Time to Buy?

Bill Evans, Westpac’s widely respected economist this week predicted Perth’s property values would increase by around fifteen percent this year, eight percent in 2022 and retract 5 percent the following year. The reasoning behind the predicted market adjustment in 2023 is, in part, attributed to pending interest rate rises and regulatory interferences kicking in to take the heat out of the market.

The problem with Bill’s assessment is, just like just about every other property economist around the nation, it largely ignores Perth’s counter-cyclical market. Sensibly, the government, Prudential Regulator and the Reserve Bank make decisions based on our largest markets, Sydney, Melbourne and Brisbane; Perth is an afterthought.

National commentary on Perth’s property market often seems out-of-step with coal-face experience. For a start, Core Logic has already reported Perth’s property values have increased 18.2 percent for the twelve months ending September 2021. Core Logic’s data is fed to them from a number of sources, most notably from reiwa.com which captures about 85 percent of all house, unit and land sales in Western Australia. It ought to be accurate.

REIWA itself reckons property values will grow about 15 to 20 percent this year and so far, most agents can comfortably report such gains across a wide range of property. There are anecdotes aplenty of homes that were ‘unsaleable’ for $750,000 a year ago selling for $110,000 more within a week of coming to market nowadays.

Certainly, with low interest rates likely to prevail until at least 2024 (the Reserve Bank’s words, not mine), housing supply shortages and relatively low prices (WA remains the most affordable state in Australia) it is hard to find anyone predicting prices will fall anytime soon. The current market trajectory puts Perth on track to record double-digit price rises for at least the next 12 to 18 months.

With state borders to open over east by years’ end, WA’s stubbornly hard border may take some of the shine off our market, but Perth’s safe and predictable pandemic management ought to make it a ‘go-to’ destination and boost migration levels. Our jobs market remains strong, our economy is booming and, as already mentioned, property values and rents are relatively affordable. A buyer relocating from Melbourne after selling the family home can buy here and get plenty of change for a comparable home.

Staring off into the distance of 2023, whilst no one really knows what will happen, I predict Perth will survive any regulatory-led downturn of east coast property markets. Sydney’s and Melbourne’s bullish property markets defy logic in their persistence and pace and are due for a correction. In Perth, we’re still in recovery from the 2014-2019 downturn and the fundamentals of our economic conditions ought to support sustained growth for several years to come albeit at differing rates.

If I had been smart enough to buy Sydney property in 2014, I’d be selling now and buying in Perth.