Bargain hunters in the Australian property market are perched like eagles, just waiting to strike when the time is right. Property prices have been falling unabated right across the nation and the third quarter of 2018 saw the biggest decline in a decade! While, at the same time, smart investors all over the world know that there is truth in the age-old adage, ‘What goes up must come down, and what comes down must go back up again’ and the Perth Property market is providing a clear opportunity.
Also, just like surfers prefer a ‘pumping’ ocean, strong market movements are what investors love most, i.e. on the way up profit opportunity is created, and declining markets create buying potential.
Furthermore, as most of us would likely agree, property per se is by-and-large a fundamentally sound investment. After all, human beings will always need a place to live, shop, work, learn, and go for their social, health, and entertainment activities, no?
On the other hand, though, investment timing is of the utmost importance. Purchase-price is a key component of real estate profitability. So, is this why prospective investors are busy looking at the Aussie property market with wide-eyed anticipation? And why Perth in particular?
Let’s take a closer look.
Australia – The Big Picture
Industry stakeholders seem to agree that the country’s property prices are currently hovering around the bargain-basement territory.
On a whirlwind tour around the nation, reports indicate that Sydney property prices are now back at year-2016 levels, Melbourne the same as 2017, Perth at 2009 levels, and Darwin has fallen back to year 2007.
The continuous decline has even prompted Deutsche Bank to list a potential Australian house-price crash as a top economic risk to global markets. While CoreLogic’s head of research Tim Lawless says, ‘Buyers will be in the driver’s seat when it comes to choosing a property and negotiating on price.’
Perth Property Market – A Closer Look
Western Australia (WA) is one of the country’s most resource-rich states. Almost half of Australia’s 340 mines are situated in WA and this region alone produces 38 per cent of the entire world’s iron ore supply!
Perth is, of course, the capital of WA and home to around 80 per cent of the state’s population. It was, therefore, no surprise that during the global resources boom -which peaked in 2012- the city was bursting at its seams.
Dubbed as one of the biggest mining booms in history the price of iron ore doubled and quadrupled. And of course, residential construction in Perth knew no bounds as mine workers streamed into the state like never before.
During 2015, however, a global mining meltdown and iron-ore demand slowdown in China confirmed the end of the boom and saw the beginning of a mass exodus of the mining workforce and industry stakeholders from WA.
Today four years later Perth is still playing catch-up trying to fill the abundance of residential property and office space that emanated during the resources boom. A situation of supply over demand is therefore still dampening the real estate market at present.
However, the population growth rate of the city has reached positive levels again, reaching 1 per cent p.a. earlier this year. Which of course means that it’s only a matter of time before the property oversupply runs out and natural market mechanisms start pushing up real estate prices again.
What’s more, in July this year Bloomberg wrote ‘Australia Sees Jobs Boom in West as Resources Comeback on Cards’. Also, recently introduced direct international flights from Perth to key global destinations –e.g. London, Paris, and Japan- are undoubtedly a major boost for the WA tourism industry.
So, what’s not to like? With property prices at an all-time low and many great reasons for us to be excited about a renewed influx of residents and visitors to beautiful Perth -voted one of the world’s most liveable cities– there is absolutely no wondering why interstate investors are putting a weakened Perth market on their radar screens!