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WA Property Market Update October 2024

The Western Australian (WA) property market is experiencing dynamic changes across residential and retail sectors as it adjusts to a mixture of local, national, and global economic factors. Rising interest rates, inflationary pressures, and shifts in market activity continue to shape affordability and property values across the state. Here are some of the key trends in the WA residential and retail property market, and an overview of what’s impacting prices, rents, and investment opportunities in October 2024.

WA Residential Property Market Update – October 2024

As spring blooms, Western Australia’s residential market presents numerous opportunities for first homebuyers across Perth and regional areas. The Perth metro market has seen steady demand, especially within the first homebuyer segment, buoyed by state government incentives like the First Home Owner Grant and reduced stamp duty rates. For example, properties priced under $750,000 below the 26^th parallel (i.e. south of Shark Bay) qualify for the First Home Owner Grant ($10,000), while properties north of that line remote areas can go up to $1 million, easing the financial burden for new homeowners.

Additionally, off-the-plan buyers in Perth’s inner suburbs benefit from increased government concessions, providing up to a 75% transfer duty relief for eligible developments under construction. For those who have signed, or will soon be signing, a pre-construction contract, up to a 100% duty concession (capped at $50,000) will apply to properties valued up to $650,000 (formerly $500,000); phasing down to a 50 per cent duty concession (capped at $50,000) for properties valued at more than $750,000 (formerly $600,000). This is part of a broader government initiative to stimulate housing supply in the CBD and its surrounds. More detailed information on that can be found here and here.

Outer suburban areas such as Bullsbrook, Mandurah, and Rockingham offer a growing array of more affordable housing options, often ideal for first homebuyers and young families. Spring has seen an increase in listings, partly driven by a reduction in investor activity as rental yields stabilise. In these regions, first homebuyers can find older, spacious homes within their budget. Broome, Port Hedland, and Geraldton continue to draw buyers, with government incentives, such as stamp duty exemptions for homes priced under $450,000, attracting new residents and supporting local economic activity. Properties priced between $450,000 and $600,000 are subject to a tiered rate of duty. While regional centres like Albany and Esperance offer an attractive blend of lifestyle and affordability, the tight supply means eligible properties move quickly. Prospective buyers in these markets must act decisively to secure suitable homes. In summary, despite increasing prices, WA’s regional and outer suburban markets provide a variety of affordable entry points, with financial aids providing significant support for first-time buyers across the state.

WA Retail Property Market Update – October 2024

The WA retail property market faces ongoing challenges and remains positioned near the bottom of its property cycle. Previously, the retail sector had benefited from Western Australia’s resilient economy, which drove steady retail sales and commercial activity. However, inflationary pressures have begun to strain household disposable incomes, resulting in reduced discretionary spending. This downturn in consumer spending is creating difficulties for many retailers, particularly those dependent on non-essential goods and services, thereby affecting retail demand in shopping centres and suburban high streets.

Entry-level retail investments have gained appeal as an affordable option for investors, especially local self-managed superannuation funds (SMSFs) and first-time investors looking for lower price points. Properties under $1.5 million in outer suburban and regional areas are popular, though such investments often carry higher tenant risks, with many smaller businesses or start-up tenants. Despite these risks, properties anchored by essential service tenants, such as grocery stores or pharmacies, remain highly sought after due to stable, non-discretionary income streams. Investors from interstate, undeterred by fluctuating interest rates, are keen on retail properties with strong lease covenants, long remaining lease terms, and rental growth prospects.

Neighbourhood shopping centres with robust anchor tenants, as well as properties in emerging residential hubs, attract sophisticated investors, particularly from the eastern states. As affordability pressures influence investment choices, retail spaces within growing suburban catchment areas present lower-risk entry points. In WA’s retail market, familiarity with the Retail Shops Act and a solid understanding of lease terms, rent dynamics, and local regulations are essential for investors to navigate potential risks. With the ongoing evolution in consumer behaviour and retail demand, particularly amid inflation, investors are urged to stay vigilant and adaptive in this fluctuating market, with a focus on properties that meet evolving consumer needs and offer stable returns in uncertain times.

Conclusion

The WA property market presents a mix of challenges and opportunities across residential and retail sectors. For first-time homebuyers, incentives provide much-needed relief, though rapid price increases and low availability in certain areas require proactive decision-making. The retail market, while subdued, offers valuable entry points for discerning investors who can navigate tenant risks and legislation effectively. As economic conditions continue to influence property trends in WA, local buyers and investors are encouraged to keep informed and seek specialised advice to navigate this complex market landscape.

With the current economic climate posing significant challenges and opportunities, finding the best deal on your Home or Retail property loans is key. Our Finance team offer a complimentary loan health check to determine if your current loans stack up, and then work with you to find a better deal elsewhere or renegotiate with your current lender as required. Call us today on 08 9325 2411 (Perth), 08 9301 2200 (Joondalup), or via our website.

Data from: HTW Month in Review October 2024

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.