INVESTING INTELLIGENTLY TOWARDS 2019/2020
CSIPROP INVESTMENT GUIDE
Perth Historically, the housing market in Perth has been highly cyclical and reliant on the commodities market. However, it appears that the drag from Western Australiaâ€™s mining investment boom may be dissolving and the economy is improving. The housing market remains soft, yet is seeing a revival. But, it may be a while before Perth experiences the highs of its heydays in 2003 - 2013. In spite of this, Perth has shown one of the best growth patterns in house prices over the last 25 years. With signs of recovery and the market starting to bottom out, this could be an interesting time for investors to reenter the market.
Western Australia Key Economic Indicators
Western Australia (Perth)
State Final Demand Growth Year-ended to 4Q17
Retail Turnover Growth
Year-on-year to Mar 2018
Population Growth Year ended to 3Q17
Employment Growth Year-on-year to Apr 2018
1.2% 0.1% 0.9% 2.0%
There is still some way to go, but Western Australia is showing a slow recovery. Source: JLL
Western Australia House prices in Perth have taken a plunge over the last four years, reflecting the stagnation in the employment market. The decline seems to be slowing, signalling that the market is in recovery and, possibly, bottoming out. Some studies predict that recovery in Perth will be a long, slow grind, but that strong growth is expected in 2020-21.
Research Report: Perth
#DidYouKnow Perth was one of the hottest markets in Australia prior to the mining downturn, with house values substantially outperforming the broader market between 2003 and 2013.
Recovery in Demand
While house prices are still down in general, demand is climbing. Perth saw the highest increase in demand over 12 months from July 2017, after Hobart and Canberra. Statistics show that prices in the city’s northwest had been on an upward trend.
A study by CoreLogic of the top 100 suburbs for price growth over the past 25 years (1993 - 2018) based on change in median prices, showed a surprising discovery. Perth came in third for growth at a rate of 6.7% per annum, after Melbourne and Sydney.
Demand in Perth increased 6.4% y-o-y as at July 2018. While the northwest has seen prices consistently rising, the highest price rise was recorded in the northeast. In 1Q 2018, 410 new apartment sales was recorded, an increase from the previous two quarters. This was reportedly the highest number of surveyed sales recorded in two years.
That Melbourne and Sydney suburbs dominated the top two spots comes as no surprise. Suburbs for Perth, on the other hand, are unexpected, given the lower house price trends since 2014. Yet, this sheds clear light on the prominence of the Perth market — it was one of the hottest housing markets in the country between 2003 and 2013, prior to the mining downturn, substantially outperforming the broader market
Australia’s Housing Values over 25 Years House Values Median Value 2018 National Adelaide Brisbane Canberra Darwin Greater Hobart Melbourne Perth Sydney
$571,441 $462,049 $535,292 $678,765 $496,498 $452,935 $824,955 $487,992 $1,026,638
Annual Average annual percentage dollar value change, 25 yrs change, 25 yrs 6.8% 5.9% 5.9% 6.0% 6.3% 6.5% 8.1% 6.7% 7.6%
$18,397 $14,027 $16,290 $20,848 $17,937 $14,393 $28,325 $15,679 $34,426
Median Annual Average annual Value percentage dollar value 2018 change, 25 yrs change, 25 yrs $515,610 $328,274 $384,970 $435,072 $334,436 $353,292 $574,003 $400,717 $753,304
5.9% 5.2% 4.5% 4.7% 4.1% 5.5% 6.6% 6.0% 6.3 %
CoreLogic’s study on Australia’s housing trends over 25 years reveals Perth’s house values to be one of the best performers in the country. Source: Aussie, CoreLogic.
$15,671 $9,462 $10,255 $11,929 $9,424 $10,402 $18,331 $12,255 $23,594
Looking Forward The Perth property market is in recovery — albeit a slow one — and it appears that the worst could be over. Rental vacancy should improve on the back of moderated supply and a healthier economy. The state government’s commitment to diversify the Western Australian economy and the federal government’s commitment of A$2.6bn for transport infrastructure investment should help boost growth and jobs creation in the future. This should alleviate some concerns about the weak labour market. While it may be a buyers’ market (especially owner occupiers), the slow market offers opportunities to investors to receive higher gains from low purchase prices due to the lack of buying competition. BIS Oxford Economics has tipped Perth to have the second-fastest price growth of 10% by 2021 alongside Canberra. Nonetheless, history tells us that Perth is reliant on the commodities cycle. Perhaps the key to keeping informed on its house prices is through watching the price of iron ore and global economic recovery.
Quick Facts: Perth . 6.7% annual house price growth over 25 years (1993 - 2018) . 2nd fastest house price growth by 2021 . Strengthening job growth . Property demand increase of 6.4%
Words VIVIENNE PAL
Research VIRATA THAIVASIGAMONY VIVIENNE PAL IAN CHOONG
Design & Layout AHMAD MUNAWAR ABD RAHIM JANE TAN
MARKETING AGENT (SINGAPORE) CS PROP Pte Ltd (E.A. License No. L3010808F | Co. Reg. No. 201731379K) Level 22, Tower B, Ngee Ann City, 391B Orchard Road, 238874 Singapore
MARKETING AGENT (MALAYSIA) CI PROPERTIES Sdn Bhd (E (1) 1797 | Co. Reg. No 1254857-K) Level 3, North Block, Wisma Selangor Dredging, 142D Jalan Ampang, 50450 Kuala Lumpur, Malaysia
+65 3163 8343 firstname.lastname@example.org
+603 2162 2260 email@example.com
PROJECT MANAGER CSI PROP Pte Ltd @ 2019 CSI PROP Pte Ltd. First Edition. All rights reserved. This publication is the sole property of CSI PROP Pte Ltd (trademark: CSI PROP) and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of CSI PROP Pte Ltd. All descriptions and other particulars are given in good faith and are believed to be correct but any intending readers, purchasers or tenants should not rely on them as statements or representations of fact and must satisfy themselves by inspection or otherwise as to the correctness of each of them. The Marketing Agents and The Project Manager shall be held responsible for any negligence, consequential loss or damage arising from the use of this information. No person in the employment of the Marketing Agents and the Project Manager has any authority to make or give any representation or warranty whatever in relation to these investments and properties. This is an overseas investment. As overseas investments carry additional, financial, regulatory and legal risks, investors are advised to do the necessary checks as well as research on the investment beforehand. Investors are also advised to seek independent and qualified legal, financial and tax advisors. Past performance is not necessarily indicative of future performance even if the same strategies are adopted.