Perth’s real estate market has bottomed out and is now entering the recovery stage of the housing market cycle, according to a recent report published by Perth-based property investment advisor, Momentum Wealth.
The market’s recovery has been attributed to high affordability, the tightening of housing supply, and a growing labour market that’s becoming increasingly stable.
Momentum Wealth’s report, entitled ‘Residential Property Spotlight: Perth’, analysed the fundamental supply and demand indicators that affect property prices in Perth. It states that the housing market is re-emerging from its sixth downturn in three decades. The latest recovery follows a period where supply outweighed demand in the face of a construction boom and a slower growing population.
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What’s Responsible for the Real Estate Market Recovery?
In 2015, the housing construction industry hit a record high thanks to government incentives for first-time buyers. Such initiatives encouraged buyers to build homes instead of purchase existing properties, which, coupled with a slower growing population, resulted in supply outweighing demand.
Fortunately, according to the managing director of Momentum Wealth, Damian Collins, the market is beginning to rebalance, which will help buoy house values as we progress into the future.
Mr Collins said: “On the supply side, the report shows that the number of properties for sale has hit a two-year low, meanwhile the amount of new properties being built has returned to average levels after dwelling starts hit a record high in 2015. After three years of an imbalance, this tightening of housing stock will allow demand to catch up to supply and subsequently will help underpin property price growth going forward.”
Adding to the confidence that demand is catching up to supply, Perth’s population is starting to grow again, thanks partly to a strengthened labour market. For the first time in 12 months, Perth’s unemployment rate has dropped to be in line with the national average.
Mr Collins continued: “The research report explains that although Perth’s population growth has slowed following the end of the resources construction boom, it’s expected to rebound as the city’s labour market continues to strengthen.”
“Add to this the city’s encouraging housing affordability, which is the second-best in the nation only behind Hobart, and the report explains that more buyers will increasingly return to the market as job stability firms and the economy continues to gain momentum.”
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