What a year 2015 turned out to be, with volatility not only in the property markets, but in share markets, commodities and currencies as well.
Whilst the Sydney and Melbourne residential property markets both performed very strongly over the past year, most market commentators agree that growth in those markets will likely moderate over 2016.
Further, the share market started the new year with some dramatic gyrations and has now official entered a “bear market” phase, and many are wondering what 2016 will bring for investment and financial markets.
Against this backdrop, we’re seeing significant anecdotal evidence of home owners in Sydney and Melbourne using their recently-created equity in their homes to look interstate to purchase investment property – particularly Queensland (mainly Brisbane and the Gold Coast) – but we’re also starting to see some of that interest emerging in Perth also.
Meanwhile our own state economy has been adjusting to the end of the mining construction boom, and falling interstate migration, increased unemployment and rising rental vacancy rates have all been symptoms of that transition. However, many would say it has been the “adjustment we had to have”, as the state was already close to full employment prior to the boom, meaning that many local mining jobs were exported. In addition, the state now has the opportunity to reduce its reliance on the mining industry and transition to more sustainable, less cyclical endeavours such as infrastructure investment, healthcare and education.
The big question is – what does all this mean for the Perth residential property market? Whilst we’re not predicting a return to boom conditions any time soon, we are now seeing some evidence that the market is stabilising, and combined with continued low interest rates our view is that it’s a good time to again start considering real estate as part of your investment portfolio – particularly if you’d like to take some shelter from volatile share markets.
We’re also seeing a significant amount of enquiry from “empty nesters” and first homebuyers keen to make the move into apartments, and using the current great buying deals available and low interest rates still on offer from the banks as an opportunity to “get set” before the next wave of capital growth kicks in.
Where does this view come from? The Real Estate Institute of Western Australia has recently been releasing data which they say points to the market “bottoming out”, with rental vacancy rates stabilising and the number of properties listed for sale starting to decline. And ABS labour force statistics shows WA’s unemployment rate starting to stabilise and even retreat from its peak. In fact, in seasonally-adjusted terms WA is showing the strongest contraction in the unemployment rate of any of the states!
To find out more about what is happening in the property market, click here to register for one of our informative property seminars today!