The Western Australia market is rebounding from unprecedented lows, thanks to declining vacancy rates and significant population growth.
According to Craig Gemmill, managing director of Gemmill Homes, an important factor contributing to the state's more optimistic outlook is the sharp decline in vacancy rates. In July 2017, the vacancy rate exceeded 7.3%.
Stabilization was followed by four consecutive quarterly declines. The Real Estate Institute of Western Australia revealed that the vacancy rate had dropped to 3.9%, a level never reached in 2015.
Gemmill also stated that this was the ideal time for an investor to enter the market, given the fact that the situation has deteriorated in favor of the owners.
"Investors need at least 5% return. The average is now around 5.5%, "he said. "When you claim a depreciation of 2%, you get a return of 7%. This is before investors have even recovered their borrowing costs. So, in this market where interest rates are low, you can get a great return on your investment. We are entering a recovery phase and the time is ripe to invest in the market. "
Population growth is the biggest change in WA's outlook. After a 60,000-person drop in 2015, WA's annual population growth is rebounding, with repeated increases in recent years.
CBRE figures show that the state has recorded a net increase of 21,000 people over the last year. The population of Perth and Peel, which was about 1.65 million in 2010, is expected to exceed 2.2 million by 2031.
"This is the first step in the recovery of Western Australia," said Gemmill. "The existing housing stock is absorbed. This affects the supply and people then go to the higher level of pricing or build. This will really stimulate the market. "
Michael Valetta, director of residential evaluations at CBRE, shared this positive sentiment, noting recent data reflecting a clear growth for WA.
"Increasing population growth and declining vacancy rates offer real opportunities for the property market," Valetta said.
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