CAPITAL CITY MARKET OUTLOOK – PART 2
This week….Perth – End of the downturn. New housing supply is now tight. Housing and rental markets have become affordable. A high vacancy rate will continue placing pressure on rents.
We expect Perth’s period in stagnation to be a long one, but Perth looks like it has finally gotten through the worst of its downturn.
We are forecasting little change (0% to 2.5%) in dwelling values over the next twelve months. Rents are still likely to fall. We expect attached dwelling rents (mostly apartments) to fall by up to 10%; with house rents falling up to 5%.
Beginning of a recovery? The positives are rising demand, affordability, falling resale supply and a very tight vacancy rate. The negatives are jobs, limited wage growth and new housing supply. We think the positives will outweigh the negatives over the short to medium term.
We are forecasting a 5% to 7.5% lift in house prices and a 2.5% to 5% rise in attached dwelling values. Rents are likely to increase, too – a 5% to 7.5% increase – for both houses and attached dwellings over the next twelve months.
Still in a downturn. Falling population and job growth. High level of stock for both sale and rent. New housing market remains oversupplied. It could be some time before Darwin’s housing market bottoms out. A lot depends on job growth. For now, there is little promise on the horizon.
We are forecasting that dwelling values will continue to fall. Falls of up to 10% are likely for houses, with falls of up to 5% for attached stock probable, over the next twelve months. Falls of up to 5% are expected for weekly rents.
Recovery, but one which, like Brisbane, will be dampened by the amount of new apartment supply. But the full impact may be some time away. At present, resale and rental supply is tight. Canberra remains affordable.
We are forecasting a 2.5% to 5% lift in house values. Attached dwelling values are likely to fall by up to 2.5%. House rents could rise by 7.5% to 10%. In contrast, attached dwelling rents are expected to fall by 5% to 2.5%.
Not all residential markets are in the same place. Some are improving, whilst others are in decline. The position and strength of each market, and its outlook, is largely determined by three things – demand, supply and external factors.
External factors do come into play. Sydney and Melbourne – for example – are being influenced by overseas buying. This is having an impact not only on new stock, but on the existing housing market as well. Other capitals are not similarly affected.
In short, most capitals are expected to see a continued lift in dwelling prices (and in particular for houses), over the next twelve months. Our rental forecast is much more mixed.
Our reporting uses twelve benchmark indicators that define the state of supply and demand in each city. There is a clear logic behind our forecasts.
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“Many thanks Michael for your words, wisdom and talents, not to mention your great taste in music!!” Well thank you Chris A.
PS Listening to John Mellencamp – his new record, Sad Clowns & Hillbillies, finishes off a recent trio – also tuned into Rodney Crowell. Some great tunes on Close Ties, Crowell’s latest release.
Keen to hear your thoughts.
Until next time,
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