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WA Property Market Update August 2023

In the ever-evolving Australian property market, the echoes of national macro-economic factors reverberate throughout each region, and prospective buyers, investors, and homeowners find themselves amidst a landscape marked by both challenges and opportunities. The relationship between inflation, interest rates, and supply-demand dynamics combine to shape the course of the residential and industrial property sectors alike. From the aspirations of homebuyers seeking a piece of vacant land to the surge in demand for industrial assets, there is plenty happening across the broader WA property market. In this update, we’ll explore the state of play of the market as a whole, and how it fits into the national landscape – here is your WA Property Market Update for August 2023.

WA Residential Property Market Update August 2023

The Western Australian property market, much like its national counterpart, is navigating a landscape influenced by macro-economic factors. Borrowers seeking property ownership are grappling with the challenge of higher mortgage repayments in the face of inflation exceeding target rates. The Reserve Bank’s cash rate adjustments have paused, yet uncertainty remains regarding potential future changes. This has implications for both vacant land purchasers and existing homeowners. Construction costs have surged beyond the Consumer Price Index (CPI), affecting the feasibility of building a dream home. Additionally, renting during construction has become costlier due to widespread rent increases. Homeowners are already feeling the pinch of rising mortgage repayments. This inflation-driven cost of living has varied effects on the residential vacant land market, demonstrating the resilience and diversity of Australia’s property landscape.

In master planned large subdivisions, where residential blocks are abundant, cost pressures have a significant impact. These developments, often geared towards providing affordable housing, can lead to borrowers nearing their maximum borrowing capacity, adding further cost constraints. Rural living areas have also seen sustained demand, driven by the appeal of remote work lifestyles. Limited supply and zoning restrictions in these areas create competitive bidding scenarios and firm prices. These trends influence buyer behaviour, with some opting for established homes while others wait for construction costs to abate. In this landscape, thorough market and cost research is crucial for potential land buyers.

WA Industrial Property Market Update August 2023

Within the Perth metropolitan area, the industrial property market is seeing significant activity, especially in secondary industrial precincts. Small-scale, owner-occupier assets, such as warehouses and factories, are in high demand. The low-interest-rate environment has made property acquisition cost-effective for small businesses, often resulting in lower mortgage payments compared to renting. Owner-occupier businesses also incorporate such properties into self-managed superannuation funds, allowing them to retain both the asset and rental payments. However, the market for such assets is distinct from that of investor-driven properties. The motivations behind acquisitions lead to differing values. It’s vital for investors to scrutinise tenant quality, as these tenants are sensitive to cash flow fluctuations.

Property prices depend on various factors, including location, age of construction, floor area, and specification quality. Recent sales in Perth indicate market yields ranging between 5.50% and 7%, reflecting differences in property attributes and lease covenants. Options are abundant in various suburbs, with limited stock available for acquisition. The demand for newly constructed units is bolstered by depreciation benefits, making them more appealing than older units.

As the local industrial property market likely reaches its peak, demand for entry-level stock has driven capital growth and rent increases. Limited supply, especially for modern facilities, will likely shape the market’s performance for the remainder of the year.

Looking Ahead

As the market continues to evolve, individuals and businesses are encouraged to gain insights from McKinley Plowman’s experienced Finance team. Our extensive network of property professionals equips clients with the knowledge needed to make informed decisions in these dynamic markets. Whether seeking to enter the residential property arena or exploring industrial opportunities, the key lies in understanding the trends shaping Western Australia’s property landscape. You can reach us via our website, on 08 9325 2411 (Perth) or 08 9301 2200 (Joondalup).

Data From: HTW Month In Review August 2023

written by:

Paul Moran

Paul has over 35 years of experience in finding financial solutions for homebuyers, investors and business owners.
A licensed broker and member of the Mortgage & Finance Association of Australia (MFAA), Paul’s extensive experience includes 20 years with a major bank, seven of which were as commercial banking manager.
Paul delivers a holistic financial solutions to achieve the best possible outcome for a client’s personal or commercial lending needs. Paul also provides a comprehensive financial consultancy to business owners on commercial, equipment and invoice finance.