Pete Wargent of BuyersBuyers.com.au says that although there have been false dawns aplenty across Perth's at times excruciating 'seven year' itch, but on this occasion the recovery is on.
"Sentiment has been understandably cautious in recent years after so many false starts, but there's now tangible evidence from our buyer's agent operators on the ground that things are really picking up" Mr Wargent said.
Mr Wargent of BuyersBuyers.com.au cites four of the key drivers of the rebound.
1 – Desirable post-COVID destination
Mr Wargent said, "Western Australia officially recorded nine deaths from COVID-19 in 2021, but perhaps more so than most parts of the country the direct impacts of the virus have been relatively muted".
Border closures have taken their toll on some parts of the local economy, but there remains only a smattering of active cases, none of which are in ICUs.
Mr. Wargent said that "Perth has always been an attractive city to live in with its excellent climate and living standards, and the improved flight connections to Europe will only enhance the city's reputation as a desirable, safe, and clean destination for aspiring migrants from overseas or interstate once the international borders are reopened".
2 – The return of relative affordability
"There are different ways to measure the decline in housing prices in Perth since the previous market peak" Mr Wargent said.
"The ABS 'all dwelling types' index shows prices as having fallen by 13 per cent since March 2014, although there'd certainly be owners that have experienced worse outcomes than that".
"In real terms prices may be one quarter cheaper, or even up to a third cheaper in some cases" Mr Wargent said.
"Moreover, the standard variable mortgage rate has declined dramatically from around 6 per cent at the market's peak to much lower rates today. Some new borrowers are even accessing rates from closer to 2 per cent now. So affordability has improved significantly" Mr Wargent said.
So sharp has the decline in interest rates been that it's now become cheaper to be a homeowner than a renter from a servicing or cashflow perspective.
Doron Peleg, CEO of Riskwise Property Research said that "the pendulum has swung in favour of homebuyers now, according to our latest market research".
"Our latest figures show that it's cheaper to buy a home than rent one across most areas of Perth, and this will impact the decisions of many potentially marginal buyers" Mr Peleg said.
Mr Peleg said "except in inner Perth, it's even become cheaper from a cashflow perspective for borrowers looking to pay down principal, so lower mortgage rates will clearly be a strong driver for the local housing market over the next few years".
"With the government stoking first homebuyers into action, the market is turning around" Mr Peleg said.
3 – Resources investment to return on China's coattails
Western Australia came surging out of the financial crisis on a wave of mining investment driven by China's endless appetite for Pilbara iron ore.
Mr Wargent of BuyersBuyers.com.au "things will almost certainly be less dramatic this time around, and yet as China has emerged from its COVID crisis earlier than elsewhere the price of iron ore has now surged to six-year highs, in part driven by Brazil's woes".
"With gold also faring strongly of late it's likely that mining exploration spend, resources investment, and resources construction will all be heading higher, and this tends to be an integral part of the economic cycle in the west" Mr Wargent said.
4 – The potential for a looming rental crisis
Mr Wargent said that "there's nothing quite like a rental shortage to see homebuyer sentiment shifting".
"And as the last of the previous cycle's excesses are worked off the overhang and glut is rapidly lurching towards a potentially chronic shortage of rentals" Mr Wargent said.
At the last count, the vacancy rate for Perth had fallen to just 1.1 per cent, continuing a trend of several years of consistent declines.
Time to shine
Mr Wargent concluded that "caution has abounded for homebuyers and investors in Perth after so many false dawns, but this time around really is different, and the market will be heading higher in 2021".
"Properties are already selling more quickly, just as rental properties are being snapped up, and vendor discounting is drying up, suggesting that the bottom of the market may already have passed" Mr Wargent said.