New Year's 2021 Market Insights

Perth Property Sales News & Market Insights 

12 January 2021

Happy new year from the Xceed Sales Team, we hope you had a lovely Christmas and, like us, are looking forward to an exciting year ahead.

The first 6 months of the current financial year have revealed some interesting results in the property space - some expected, and others unprecedented. Generally, we have observed positive movement; however, not across all market segments.

Exceptionally low vacancy rates and the shortage of available accommodation has seen renters and investors entering, or returning to, the property market. Migration has also played a significant role, with many homeowners returning from interstate and abroad, forcing tenants to review their accommodation status.

As reported by REIWA in December 2020, sales activity increased by 42.5% from the previous year, and 45% of Perth suburbs saw an increase in median value. Another significant factor that may be influencing growth in December 2020 is the decrease in listing volumes. Significantly, there are currently 9167 homes on the market, where there were 13,300 at the same time last year.

In early June 2020, in the wake of Covid 19, the State and Federal Governments announced building grants and stamp duty subsidies for new builds and off-the-plan purchases, which, according to UDIA, saw land sales skyrocket from 160 to 450 per week in the first few weeks. Sales remained higher than pre-grant levels until September 2020 and began waning from August 2020. The significantly increased volume of new builds fueled by the Government stimulus in the first quarter of this financial year has slowed to pre-stimulus levels, likely caused by the fact that many Builders have reached their cap set by Housing Indemnity insurers. In November and December 2020 the average number of land sales were hovering between 80 and 130 per week, which is back at pre-covid lockdown levels.

We observed that capital growth has been very encouraging for properties with a greater land component and in suburbs that didn’t have a high proportion of new land available. This trend reduced exponentially according to the land component of the housing product available (i.e. single homes as opposed to duplexes, villas, units etc.) or where an abundance of newly available land was present. 

Where the 75% stamp duty rebate scheme for off-the-plan apartments, along with the State and Federal incentives stimulated growth in this segment, it appears to have had a counter-productive effect on established apartment sales with little price growth recorded.

As at 31st December 2020, the Federal Home Builder Grant has reduced from $25,000 to $15,000 and the State Homebuilder Grant of $20,000 has ceased (no evidence of an extension to date). While the $10,000 First Home Buyers Grant remains, other buyers are less incentivised to purchase new.

Continued growth, in conjunction with the factors discussed above, is likely to see the established market segment increasing, with a reduction in house and land sales.

We will observe the impact of the decrease in grants over the coming weeks and months and look forward to sharing our findings with you - watch this space!