In the first part of this series, we noted that we have been saying for some time now…

“We would much rather be ‘in’ the Perth property market over the next decade than ‘out’ of the property market.”

It has recently been announced that the Perth property market has hit what some say is the technical definition of a ‘crash’… as of July 2019, prices have now fallen 20% from their peak.

But what normally follows a ‘crash’ in investment markets? A ‘recovery’?

Of course, there is nothing that says a price rise has to happen, and there is nothing that says if it comes that it will be this year, or next, or even the next.

Therefore, you need to decide for yourself, do you think the current state of the market can and will continue? Or do you think things will improve? And if you think they will improve, do you think it will be at some point in the foreseeable future, or will it be many years ahead?

To help you make an assessment, below are some key points about the WA property market and economy generally, as delivered at a recent event hosted by ANZ.

Perth’s residential rental vacancy rate is now below 3%!

This is down from a high of 6.6% in September 2016 when rent prices were well and truly in decline. We are now at vacancy levels not seen since 2013.

Perth’s residential rent prices have started to reverse their declining trend of the past few years.

Unit rents are slightly up as of the first quarter of this year and stable in the second. House rents are up 3% over the past year.

WA is currently the “most affordable” property market in Australia, by some distance!

As of December 2018, families were using 23.1% of their income to meet their monthly loan obligations. This is almost at the level seen back in 1998!

That compares to a high of 31.6% in 2008, and compares to the current Australian average of 31.2%

The average residential rental yield on investment properties in WA is now at 3.9%.

This is less than the interest rate many investors can access in order to fund their investment property purchase!

Anecdotal evidence suggests WA is attracting attention from East Coast property investors.

WA’s residential (gross) rental yields certainly look attractive compared to the closer to 2% being achieved on the eastern seaboard.

WA’s net interstate migration has been negative for 4 years running, however…

The rate of net emigration is in decline and a return to net immigration is predicted to be on the horizon.

Even despite this net interstate emigration, the WA population has still managed to grow during that time.

Meaning demand for residential property is still increasing.

There are presently just 12,000 dwellings under construction in WA.

This is the lowest since 2003, when the population was 33% smaller. And as mentioned, our population is still growing!

Are we set up for housing shortages in the future? What would a shortage mean for prices?

Credit availability will be an important part of turning around the Perth property cycle (as well as business investment).

Credit availability has been in decline for some time, but ANZ believe it can’t decline forever.

And with recent announcements, it may well already be improving.

Finally, when it comes to our exports, we are presently winning on three fronts…

1. Volumes are up

2. Prices are up

3. The Aussie Dollar is down (meaning we receive even more for our exports)

So where to from here?

Well we recommend you doing a huge amount of your own further research and self-education and then, and only then, making dispassionate, logical, informed decisions about how you intend to build your wealth and achieve your financial freedom.

You can revisit Part 1 of this article series below –