It’s too early to predict the outcomes that COVID-19 impacts will have on our state’s property sector and wider economy. However, having ridden a number of economic waves throughout Realmark’s 30 years of business, one thing we do know is that each market will respond differently, and there will be some that come out on top and some will fare better than others.
Realmark advocates helping its clients making informed decisions based on real data and with this in mind we consulted Economist Tim Lawless, CoreLogic to share specific insights on the WA market to help us navigate the changed property market outlook from where we saw it headed at the start of 2020.
Our team were invited to join Tim as well as Bruce Landow, CoreLogic and John Percudani, Realmark online for this live stream event.
Importantly, our briefing was WA focused and applied to our unique situation over here in the West. Historically, we have seen WA take a different economic path and follow different property market trends than other states and territories; we expect that this may be the situation following the Coronavirus pandemic. This prediction is mainly due to strong property market foundations in Q1 of 2020, as well as WA’s industries and resource sectors.
Trends could be friends supporting positive foundations for Western Australia’s housing property market.
Tim noted that leading into this crisis, the WA economic and demographic trends were improving, providing a reasonably strong foundation for a post-crisis recovery. Perth and most regional WA housing markets were generally entering into a recovery phase of the cycle with an upswing momentum building since late-2019 after a sustained downturn before the onset of COVID-19.
Whilst other capital cities were losing some steam, the quarterly trend in dwelling values across Perth was gathering pace.
Buyers activity was also improving both Perth and regional WA prior to the emergency period.
Residential values were also highlighted as trending in the right direction with Perth rents are up 2.0% over the past twelve months in Tim’s presentation.
Tim noted in his presentation that economic activity in WA was back on the right track as we headed into the COVID-19 period; confidence was gaining pace with positive resources project plans announced by those such as BHP and Fortescue in late April 2020*, and jobs growth trending higher in WA for the first quarter.
House prices proven less volatile in response to market shots.
Tim acknowledged that generally housing values have proven to be less volatile and slower to respond to market shocks than equities and the Western Australian housing market may be less disrupted due to strength in the resources sector and less exposure to impacted industry sectors, as well as healthy affordability and tighter rental conditions than other Australian capital cities.
In the short term, Tim noted that Western Australia housing prices could expect to see some downwards pressure in the short term on activity and values; with transaction activity affected by low consumer confidence, social distancing measures, and the pace of recovery. We have seen this on the ground over April however, with social distancing restrictions eased at the end of the month there were more enquiries and increased home open attendances emerging.
Tim noted that the depth and duration of this market ‘pause’ depends on how well the virus is contained, how long the shutdown period lasts and how long it takes for the economy and sentiment to improve with a cautious approach to the first three quarters of 2020 is likely. However, Western Australia had laid the foundations for potential bouncing back during the recovery stage reinforced by the underlying market fundamental and the trends that it commenced the year with.
WA businesses have adapted in light of COVID-19.
Tim (whilst acknowledging his research and focus is on housing) observed that from the commercial market perspective there may be some negative impacts on sections of the commercial market that may be less responsive to recovery than residential and were impacted by changing habits of consumers and tenants.
Bruce Landow, CoreLogic noted he felt that industry professionals were preparing for a bounce back in the medium to long term; and planning for the future once we get through the immediate tough times. There is opportunity in the market for agencies that are resilient and forward planning will be favoured through to the future.
John Percudani noted the thin market in relation to listings, residential and commercial, in the immediate term. Listings volumes in Western Australia has been trending down and were currently well below long term averages.** This lack of supply may buttress property value and may be a challenge affecting agents and buyers in 2020.
John noted the Realmark team had adapted quickly by using our tools and methods such as virtual tours, set date sale selling & leasing methods, and online meetings to continue to deliver our services to our clients. We are focusing on being here for our clients and industry at this time, making sure we are providing useful information with more online articles and facilitating communication between tenants and landlords/buyers and sellers. It is important that as an industry we support each other at this time, in particular providing mentoring and support to anyone new the real estate industry and collaborating to provide effective selling and leasing solutions and reliable management.
The above is general in nature, please seek professional advice specific to your circumstances before acting on this information. For a market appraisal or property marketing advice please contact our team.
* https://www.perthnow.com.au/business/mining/bhp-looks-to-boost-pilbara-export-capacity-ng-s-2007444 and https://www.aap.com.au/fortescue-hikes-iron-ore-shipments-outlook/
** REIWA Quarterly Perth house sales and median price data https://reiwa.com.au/the-wa-market/perth-metro/?active=listing as at 26 April 2020