How McGowan's Post-COVID Roadmap Will Affect Perth Property
Friday, 24th of December 2021

 

For two years, Premier Mark McGowan has done everything possible to keep coronavirus out of his West Australian fortress — shutting borders and implementing lockdowns, making WA one of the more successful jurisdictions at eliminating the virus.

 

As each state edges closer to its national vaccination targets, and WA plans to have its borders opened up to the masses, the question on every investment property owner’s lips is…How will the Perth property market change once the borders open up?

 

Whilst there are always several factors at play, we’ve analysed market data and the opinions of industry professionals to forecast what the future market might look like once an influx of tenants and investors return to the local WA property market in 2022.

 

 

The Initial Effects Of Opening The Border

 

The WA public have been largely happy to be part of McGowan’s plans and, following the release of the federal government’s four-phase roadmap to normality, a post-COVID Australia now looms as a tangible possibility (depending on vaccination rates and case numbers of course).

 

Perth property has had relative freedom during this time, surging in first-home buyer activity thanks to government support, and record low vacancy rates which causing upwards pressure on rental prices.

 

What is equally clear to see is how the eventual lessening in restrictions, both city and state-wide, will cause another surge in demand in the rental market. This is primed to result in rental price increases once again, which experts expect throughout 2022.

 

 

What Will Influence Property Growth
 

CoreLogic’s head of research Australia, Eliza Owen, said that national first home buyer incentives ending, paired with rising property prices and higher demand across WA, added to a slowdown in the growth rate which was mirrored across the country.

 

Ms Owen noted that the biggest challenge and driver for WA remained the supply, demand and affordability of the rental market.

 

When the WA border opens, migration will increase, resulting in a higher level of rental demand. Prior to the initial lockdowns, WA was in fact the highest state for migration, so it stands to reason that when it does happen, gradual or influx, the property market will be directly influenced.

 

At PPM we have been working hard to capitalise on the strong demand and maximise value for our investors. In 2021 alone we have negotiated rent increases on 70% of our properties under management at an average of $41 per week per property (additional $2,138 per year income on average for our investors).

 

Kristy Copping is the Perth Property Management (PPM) Principal and also REIWA’s 2021 Property Manager Of The Year, and she commented on the projected fluctuations by stressing the importance of being prepared ahead of this surge in demand.

 

“PPM are suitably prepared for an increase in demand and have prepared our owners accordingly. Having now had invaluable experience managing properties throughout COVID, we are fittingly poised for this next chapter in the Perth property market.”

Kristy Copping | PPM Director

 

 

Kristy ensures every owner is poised and ready for market shifts in 2022.

 

 

Projected Rental Returns For Investors

 

As the world recovers from COVID-19, iron ore and energy exports are predicted to increase with increased global demand, which spreads wealth throughout the state of Western Australia. As workers join or return to the industry, property demand will spike again and the rental vacancy rate will continue to be at critical points, particularly rental properties, which could bring in some healthy returns for investors.

 

With inflation being on the up, Q2 2021 was its highest reading since 2008 at 3.8%. This will continue to have an effect for property prices given that the inflation rate can impact housing prices through its relationship to interest rates.

 

If you are unprepared for these forecasted fluctuations, you may miss out on fruitful opportunities within the market, so it pays to align yourself with the right agency. Here at PPM we are a smaller, boutique agency who communicate closely with our clients, ensuring they are as adaptive as the market is fluid, as covered in our recent article Property Management Service: Why Specialised Agencies Offer More.

 

 

 

 

The Benefits Of Holding Onto Your Property

 

Many investors were taking the opportunity to cash in on their properties whilst the market was hottest earlier in 2021, but with the mining industry remaining strong, and indications that it will continue to improve for an elongated period, potential growth continues to remain at hand. There is continued merit in holding onto your asset at this stage, rather than looking to capitalise on an initial short-term sale.

 

There has been much media hype about the hot selling market in Perth in 2021. However, data from Domain's House Price Report shows the Perth median house price has performed the worst of all capital cities in Australia (refer table below from the report) and are still -2.4% below the record high of June 2014. The rental market however has performed very well over the past 12 months.

 

 

 

Positive signs for strong rental returns continue in the Perth market. For further insight, see our recent article:  Buy, Sell Or Hold? A Forecast For Property Investment In Perth.

 

Some investors have to sell due to personal circumstances. But if this is a choice between high rental yields for the foreseeable future (in the strongest performing capital for rentals) or a short-term cash hit (in the worst performing capital city for sales) why wouldn’t you hold onto your investment?

 

 

Are You Ready For The Next Chapter In Perth Property?

 

As is the nature of the pandemic and Mark McGowan’s immediate response reactions, everything can change in a heartbeat within the Perth community. It is true that no investor or property manager in Perth has a crystal ball, so the need to remain flexible and transparent is key.

 

Investment property owners in Perth should ensure they have aligned themselves with an adaptive and flexible property management agency who is local and able to help you navigate the dynamic market of 2022.

 

In order to maximise returns and to remain as dynamic as the market itself, you can align yourself with an award-winning agency like Perth Property Management, who recently enjoyed some success at the REIWA Excellence Awards.

 

If you want to work with WA's leading agency, for professional service that offers stress-free management and effective communication, we welcome you to contact us today for a rental appraisal, or to discuss how we can prepare you for the predicted 2022 market shifts.  

 

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