- The WA property market demonstrated resilience compared to the eastern states
- Herron Todd White Director says landlords are in a great position right now
- New housing is not sufficient to match the net migration figures at present
The Western Australian property market demonstrated resilience compared to the eastern states in the latter part of 2022; Herron Todd White‘s latest Month in Review report reveals that resilience appeared to be mainly driven by investor activity.
Herron Todd White Director Chris Hinchliffe comments in the report saying the state’s resistance is especially noteworthy given that it was on the back of interest rate hikes throughout 2022.
“This resilience appeared to be largely driven by investor activity from both local and interstate investors as owner-occupier activity slowed,” Mr Hinchliffe says.
Landlords market
REIWA data reveals, in December 2022, the vacancy rate for the Perth metro region was recorded at just 0.6%, the lowest rate recorded since 1980 when REIWA began keeping such records.
“With a balanced rental market believed to show a vacancy rate in the range of 2.5 to 3.5 per cent, it is clear to see that landlords are in a great position right now.”
In line with national trends, the record low vacancy rate is making getting a rental very difficult.
“This is allowing landlords to increase rental payments as many tenants are not in a position to look elsewhere as there is no certainty of finding a new rental,” Mr Hinchliffe says.
“This cycle actually started well before the impact of COVID-19, but was exacerbated significantly by the pandemic.”
SQM data: Perth Rental Vacancy Rate
SQM data may have slight variations from REIWA data due to differences in calculation.
The Month in Review report finds a noticeable trend of rising rental prices for both houses and units, coupled with a decrease in the time it takes for rental properties to be leased after being listed.
“The situation is not helped by the slowdown in construction throughout 2022 due to an escalation in construction costs and supply issues,” Mr Hinchliffe explains.
This suggests that it may take some time before new properties become available in the market.
The rate of new housing starts is not sufficient to match the net migration figures at present.
Relative affordability of the Perth market
“Another key driver of investor activity is the relative affordability of the Perth market in comparison to the eastern states,” Mr Hinchliffe says.
The median house price in January 2023 across Australia’s combined capital cities was $849,666, while in Perth it was $585,326.
This makes Perth the most affordable capital city in Australia when it comes to purchasing houses.
“It is this affordability that has driven activity from eastern states buyers who have likely been priced out of the market in their home states or see Western Australia as an opportunity to get more bang for their buck.”
