On February 5, 2022, the WA border is set to reopen from a lockdown due to the global COVID-19 pandemic. This will give Perth real estate market another boost and is predicted to push prices further up. In 2021 alone, house prices in Perth increased by 13 per cent, and are expected to have another 10 per cent increase in 2022.
Since the state has the most affordable suburbs along with other benefits, the border reopening might be your chance to move into your new home. If you’re a homebuyer, should you jump into this opportunity or wait some more? Here are some ways the border reopening can affect the property market in 2022:
1. Increase in housing prices
New arrivals from interstate and overseas migrants might increase demand for property amidst low stock levels. This growth in housing prices may be evident in the second half of the year as more companies open for recruitment and the population in Perth grows.
2. Easing border controls may result in stronger demand
When tighter border controls were implemented, it prevented WA from achieving high annual growth as seen in other states (Brisbane: 27.4 per cent, Sydney: 25.3 per cent, Canberra: 24.9 per cent). Open borders may push prices due to new arrivals and growing demand.
3. Interest rates may go up (or down) depending on the situation
Most analysts predict that the housing market will loosen up by 2023 as the Reserve Bank of Australia may increase interest rates to keep inflation at bay.
4. Lending rules may lower house prices
In 2014 and 2017, tighter lending rules put downward pressure on house prices. In October 2021, the APRA (Australian Prudential Regulation Authority) also had tougher serviceability tests for home loans.
While building more houses is the most obvious way to lower housing prices, this is not applicable due to labour shortage and a 30 per cent increase in construction costs.
5. Price gains in western suburbs and riverside areas
The western suburbs and riverside areas have also increased in terms of prices. However, local employment opportunities in the area continue to have a strong demand. As long as employment demand and lifestyle remain a driving factor to choosing a location, the outer suburbs will remain appealing to people.
6. WA is still affordable
Despite the increase in prices, WA remains an affordable state in the nation. Perth has the second-lowest median house value ($520,000) just behind Darwin ($498,168). Compared to the capital city, Perth had a median value six times higher than household incomes.
7. Increased rental demand
For those moving into a new area, the first thing that comes to mind is renting a property due to affordability and lifestyle concerns. As the borders reopen, demand for rentals will increase to accommodate people.
- People want to upgrade their homes (and may even be willing to pay a premium)
The effects of COVID-19 have changed our way of life, especially in terms of living arrangements and environment. Some are willing to pay more to achieve their wants and needs. This includes recognizing the value of a bigger and better neighbourhood, proximity to lifestyle places, and open spaces where we can be involved with socialisation activities.
As the border reopens, don’t close opportunities to buy a home
Perth has always been one of the most affordable states in WA. With its proximity to the centre and other destinations, buying a house in this location is your best bet.
Take advantage of the border reopening. For expert advice, get a free consultation from the buyer’s agents at Buying Perth Real Estate. Contact Clive at clive@buyingperthrealestate.com or give us a call at (08) 6215 0200 or 0412 926 190.
