- Perth's property market faces unprecedented demand, tight supply, and record prices.
- FOMO leading to rapid, aggressive offers and quick sales.
- Despite government initiatives, Perth's housing and rental crises will persist.
Perth’s residential property market has been plagued with a convergence of factors that have escalated demand, drained supply, and sent property prices spiralling to record levels, according to Resolve Property Solutions director and local buyer’s agent, Peter Gavalas.
An unprecedented crisis
With The Real Estate Institute of Western Australia (REIWA) clocking the available listings at a little over 5000 by the end of October, Gavalas said the property market conditions have worsened to unprecedented levels.
Perth’s total property listings
“The market’s never been this tight. Houses are being snapped up at record speed, and with median time on the market at an all-time low of eight days in October, buyers are feeling the urgency,” he said.
Gavalas believed that the buying frenzy was driven by a fear of missing out, causing buyers to make quicker and more aggressive offers.
“It’s a frenzy out there. Buyers know that if you’re not quick or competitive enough, chances are you’ll miss out and end up paying more for a similar property later.”
Peter Gavalas, Resolve Property Solutions Director
According to CoreLogic data, Perth’s median property price hit a record $631,195 in October. The increase is among the highest nationwide, having grown by 10.8% compared to last year’s price.
Affordability and population growth have sent investors flocking to Perth
While Perth remains one of the more affordable capitals for purchasing a home, Gavalas said that the city’s lower prices and booming population were fuelling its heightened demand.
Indeed, Western Australia (WA) witnessed the sharpest population growth nationally over the year ending 31 March 2023, with its population rising by 2.8%, according to Australian Bureau of Statistics (ABS) data.
“People are moving to Perth for its fantastic lifestyle and affordability, which is more attractive than in Sydney or Melbourne. This surge of interest from overseas and interstate buyers is adding to the already strong local demand, intensifying the competition for homes,” Gavalas said.
Perth’s residential vacancy rates
The rental market fared no better, with SQM’s figures placing vacancy rates at a paltry 0.4% in October, almost a third of the national average vacancy rate of 1.1% and well under the 2% to 3% characteristic of a balanced market.
“The lack of available rental properties has pushed rents higher and encouraged investors to enter the market,” Gavalas said.
The latest ABS lending data highlighted a stark rise in WA investment loans, with the total value of property investment loans reaching $838 million in September, the highest monthly figure for property investment in eight years.
A wicked problem with no quick solution
Though Perth’s pervasive housing and rental crises seem unending, the State Government has not been inactive, having recently released several initiatives to alleviate these twin problems.
Last week, the Cook Government announced a $10,000 incentive to convert short-term rental accommodations into long-term rental properties. It also committed $24.4 million in rental assistance to help Western Australians facing eviction or suffering from rental stress earlier this month.
Additionally, the Government pledged $15.45 million to see the delivery of 1,500 new apartments and extended off-the-plan transfer duty concessions to include apartments under construction.
Finally, a new Housing Supply Unit was revealed in October, overseeing the government’s push for more supply.
Though these announcements may offer some reprieve, it is essential to note that supply takes time to come online, and the poor conditions affecting Perth’s property market will not change soon.