for the first time in 12 months, which Mr Collins said will reflect the changes that have occurred in the market over the past year.
"Whilst it is inevitable prices will rise, WA tenants are still paying a lot less overall than their counterparts around the country," he said.
"In fact, earlier this month the Real Estate Institute of Australia released its December 2020 quarter Housing Affordability Report which revealed WA remained the most affordable place to rent in the country, despite the State experiencing a rental shortage and record low vacancy rates."
Mr Hinchliffe also said that he expects rents were likely to increase further into 2021.
"General economic conditions in the State have also been favourable, with the State government avoiding a deficit and forecasting a $1.2 billion surplus in 2020," he said.
