- Population growth continues to buoy Perth property market.
- Market not expected to be flooded with properties.
- There are early signs of easing in the rental market.
Perth property prices are expected to remain resilient after withstanding 12 consecutive rate hikes thanks to strong population growth.
According to the Real Estate Institute of Western Australia (REIWA), Perth’s population grew 2.3% last year. Since the end of 2022, the annual median house price rose by 1.5%.
REIWA CEO Cath Hart said the Perth population is expected to grow a further 1.8% in 2023-24, which will keep values trending higher.
“Demand for homes is strong and is supported by population growth,” said Hart.
Hart said that there is also a record number of homes under construction across Perth.
“There are over 20,000 homes under construction at the moment and as they are completed we will see people move out of their current residence and into a new home, freeing up some supply in the sales and rental markets.”
Cath Hart, REIWA CEO
“This is already starting to be seen in the rental market.”
“However, this won’t have a significant negative impact on prices as population growth will offset the increase in supply.
“In addition, these homes will not all be completed at the same time, so the market will not be flooded by more properties to sell or rent.”
Hart said higher interest rates have so far not dented Perth property prices, but it’s clear they are having an impact.
“We have certainly seen a decrease in sales activity in the sub-$500,000 price bracket,” she said.
“This is the segment of the market where buyers’ and homeowners’ budgets are more sensitive to the increase in interest rates and cost of living.
“Buyers have become more budget conscious and this will increase if more rate rises reduce their borrowing power further.
“And while sales activity has decreased at the lower end of the market, it is the cheaper suburbs that are recording the quickest selling times, suggesting affordability is important to buyers who are acting quickly when they spot an opportunity offering good value.”
Home selling fast
Perth homes are still selling quickly, with average days on market of just 10 in June, according to REIWA.
While the number of properties for sale on www.reiwa.com hit a 13-year low of 5,384 at the end of June.
“For a couple of months, the number of sales exceeded the number of properties coming to the market, which has seen listings on www.reiwa.com decline,” said Hart.
“This started to change towards the end of June with new listings increasing slightly and sales falling below new listings.
“We expect more properties to come to the market as we move into Spring.
“However, it will be some time before we return to a traditional balanced market.”
Good news for tenants
While Perth’s rental market remains one of the tightest in the country, there are now signs that conditions are starting to ease.
Hart said the median rental price for a house hit a record $580 per week at the end of June, up from $550 in December 2022, while units rose from $475 at the end of last year to $525 in June.
“The vacancy rate has been 0.7% since the beginning of the year and property managers are still seeing queues at home opens and receiving multiple applications.”
“Demand will maintain pressure on prices and we will see median rents increase over the remainder of the year as 12-month fixed-term leases come up for renewal at current prices.”
Hart said there are early signs the rental market was easing, which will be boosted further when the pipeline of homes under construction is completed.
Rental listings have been over 2,000 since the first week in June, Hart said, and while the number of listings at the end of June was still about 6% lower than in June 2022, it was a big improvement on the past few months when it was about 20 per cent lower year-on-year.
“Building completions are playing a role in the increasing listings.”
“Our members are reporting more tenants moving out into their long-awaited new homes and this is freeing up some supply.
“We are also seeing an increase in requests for additional occupants as tenants seek to split the rising rent costs as well as address the difficulty of finding a property in current tight conditions.
“This is also easing some of the pressure on the market.”
According to Hart, east coast investors are also active in the market, chasing the strong yields Perth has to offer.
“If current trends continue, we expect to see a slight easing in the vacancy rate in the coming months.”
She said conditions in regional WA are also still strong, with low vacancy rates and steady demand for good homes.
