National Property Report – August 2014

Australian Capital Territory

Cash splurge attempts to revive property market

Massive infrastructure spending and cuts to stamp duty are just some of the highlights of the ACT budget

The ACT government has allocated a record $2.5bn to infrastructure spending over the next four years, in the hope that it will stimulate activity in the economy and revitalise the ACT’s stagnant property market.

In order to fund all the new developments, the government will have to borrow an extra $1.27bn over the forward estimates. However, ACT treasurer Andrew Barr is adamant the extra borrowing will not jeopardise the local economy and its AAA credit rating, citing the fact that the ACT has the lowest debt among all states and territories.

Some of the big ticket items include:

• $21m for the Canberra Hospital redevelopment
• Development of the University of Canberra Public Hospital
• A new carpark at Calvary Hospital
• $21m for the Capital Metro light rail project
• Construction of the new Coombs P-6 School
• $20m to improve the Civic to Gungahlin Corridor
• $9.9m for the Majura Parkway to Majura Road link road
• $10m for upgrading the Barton Highway roundabout

Another important announcement that will catch the eye of property buyers relates to stamp duty. There is now a lower flat rate of 5.25% for transactions of more than $1.455m. Despite most purchases in this category being commercial, the benefits will also be available for Canberra’s more expensive properties.

Furthermore, people aged over 60 will effectively be exempt from paying stamp duty when they buy a house worth up to $595,000. This should encourage downsizing, with the purpose of freeing up larger homes for families, while stimulating activity in the housing market.

And in an attempt to bring in an extra $10m per year, there is a new fixed charge and rating structure for residential land tax.

Finally, good news for jobseekers

At a time when 6,500 Commonwealth public servant jobs in Canberra will be lost over the next four years, it must be a welcome relief to the ACT economy that the Capital Metro project will support more than 3,500 jobs during construction.

In particular, the jobs created by the light rail project linking Gungahlin to the city will support the economy well into the future, says the minister for the environment and sustainable development, Simon Corbell.

“Light rail is well known for its ability to stimulate economies and support significant job numbers both during construction and operation.

“In a time when many jobs will be lost in the ACT, it is great to see the positive economic injection will have to the ACT economy in the short and long term.”

Furthermore, an EY report indicates that the light rail along the city to Gungahlin corridor will support 50,000 jobs through to 2047.

New South Wales

 Yuppies invade inner Sydney apartments

If you’re living in Sydney City, watch out. Young professionals are coming to an apartment near you

Not unlike love and marriage, young professionals and the Sydney CBD also go together like a horse and carriage.

In particular, these cashed-up twenty- and thirty-somethings are on the hunt for apartments and units. At least that is what the current data indicates.

According to the latest Herron Todd White report, young people who are first home buyers are increasingly targeting studio or one-bedroom units in the $450,000–$600,000 range. This is especially evident in the transport corridor close to the CBD and the Lower North Shore suburbs. Think Mosman, Cremorne, Neutral Bay and North Sydney, to name a few.

Meanwhile, the latest ABS figures cited by BIS Shrapnel indicate that generations X and Y are driving a Sydney apartment building boom. The increase in apartment construction over the past two years and next five should make up for the shortage since the last construction boom peaked in 2004.

The report’s author, Angie Zigomanis, says increasingly it’s young professionals, who are used to living in inner-city apartments and don’t want a detached house, who want to upgrade to an owner-occupied type of apartment.

About 2,000 rental apartments are forecast to be completed in inner Sydney in 2013/14, which is similar to its 2003/4 peak but still below the 1999/2000 level of 2,500 apartments.

However, this is not sufficient to meet the pent-up demand in the inner-city apartment market. And even though there will be further high construction over the following two years, BIS Shrapnel anticipates a modest deficiency of apartments in inner Sydney will still be in place by 2016.

“This environment should continue to support rental growth in inner Sydney apartments,” Zigomanis says.

“The continued tight rental market and rising rents are expected to support further investor demand and consequently price growth over the next two to three years, particularly if economic growth starts to recover and confidence returns.”

In addition to the City of Sydney, BIS says the local government areas most likely to attract new high-density apartments are Parramatta, Ryde, Auburn and Ku-ring-gai.

Market outlook

After Sydney’s astronomical growth during the past 18 months, is there still some juice left in the tank?

Apparently there is, according to all the experts Your Investment Property spoke to.

Cameron Kusher, senior research analyst at RP Data, says: “Low interest rates will likely drive further increases in home values; however, it is likely to be at a more moderate pace than what we have been seeing over the past 18 months or so.”

BIS Shrapnel managing director Robert Mellor agrees the fundamentals for residential properties in Sydney remain rosy, and he expects property values to grow by another 8% in the next 12 to 18 months. “There’s still a lot of demand pressure, and supply is strained,” he says.

Linda Janice Phillips, national research manager at Propell, sees similar performance over the same period and adds that, while house prices have grown at the fastest pace in the nation, prices are still reasonable.

“The increase reflects a lost decade of underperformance, and prices are catching up to where they should be. The pace of growth will slow in the next year to 7% p.a., but this will still be the highest house price growth in the nation,” she says.

Where’s the biggest potential right now?

Kusher sees the best potential outside Sydney and points to regional markets such as Newcastle and Wollongong. “They are still commutable to Sydney, and as affordability factors drive buyers out of Sydney, they may look to these secondary cities,” he says.

However, Phillips says for investors the best potential in the state remains in Sydney.

“Regional areas always seem to underperform by comparison, though the sea-change coast was badly slugged in the past decade and could offer opportunities. Within Sydney, the better properties in prime spots out to Palm Beach look attractive, while the younger generations drive demand for near-city apartments, so areas like Balmain, Newtown, anywhere benefiting from the new light rail lines, are tempting,” she says.

Risks to be aware of

Mellor warns investors of the danger of overpaying just to get into the market. “You need to be wary of what you’re paying for, especially for off-the-plan properties which are priced based on the current market performance. You could be paying too much,” he says.

For Kusher, the biggest risk in his view is just how many investors there are and what are they really investing for. “Capital growth has been strong, but how long can it continue for?” he asks.

Northern territory

Addressing question of supply

While Darwin continues to go from strength to strength, the city’s undersupply of stock remains a problem. However, there are options for canny investors

Sometimes strange dilemmas can come with great fortune. And this is currently the case for the property market in NT’s booming capital city.

Darwin continues to enjoy the spoils of its strong economy and growing population. As a result of this happy situation, in the latest RP Data-Rismark Home Value Index results Darwin was once again streets ahead of the capital city field.

Over the three months ending May 2014, it was the best-performing capital city, with a 5.5% growth in dwelling values. Over May itself, it also recorded 1% growth in dwelling values, making it one of only two capitals to show any growth at all.

Further, over that three-month period, the city again had the highest rental yields of any capital city, with both units and houses recording yields of 5.8%.

This is all good news, but Darwin’s oft-cited shortage of housing stock is an ongoing major issue, which increasingly impacts on investors.

Tod Peterson, from Peterson’s Property Search, says housing availability has always been a huge problem, largely due to the drip-feed system of limited land releases. But now an apparent change in mindset seems to be leading to more buyers, and thus competition for limited stock on the market.

“A lot of renters are converting to buyers because rents here are sky high and people are simply sick of it. Also, people used to come here for work and rent, but now we are seeing people who are buying on arrival.”

However, Peterson says there are still opportunities in Darwin for investors, especially as rents will remain high while demand exceeds supply. “The interesting thing is that the government seems to have realised that infill housing and zoning changes are cheaper and easier than building new suburbs.”

For this reason, he suggests that investors adopt the following strategies to try to get around the problem of undersupply:

1) Entry-level houses in the northern suburbs have increased in price dramatically over the last year. But it is possible to get single-storey, three-bedroom houses on good-sized blocks of about 820sqm. As it is now legal to rent out a granny flat to a non-dependent, it would be worth an investor’s while to put one on such a property as a separate entity. This would cost about $120,000, but it could then be rented out (independently of the main house) for about $350 a week. For an investor this equates to a 15% rental return as well as a potential equity gain. Make sure you choose your area well and do your numbers before embarking on this strategy.

2) Secure a unit or apartment that can be set up as a corporate rental as the returns tend to be significantly better. As long as the property fits the requirements of a corporate management company, it will do well. For example, decent-sized, well-fitted-out two-bedroom units can attract about $1,000 a week, and vacancy rates are low. It is possible to secure such a unit for about $520,000 to $580,000.

Queensland

Market defies naysayers

Reports that segments of Brisbane’s market are facing a looming oversupply seem to be overstated, while the market overall continues to move along at a steady pace

All too often, positive news seems to inspire naysayers. One of humanity’s quirks is the presence of people who prefer to see the glass as half-empty or the darkness surrounding a cloud’s silver lining.

Discussion of aspects of Brisbane’s property market has been afflicted by this tendency in recent weeks. In particular, there have been reports of the need to approach the inner-city apartment market with caution, due to a potential oversupply in the near future.

Metropole Property Strategist’s Brisbane director, Shannon Davis, says there is a lot of supply going into the inner-city apartment market and it might take a while for demand to catch up with that supply.

However, there is also growing interest in smaller dwellings – like one- or two-bedroom apartments or townhouses – and a trend towards both living and investing centrally rather than out in the suburbs.

In the past, a lot of investors invested in property further out in the suburbs for tax deduction purposes, Davis says. “But many have realised that, for an investor, it is not necessarily the best thing to do. Also, many people are tired of commuting. You look at the young professional, empty nest or migrant demographic groups. They prefer apartment living and they are often renters.”

Comments claiming a potential oversupply and the associated risks have been overstated, Real Estate Institute of Queensland (REIQ) CEO Anton Kardash says. “In my view, the inner-city apartment market is actually improving. There has been huge growth in sales activity in certain areas of that market.”

There might come a time when that changes and there is an apartment oversupply, but vacancy rates are quite low, which indicates a reasonably tight market, Kardash says.

“Also, anecdotally we are hearing there might be a general lack of stock in well-established, inner-city Brisbane suburbs. Properties are spending quite a short amount of time on the market, so the demand is out there.”

The latest Place Advisory report on the Brisbane inner-city apartment market also addresses the issue. While some statistics imply the market is likely to be oversupplied in the near term, it directly challenges such statements.

While there are over 22,000 proposed apartments in the pipeline, this depth of market pipeline has existed for over six years and, given demand, Brisbane was likely to, in fact, remain undersupplied, the report says.

Solid and steady

Overall, the Brisbane market seems to be well placed in terms of value and growth. The latest RP Data Rismark Home Value Index results show that, while there was a slight drop of 1.7% in values in May, over the quarter there was growth of 2.2%.

Davis says that drop is likely to be largely seasonal, as is traditional over April to May. Another contributing factor could be the Federal Budget, which has probably impacted on consumer confidence.

“Pre-Budget, Brisbane was firing up more than most capital cities… And it remains the most pent-up of capital city markets. So, assuming a return to the trend pre-Budget, the market should continue to grow.”

An attractive feature of Brisbane’s market is that, compared to Sydney and Melbourne, it generates higher rental yields, Davis adds. “This is driving lots of investor interest. Those yields, in comparison to purchase price, means there is lots of activity.”

Kardash agrees with this assessment of the current state of the market. It has been a good year of steady growth in both the house and unit markets, he says.

“The thing with the Brisbane market is that it is never as dramatic as markets like Sydney or Melbourne. So we have seen solid growth and then a slight easing. But, crucially, it remains stable and steady and should continue in the same vein.”

Developing trends

A positive trend worth noting is that both the time (days) properties are spending on the market (DOM) and property discounting have dropped over the last year, Kardash continues.

DOM has dropped by 15 to 20 days in total and, while there will always be some discounting, the drop in the percentages properties are discounted by has been significant.

“This is an indication of a nice, steady marketplace which has increasing demand and where there is a good convergence between sales and stock.”

Meanwhile, an investor trend worth noting is that in Brisbane’s outer suburbs houses are increasingly being favoured over units, Kardash says. “This is particularly prominent in the $350,000 bracket. It reflects a move by investors into houses in particular areas.”

South Australia

SA revamps image, but will investors bite?

SA’s government is doing its best to make Adelaide a more attractive investment option, but is it working in the residential property market?

Often described as one of the “great small cities of the world”, Adelaide is no stranger to accolades. It is, for example, regularly rated one of the world’s most liveable cities.

Yet the state government itself concedes that the city has a bit of an image problem. Adelaide has long struggled with the perception that it is conservative, staid and slow-paced.

Having identified this as a problem, the state government is in the midst of an intensive revitalisation program. Known as the Vibrant City strategy, it aims to transform Adelaide into a city attractive to SA residents, as well as to potential visitors.

According to James Young, who is chief executive of Colliers International in SA, the strategy is also meant to make Adelaide more appealing to investors. There tend to be lower levels of demand for Adelaide than other capital cities, so demand does need to be encouraged, he says.

“This rejuvenation and rebranding is a very deliberate attempt to attract the investor market. To support this, the government has been proactive in doing things like, for example, introducing stamp duty concessions for buying into certain CBD projects.”

Adelaide’s new-style residential developments are designed to cater to the growing demand for two- to three-bedroom apartments and townhouses, as opposed to bungalows in the suburbs. The Bowden urban village in North Adelaide and the Tonsley industrial-residential complex are good examples of these lifestyle-focused developments.

Young says that, when combined with the drive to develop better services (like light rail) for inner-city living, the development involved with the Vibrant City program, and the SA affordability factor, these new property options should be of interest to investors.

The demand is out there, he believes. “We are seeing more interstate buyers looking genuinely at investing in Adelaide. This is largely because competition has increased dramatically in NSW and Vic, so investors are looking in SA as a result.”

Over the last three to five months, he has also observed growing numbers of past investors, who had moved their investments out of SA, coming back to have another look at the Adelaide market. “This is an exciting and positive trend.”

Resources sector primed for growth

Improving awareness of SA’s emerging resources sector, which is regarded as having a very bright future, is another factor piquing investor interest.

Young says that with the development of the resources sector will come tremendous investment and infrastructure spending. In turn, there will be job creation running from these projects over time. The economic impact of this for SA, and particularly Adelaide as the capital city, is set to be major.

“This should impact significantly on the capital growth of Adelaide property in the future. Adelaide, and SA generally, does have a very stable market. But I think residential property is set to enjoy an upside down the track.”

A measured recovery

The latest RP Data-Rismark Home Value Index results show that Adelaide, like most other capital cities, had a slight drop (of 1.8%) in values over May. However, it recorded growth of 1.6% over the quarter, and 4.3% growth over the year.

The latter figures are probably the ones to focus on. According to the latest Herron Todd White report, Adelaide’s residential property market continues its “fairly measured recovery”.

There are a number of positive indicators of this recovery, the report notes. For example:

• Increased buyer interest and enquiry has started to translate into a slow rise in sales transactions.
• Auction clearance rates have improved.
• Time (days) on market figures appear to be falling.
• Reduced vendor discounting has reduced.
• There has been a slight increase in confidence, despite some ongoing concerns about the economy and employment.

The report also states that recent RP Data figures show a median price increase of about 3.5% over the last year. This has left Adelaide’s market sitting at a level slightly higher than its last peak, which was towards the end of 2010.

Tasmania

Changing times

Will the economic promises of Tasmania’s new Liberal government help along the fledgling recovery of the state’s property market – or will other factors prove more important?

Traditionally, a change of government heralds the start of a new era. And, as with any new beginning, this means high hopes for the future abound. Such is the situation in Tasmania at the moment.

Since the Liberal Party grabbed victory in the March election, the Apple Isle has been focused on a fresh start. After 16 years with one party in power, any change was going to be appealing, especially if improvements to the struggling economy seemed to be on the cards.

Commentators agree that rebuilding of the economy and the creation of more jobs, as promised by the new government, are essential to the future of the state – and to the continued recovery of its property market.

Recent increases in building approvals and new jobs are being trumpeted by the government as a sign of renewed confidence in Tasmania. But some question whether this will impact on the still-struggling property market in the near future.

Airport extension to benefit market

Rock Property managing director Kent Medwin says the change in local government has brought investors the promise of greater stability. This has helped boost market confidence, which will aid the long-term recovery of the market.

“Conservative governments usually bring about a desirable investment landscape. But in terms of the type of specific initiatives that might benefit the market … how significant they might be and the timeframe they might take place in is anyone’s guess.”

In his view, the Federal Government’s plan to extend the runway facilities at Hobart’s airport will prove more immediately important. “It means that, starting early next year, there will be direct flights from mainland China. This will have a tangible economic benefit which, in turn, will have a noticeable impact on property values.”

Medwin feels the greater access provided by the airport will lead Chinese residential investment to increase. “The level of genuine interest from Chinese buyers is currently about the highest it has ever been. This is likely to have a positive impact on market growth.”

Further, the preference of Chinese buyers for buying new stock off the plan – which is not common in Tasmania – might impact on how stock is provided to the market in future, he says.

Any such change should be of interest to investors as it would provide them with an improved range of investment options, and opportunities, in the future.

Cause for optimism

In the latest RP Data-Rismark Home Value Index results, Hobart’s market actually recorded a slight drop (of 0.6%) in values over May.

However, Medwin believes there is still cause for optimism about the future of the Hobart market. It has had several consecutive periods of growth and there is also increasing interest from mainland investors wanting to invest in Tasmania.

Cash flow is in the sights of mainland investors, he says. “In Tasmania you can get yields in the 4% to 11% range. That is attractive to many people. The top end of that range is an opportunity that investors won’t find in most capital cities.”

As mainland investors are driven out of more competitive and expensive markets, like Sydney and Melbourne, they will increasingly look to the affordability of Tasmania, Medwin adds. “And it is those investors who will drive prices and values in the market up.”

According to the latest Herron Todd White report, overall annual sales volumes in Tasmania have increased by almost 15% off historical lows – but the market is still differentiated by region. While Hobart’s market is the most buoyant (with a 12% increase in median price) and Launceston’s has stabilised, regional markets remain oversupplied.

Impact of FHBB

Meanwhile, the HTW report also notes that government changes might lead to a greater level of economic confidence for the future. But it adds that the market sectors to watch are vacant land and newly constructed housing, which are currently underpinned by the state’s First Home Builders Boost (FHBB).

The FHBB appears to be creating a market bubble as first home owners fast-track their entry to the market, the report states. Should the grant cease at the end of the year, as it is scheduled to do, there could well be corresponding fallout in those markets.

For investors, the existence of the FHBB means there is currently diminished competition for established housing stock moving into the future. Should the FHBB cease, this situation might change a little.

Victoria

Melbourne’s Inner West ignites, but risk looms

Once a typical working-class area neglected by property investors and young professionals, Melbourne’s Inner West now seems to be attracting the same demographic it once repelled

You know an area is experiencing gentrification when factories and warehouses are turning into modern housing estates, and that’s exactly what’s happening in Inner West Melbourne.

And it seems that homebuyers, investors and tenants are interested in not just what this area offers but what it’s going to offer.

Indeed, Inner West Melbourne has been targeted for massive new developments that have just recently been proposed. These include:

• A new $6b suburb called E-Gate located in West Melbourne, 2km from the CBD, which would provide housing for up to 10,000 people. There would also be 50,000sqm of commercial and associated retail space, and the potential addition of a school, a sports field and a library should help attract families.
• A long-abandoned Kinnears Rope Factory site on Ballarat Road that could be turned into a suburb for 2,500 people, which would involve more high-rise apartments.
• A project to build 751 apartments in Footscray, within 100m of the Maribyrnong River, in four towers rising to between 16 and 28 storeys high.

Furthermore, nearly 9,000 additional dwellings were built in Footscray between 2006 and 2011, according to the Maribyrnong City Council website.

So what is it about this area that has attracted so much investor attention, which has helped it outperform some of the wealthier parts of Melbourne in recent years?

What the Inner West offers

There are two key things Inner West Melbourne has that many other Victorian suburbs don’t, says Leo Dardha, a director at Hocking Stuart Yarraville.

“I think the proximity to the CBD and the affordability are two key components which have transformed the Inner West,” he says.

“To live within 5km of the Melbourne CBD – the world’s sporting capital – and get a nice two-bedroom apartment for under the half-a-million-dollar mark is a sensational buy, whether it be an investment or a place to live.”

Dardha says the area is becoming increasingly popular among singles, professionals and young couples who are looking for nice apartments.

Footscray: the new South Yarra?

Footscray has come on in leaps and bounds, so much so that it could become like the prestigious southeast Melbourne suburb of South Yarra, says Dardha.

With median prices for Footscray at $594,000 for houses and $350,000 for units, the suburb still has a way to go before it reaches South Yarra’s $1,133,000 for houses and $547,750 for units.

“I think the proximity to the city and the infrastructure changes are really helping Footscray become one of Melbourne’s premier suburbs, and it’s heading in the direction of becoming South Yarra, which is one of Melbourne’s most sought-after locations.”

In addition to Footscray, Dardha also sees great potential in West Footscray, which he says is benefiting from the ripple effect.

Risk looms

Like Sydney, Melbourne’s performance during the past 12 months is also causing some concerns among experts.

“On the plus side, values are rising and have generally continued to rise unabated for 20 years or so on the back of strong population growth creating additional housing demand, but the high level of investor activity and much more sufficient housing supply than across other states is the key risk, not to mention that rental yields are the lowest of any state,” says Cameron Kusher, senior research analyst at RP Data.

Angie Zigomanis, senior research analyst at BIS Shrapnel, agrees and adds that some parts of inner Melbourne could be headed for oversupply in the near to medium term.

“The record levels of new apartment supply in inner Melbourne over 2013/14 to 2015/16 will push the market into oversupply and vacancy rates will rise,” says Zigomanis.

“The high level of competing stock means that landlords will be unable to command the premiums that are traditionally available for new apartments, while owners of older established apartments will have to discount the asking rent on their apartments in order to compete.”

For Linda Janice Phillips, national research manager at Propell, there is the more adverse impact of oversupply.

“The risks lie in lower capital growth in future,” she says. “The boom is over, and while prices will still go up, it will be at a snail’s pace by comparison with 2013/14. A vast oversupply of residential land and inner-city units puts the lid on price appreciation for the medium term, and any purchase needs to be researched against how much more can be built nearby (units) or how much land remains available (houses). Employment risks feature writ large in Melbourne: in 2017 the car industry dies with potentially a huge loss of jobs, and while agents talk up the longer-term prospects, which are certainly there, no one really knows what 2018 is going to look like. It is possibly better to wait for 2018 and buy when things are at their worst.”

Western Australia

Hold for growth in Perth market

Smart investors are cautiously exploring the best opportunities as the Perth market moves to the next pace of the cycle

Perth’s subdued performance of late may not be making headlines, but this doesn’t mean investors should write this market off yet.

WA’s economic fundamentals are still solid, and the property market remains a lucrative option for the savvy investor as prices return to more sustainable levels, says Paul Blackburne, managing director of Blackburne Property Group.

“Given Perth’s population is still growing rapidly and supply is limited, I expect to see growth rates of 5–6% for the next year,” he says.

Cameron Kusher, senior research analyst at RP Data, agrees that while property values are trending at a more moderate pace compared with their peak, home values are still rising.

Investors in Perth are also less likely to lose money on their investments compared with investors in Melbourne, Brisbane and Adelaide, as long as they hold their properties longer than one year, according to the latest Pain and gain report by RP Data.

Only 5% of homes that were resold in Perth over the March quarter sold for less than the purchase price, which is a significant drop from 6.4% a year ago.

No properties that were resold in Bassendean, Kalamunda and Peppermint Grove recorded any losses during the same period. In contrast, about 18% of all properties resold in Mandurah suffered losses, while more than 12% of properties resold in Cottesloe and Claremont made losses.

First home buyers doing it tough

Recent data from the Real Estate Institute of WA (REIWA) indicates that interest among first home buyers in the Perth market has been waning.

However, REIWA president David Airey says there has been particularly strong sales activity reported recently in the northeast region of Perth through to the City of Swan and the Shire of Kalamunda and Gosnells in the southeast region.

“The number of properties on the market is trending back strongly towards Perth’s long- term average, up by 16% in the three months to May and putting 10,665 properties up for sale,” Airey says.

“This is a reflection of a range of factors, but most notable is weak interest from investors and much slower activity from first home buyers. Together this is adding to stock.”

Indeed, according to the latest Herron Todd White Report, Perth’s selling days are now down to their lowest (49 days) for the first time in eight years, and there are low interest rates, a low number of listings as well as a slow release of lots to the market by developers.

The report indicates that these factors have had the result of increasing the median house price to unaffordable levels for some first home buyers, and increasing the amount of time buyers take to reach a decision about whether or not to purchase.

Risks to consider

While Kusher is generally positive about the prospects of the Perth market, he warns investors to be vigilant about the changing nature of the resources sector.

“WA investor activity is not particularly high; however, investors need to be aware that peak growth in values has seemingly passed and they need to understand the impacts of the slowing of investment in the resources sector,” he says.

“I think we will see further weakness in resource areas, a moderate pick-up in the coastal lifestyle market and fairly moderate value growth in Perth. Overall I expect value growth to be sluggish but probably within the slowly recovering coastal markets of southwest WA.”

Linda Janice Phillips, national research manager at Propell, forecasts an average price drop of 1–2% in 2014/15 but says in the medium term prices will settle again.

“Buying into a declining market is always a risk, but there are suburbs that are likely to outperform and deliver growth,” she says. “Inner-city northern suburbs with easy access to the city and strong public transport services are doing well, including Mount Lawley, Northbridge, Leederville, Yokine and Glendalough. On the edge of the city, lower-cost areas like Canning Vale and Ellenbrook continue to grow, while the quality western suburb of Claremont offers good upmarket opportunities.”

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