By Brendan Aylmore AAPI

The Perth residential property market continues to perform well, however, early signs of easing conditions are beginning to emerge.

Current stock levels have risen steadily since December, by an estimated 22 percent, representing a decline in buyer interest and activity. But while values appear to be relatively stable, according to researcher RP Data, Perth experienced a 0.2 percent decline in its median dwelling value in March, which is a likely result of recent interest rate rises.

Demand for properties within the sub-$600,000 investor category remains strong, particularly in the typical investor and coastal areas and within close proximity to the CBD. In particular, coastal locality Scarborough has witnessed the return of investors looking to secure an investment property in the area, known for its sound capital growth. Similarly, suburb Inglewood is fast becoming a hot spot with an affordable price tag, Fresh retail development along Beaufort Street, high rental returns and proximity to Mount Lawley entertainment precinct and the CBD are all factors contributing to the suburb’s strong performance. These and other inner city suburbs will maintain current form providing solid capital growth and investment with above average yields for the Perth market.

While the outlook for the middle market is positive, activity in the premium market appears to be declining showing limited movement in March. The first home buyer segment, or the sub-$500,000 market, is also expected to soften further as more properties are placed on the market due to rising interest rates.

Emerging suburb Alkimos, a new area located 50km north of Perth, is a vibrant coastal community currently under development and another area to watch. New vacant lots are currently selling off-the-plan at ease and following the completion of further infrastructure and retail development to accommodate population growth and improve accessibility, Alkimos and surrounding suburbs will be in high demand.

In the apartment market, recent reports indicate that there are a number of development sites currently being disposed of by developers. Purchased at the height of the market, many sites remain undeveloped as projects were put on hold due to tightening lending conditions, as well as difficulties for developers to pre-sell a proportion of off-the-plan dwellings in order to secure banking finance. This resulted from a lack of confidence from purchasers and it may have some repercussions for supply in the short term.

Although current market activity suggests only modest growth potential for Perth within the next 12 months, there is potential for a slight seasonal increase in values resulting from the commencement of operations at Gorgan and other Pilbara projects. This will create demand for property from workers moving to WA to capitalise on the trade shortage these projects will create.

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