Perth
Even with the external assistance (government grants and falling interest rates) it is anticipated that Perth will still record a 6 per cent fall in the median house price in 2008/09 before growth returns in subsequent years.
The latest figures, in October 2008, showed Perth was the worst performer for the year, registering a 4.8 per cent reduction in median house prices, as the mining boom lost momentum. An across the board slump in house prices of 7 per cent is forecast.
Some of this decline comes as Western Australia feels the impact of reduced mining activity due to the global economic situation. Perth should experience a price growth of 5 per cent in 2009/10, if resource investment expenditure does not decline further than anticipated.
With a further boost to first home buyer demand from October 2008, in the form of additional Federal Government incentives, it seems first home buyers will play an integral part in supporting the residential market.
Homes in Peppermint Grove and Cottlesloe endured an average 5.7 per cent fall in 2008 and it is predicted prices will fall another 16 per cent this year.
It is also predicted all metropolitan suburbs will fall at least 3 per cent for the year.
The best median house price growth for the year was in Coolgardie on the West Australian goldfields, where the median house price jumped 63 per cent.
Country areas linked to the fortunes of nearby mines are predicted to post gains of between 4 per cent to 12 per cent.
Following gains of between 9.4 per cent and 15.9 per cent for Perth’s most expensive suburbs, Dalkeith and Nedlands in 2008, it is predicted prices will decline for the area by 9 per cent in 2009.
It is expected Perth will be one of the hardest hit in terms of a downturn in the residential market due to the poor affordability after the rapid growth it experienced from early 2001 through to 2006, as a result of the resources boom.
Employment levels will play a major role in the residential market, which is heavily reliant on the resource sector to drive not only employment, but also wage growth.
Commercial and Rental
Increase in rents in Perth accelerated by 9.6 per cent in 2007 and 12.5 per cent in 2008 - the highest growth amongst all capital cities. With the easing of vacancy rates in Perth over 2007/08, rising to just below the market level, less pressure will be placed on median rents in the future.
The market tightened on a vacancy rate of below 3 per cent on average for 2004 to 2006, with vacancies dropping to an average of 1.5 per cent in 2006. Since then, the vacancy rate across Perth has eased, averaging 1.8 per cent in 2007 and up to 2.8 per cent in June quarter 2008.
Median rents in Perth have experienced double digit annual growth over the last three years to June 2008, increasing by a total 72 per cent in this period. However, during the period 2008 to 2011, rental growth is expected to be more subdued, with annual rises of just above 5 per cent and a total increase of 17.1 per cent.
The substantial growth in investment finance between 2002 and 2007 resulted in increasing levels of new dwelling construction and completions. As a result, vacancy rates in Perth eased over 2007/08, rising to just below the balanced market level which, in turn, will place less pressure on median rents going forward.
Rental returns increased from 3.3 per cent at June 2006 to 4.1 per cent at June 2008. With prices projected to decline in 2008/09, indicative yields are forecast to improve to 4.6 per cent by June 2009, before similar rates of price and rent growth over the following two years to 2010/11 stabilise yields during that period.
Port Hedland was Western Australia’s capital growth suburb for apartments as at June 2008.
Hot Spots
Withers, located within Bunbury City is considered Western Australia’s top location for most affordable waterfront property with a median house price of $270,000. Other affordable waterfront locations include:
• Geraldton with a median house price of $339,000
• Derby with a median house price of $365,000
• Sunset Beach with a median house price of $370,000
• Mandurah with a median house price of $382,500
The regional suburb most likely to outperform in 2009 for Western Australia is Wonthella, located within the major regional centre of Geraldton. It has a current median house price of $339,500 and in comparison to other major regional coastal centres, is particularly affordable. It has all the benefits of being located within a major city, but with a coastal address.
The Port Hedland and Karratha coastal region is expected to remain one of the bright spots for the Western Australia property market.
The main employer in the area, BHP Billiton has just committed more than $4.5 billion to infrastructure construction over the next 2.5 years, creating confidence in the local Port Hedland and Karratha markets.
Although Port Hedland has experienced a slight softening in residential sale prices, the market remains extremely active and First National is optimistic about the long-term outlook. Demand for vacant rental property far outweighs supply and investment returns of 10% are reported.
The commercial sector remains very active with many companies moving to the area exerting significant upward pressure in the marketplace.
SOURCES:
BIS Shrapnel – Residential Property Prospects 2008-11
BIS Shrapnel – December Update (Residential Property Prospects 2008-11)
Real Estate Institute of Australia (REIA) Focus Group Final Report
REIA – Media Release “Signs of Positive Activity in the First Home Owners Market,
Let’s Keep it Going (10 January 2009)
Real Estate Institute of Tasmania (REIT)
November, Tasmanian Property Market (23 December 2008)
REIT – Tasmanian first home buyers up 10 per cent in December, 2 February 2009
Real Estate Institute of Victoria (REIV) – State of the Market
RPData – Top Performing Rental Yield Areas
RP Data Media Releases – Property Hotspots for 2009 (26 December 2008)
Property Pulse – Industry Market Wrap Up
Macquarie Real Estate Economic Research
Weekend Australian Financial Review (Weekend AFR) articles over November and December 2008
Sunday Tasmanian, Boon in Burnie’s Upper Echelons (4 January 2009)
Money, Your Home – Property Outlook 2009-01-14
BRW – Top 500 Private Companies, August 28-October 1 2008
BRW – November 6-12 2008
The Australian, Darwin Goes Through the Roof as Rental Hotspot (26 January2009)
Realestate.com.au – Rental Yield 2009 Winners
The Australian Financial Review – Special Report (January 23-26, 2009)
Real Estate Institute of South Australia Market Update – SA Property Market
Reliable in Long Term (23 January 2009)
Disclaimer: There are many uncertainties in forecasting movements in the market such as government policy changes, interest rate changes and global economies. Therefore, the forecasts in this report should be taken to be indicative of market directions. First National takes no responsibility for actions taken on the basis of this report and we encourage all vendors and buyers to conduct their own research.
Commercial Property Outlook 2009 - Western Australia 
