Market activity set to continue in 2021

The homebuilding boom in Western Australia that was spurred by unprecedented government stimulus measures last year looks set to continue well into 2021.

Builders and construction trades are working hard to ensure new homebuyers are able to meet construction commencement timeframes in order to receive the financial benefits on offer.

Highlighting just how busy the new land and housing markets were in 2020, UDIA’s land survey data showed that sales numbers for new land tripled immediately following the introduction of the HomeBuilder and Building Bonus grants.

The sales numbers remained high well into December, with the number of new lots sold remaining 60 per cent higher in the month to December 31 than the previous year.

In particular, the latest first homebuyers data shows the number of applications for grants rose 260 per cent in the year to December 2020.

We can see from the list of top suburbs where first homebuyers are purchasing that new house and land packages remain very popular with this cohort. The top five suburbs for first homebuyers in the second half of 2020 were Piara Waters, Baldivis, Brabham, Hammond Park and Alkimos.

In good news for homebuyers and a reflection of ongoing demand, the State Government has recently approved a $243.5 million increase to Keystart’s borrowing limit for 2021-22.

The increase should assist thousands more Western Australians into homeownership and brings Keystart’s total gross borrowing limit to $5.7 billion. This will enable Keystart to take on an estimated 2100 new loans in 2021-2022.

With the new land and housing market booming, the demand for residential property has had a flow-on effect to the established market, with latest Real Estate Institute of WA (REIWA) figures showing sales activity in December increased 42.5 per cent compared to the previous year.

As REIWA suggests, this level of activity in December is quite unusual given the festive season and many sellers usually waiting until late January/ February to list properties for sale.

As the rental vacancy rate continues to tighten, currently sitting below 1 per cent, we are likely to see continued demand from buyers as many look to purchase instead of rent and people continue to move back to WA from interstate and overseas.

Investor activity is also likely to rise, which is an important aspect of the market, as private investment provides much needed rental stock.

Overall, with record low interest rates, accommodative lending conditions and a relatively affordable market, Perth and WA more broadly is set to be a very attractive place to purchase property in 2021.