Residential Finance Update Sept 26

Tristan Holroyd - Manager - Specialised Finance

The WA residential market is beginning to show signs of becoming more balanced. The number of properties listed for sale in Perth has increased significantly, giving buyers more choice and reducing some of the urgency we have seen over the past few years. REIWA reported 7,352 Perth properties for sale in the week ending 6 September, compared with 2,905 at the same time last year. REIWA Perth market data

While Perth remains fundamentally strong, we are now seeing some property values soften. From a finance perspective, this is producing more conservative valuations and in some cases, valuations coming in below the purchase price or the owner’s expectations.

That does not automatically mean borrowers are in negative equity. However, people who purchased recently with a small deposit may find that their equity buffer has reduced. This can affect their ability to refinance, access cash or obtain competitive pricing because their loan-to-value ratio has increased.

Construction is another major issue for those willing to build. National building costs have risen by approximately 30% over the five years to March 2026, compared with CPI growth of around 24%. Roof tiles increased by 77%, while windows, plaster, plywood, copper piping, structural steel, cement and concrete increased by between 37% and 48%. These are national figures, rather than WA-specific figures but the same cost pressures are affecting local construction. Insurance Council of Australia

For borrowers, rising construction costs can create:

• Cost overruns requiring additional cash.

• Valuation shortfalls at completion.

• Reduced equity in newly completed properties.

• Pressure on borrowing capacity.

• Higher insurance and replacement costs.

• Difficulty obtaining additional funding once construction has commenced.

The important message is that the market has not collapsed but to be aware that the lending environment is changing. Accurate valuations, realistic construction budgets and sufficient cash buffers are becoming increasingly important.

Here is an article related to investment properties for those investing in residential rental property  Cash flow crunch fuels investor retreat as sentiment collapses - The Adviser

To discuss your specific situation, contact tristan.holroyd@stratosfear.com.au