Perth housing market poised for 10% growth in 2024
WA’s population grows by 2.8 per cent in 2023; job prospects attract more residents, fueling future housing demand. Image: Canva.
  • Potential growth in 2024 to be fueled by robust economy and migration.
  • Surging population, low listings, and construction challenges create a housing market imbalance.
  • Perth's relative affordability and high rental yields make it an attractive investment choice.

Onward and upward seems to be the consensus on Perth’s housing market. According to the Perth-based property investment firm Momentum Wealth, the capital city’s housing market may grow by 10% over 2024.

A robust economy, high levels of overseas and interstate migration, together with a dwindling supply of listings and rentals, have made Perth the top destination for property investors in 2024.

Perth weekly asking prices

Thriving WA economy

Western Australia’s (WA) Gross State Product (GSP) was a whopping $445.3 billion in 2022-23, translating to about a fifth of the national Gross Domestic Product (GDP). This outcome was primarily a function of WA’s booming mining sector, which accounted for $200 billion worth of output.

Additionally, WA has record levels of full-time employment, which has had critical implications for Perth’s property market.

“Unemployment remains very low at 3.8% and is expected to remain low in 2024. With more people employed, there is generally an increase in disposable income within the economy which can lead to higher demand for housing, as more people can afford to buy homes,” said Momentum Wealth managing director, Damian Collins.

“This demand can drive up property prices, especially in areas with limited housing supply.”

Surging demographics

Australian Bureau of Statistics (ABS) data indicates that WA’s population growth has intensified as of late, growing by 2.8% in the year to March 2023, a historic pace driven by interstate and overseas migrants.

“As we look towards 2024, WA’s job prospects are set to continue attracting workers to WA, and these new residents will need somewhere to live, which will drive further demand,” Collins said.

Demand outpacing supply

Despite Perth’s elevated demand, dwelling approvals and completions remained at all-time lows in 2023, with the construction sector still faced with challenges, including insolvencies and labour shortages.

Collins remarked that the intersection of these factors may sustain future price growth.

“With the increase in population and smaller household sizes due to COVID-19, over the past four years to March 2023, the demand for dwellings in WA has increased by over 80,000, but when you consider building completions less demolitions, we have only been able to add around 48,500 dwellings to the market.”

“This is creating a supply shortage that will continue to place upwards pressure on house prices for some time to come. While we may see an increase in household sizes due to the increased prices, we are a long way from being back to balance between supply and demand.”

Damian Collins, Momentum Wealth

Indeed, while the news of Perth’s potential price growth may be well-received among landlords and interstate investors alike, the city’s renters and first-home buyers may have contrasting opinions.

This month, the Real Estate Institute of Western Australia (REIWA) reported a meagre 4,755 listings in Perth, less than half of the 13,500 listings considered as the litmus test for a ‘balanced’ market.

Perth total property listings

Perth’s relative affordability

Perth’s homes have remained relatively inexpensive when compared to their eastern counterparts. Perth’s median dwelling value is presently $646,520, nearly half of Sydney’s $1.125 million.

Sydney weekly asking prices

“Perth’s affordability is reflected in the proportion of income required to fund a home,” Collins said.

“According to the Real Estate Institute of Australia’s (REIA) latest Housing Affordability Report, only 35% of a family’s income goes towards home loan payments in WA compared to 56% in New South Wales (NSW), 46.5% in Victoria and 42.4% in Queensland.”

“This relative affordability is particularly attractive in the current interest rate environment and is driving interest from interstate investors as well as locally.”

Growing rents pushing yields up

WA’s capital city has seen one of the highest rental yields nationwide, at 4.6% in November according to CoreLogic data.

Perth property gross rental yield

Perth’s rental yields have mainly been driven by the historically low vacancies, and consequently, surging rents.

Perth residential vacancy rates

“We expect to see rents climb higher and vacancy rates remain near record lows as a growing population of tenants compete for limited dwellings,” Collins said.

Perth weekly rents

“The upside is that we are seeing more investors across Australia buying into the Perth market which over time will help to build the city’s pool of rental stock.”

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