If 2020 has taught us anything, it’s that anything is possible.
If I had proclaimed in January 2020 that every Mandurah restaurant, pub and public bar would be locked up and drinkers would be locked out they’d have carted me off to a padded cell, yet that’s what happened to all our local watering holes.
Australian Federal Politics for 10 years had been based on who could be trusted to deliver a surplus for the Taxpayer, who was best qualified to run the Country at a profit again.
Just over 12 months to the day after Scott Morrison won the unwinnable election on such a platform and he was announcing he was sending Australia into unprecedented levels of debt due to COVID-19 Pandemic.
Suddenly debt was good.
The State and Federal Government’s response to COVID-19 was swift with one aim in mind, to get cash injected back into the economy as quickly as possible.
The building stimulus packages announced early in June, just as Western Australians emerged from lock down led to record sales of vacant land, as buyers scrambled for the limited supply of residential land already developed and titled or would be titled before December 31 2020 when the Grants would end. (It has been recently announced that the Federal Government and State Government has extended their building stimulus package, although at a reduced rate to building contracts signed before March 31 2021).
As the second half of 2020 saw WA’s borders continue to be closed the Residential Rental Market hit crisis point in Perth and in the Peel Region with vacancy levels below 1% and aspiring tenants having to compete for the houses and apartments that became available. In many cases bidding wars broke out amongst applicants.
Existing Residential Rents were frozen when the Pandemic hit in March 2020 and remain so until March 31 2021, however as tenants moved out of a rental property rents were adjusted according to market demand, and demand was going up.
By November 2020 in many Mandurah suburbs like Dudley Park, Meadow Springs, Greenfields, Coodanup and parts of Halls Head it was cheaper to buy the home and pay the weekly mortgage on a 95% borrowings basis than it was to pay the weekly rent. In one instance over $100 better off a week.
To see the Residential Rental market reach this point hasn’t been a surprising result, after all Australian new Home Construction starts have been declining since 2016 and prior to June 1 2020 New builds in Australia were tracking at 25% less than the levels of 2016.
So the combination of WA residents returning back to their WA homes from overseas, FIFO workers having to relocate to WA to continue to work and comply with the states interstate quarantine requirements, and years of declining new build starts demand would eventually weigh on the market, and it did as 2020 progressed.
In the Residential Property Sales arena, Peel Region Home Open property inspections are running hot with buyers recognising the opportunity to get into the market now as there are strong signs of a recovery already underway.
Perth property prices recovered over 2.4% for the year to the end of November 2020 and many pundits are expecting the Perth recovery to go large next year with an increase in the order of 10 to 12% on the median price for houses tipped by many.
Locally we have seen the demand for established property increase at a time when the available stock levels had hit their lowest point in the past five years.
There were strong signs towards the end of 2019 that the market was recovering, but when the full effects of COVID-19 were felt in March 2020 that recovery was halted as many sellers withdrew from the market and uncertainty grew over the future of businesses and jobs.
Fast forward to December 2020 and the market has developed a hunger for Mandurah property so much so that average days on market are down to less than 30 days particularly in the under $400,000 price range.
Investors have returned to the market looking for better returns for their funds than 1% interest in the Banks and with the market coming off an extended period of low levels of growth they feel there is not only better returns in the short term but good opportunity for growth in the value of property.
Current levels of rental income in suburbs like Greenfields indicate that for a four-bedroom two-bathroom home in reasonable condition the rental income could be between $19,000 per annum and $21,000 per annum on a $350,000 home.
Commercial activity has also bounced back with strong levels of leasing activity in the last five months of 2020. Retail opportunities have been taken up in the Pinjarra Road commercial strip out to Lakes Road, we’ve leased office space in the inner Mandurah CBD developments in Sutton, George and Sholl Streets and Industrial space has also been strongly sought after.
The last quarter of 2020 also revealed a solid level of demand from qualified cashed up Commercial Investors looking for well-located property with good tenants and reasonable lease periods still to run.
Overall, after a year of unprecedented use of the word unprecedented and events that generations have never seen before, the property market has finished 2020 in a much better position for property owners than it was in January 2020.
With most property commentaries across the country from economists and property market insiders predicting a year of strong growth ahead of us there is a sense of optimism that 2021 will be a great year for property.
To discuss the future for your property portfolio call Frank Lawrence, direct on 0412 903375, with 30 years property experience in the Peel Region, nobody knows Mandurah better.