Regional West Australian Housing Market Shows Growth, But Investors Eyeing Alternatives
The Western Australian housing market has seen remarkable growth in the June 2023 quarter, particularly in regional centers, according to the Real Estate Institute of Western Australia’s (REIWA) latest report. However, other factors like increasing interest rates and changes in land tax are leading to an emerging trend of landlords selling off their investment properties, particularly in Victoria and New South Wales.
A Spotlight on Western Australia
Port Hedland has been crowned the best-performing regional center in Western Australia, posting a 6.1% growth in its median house price. Thierry Ng, reporting on the REIWA’s findings, highlighted increased interest driven by affordability and infrastructure projects, pushing the median house price from $470,000 in March to $498,500 in June.
REIWA president Joe White emphasized the current market dynamics: “Members report demand is higher in the $250,000-$400,000 price bracket and properties are selling quickly, while $600,000-$700,000 family homes are taking longer to sell,” White said. New South Wales investors are increasingly looking at Port Hedland to capitalize on the new projects underway.
Supply shortages and other constraints are driving a focus on existing homes. White remarked, “A lack of building development in the area means it is often cheaper and more convenient to purchase an existing property.”
Rental market conditions are also very tight, with Esperance showing a 26.9% rise in median weekly rents, the most significant change since 2007. The lack of supply and increased demand is driving alternative housing solutions. “Members have reported several instances of large organisations purchasing motel accommodation to house their workers,” White mentioned in the report.
Selling Up in Victoria and New South Wales
Meanwhile, in other states, an increase in investment property sales has been recorded. Lisa Calautti reported that Victoria topped the list for the highest share of investment properties sold in July, reaching 30.1%, up from 24.7% in 2022.
Planned increases to land tax in Victoria have been cited as one reason for this trend. McGrath Coburg and Brunswick principal Michael Chan commented, “Since the introduction of the Covid debt levy, we’ve witnessed a sudden increase in the number of investors considering offloading investment properties – which will ultimately exacerbate the state’s rental stress.”
In New South Wales, similar trends are observed. The PropTrack senior economist, Paul Ryan, notes that investor sales may signal emerging financial pressures. He also expressed optimism for the future, expecting that investors will feel more confident returning to the market in 2024.
Richard Mirosch, LJ Hooker Stafford principal, adds that some investors are moving away due to the legislative changes in Queensland. “Some investors just don’t like having more rules put on them around how they can operate their investments and are deciding to put their money elsewhere.”
Rich Harvey, CEO of propertybuyer.com.au, sees a window of opportunity for investors between September and March next year, stating, “If you’re a smart investor and you’ve got the income and you’ve got the borrowing capacity, even though interest rates will be higher, they’re not that high compared to what they were 10 years ago.”
The contrast in housing trends between Western Australia and the eastern states showcases a complex picture of the Australian real estate market. While growth in regional centers is promising, investor reactions to financial pressures and legislative changes are creating new dynamics that are shaping the housing landscape. The opportunities and challenges for both homebuyers and investors continue to evolve, providing a multifaceted view of the Australian property market.
References:
https://www.realestate.com.au/news/where-landlords-are-selling-up-and-why/
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