- Perth real estate agents are reporting increasing FOMO (Fear of Missing Out) conditions for buyers.
- Stock levels of properties for sale in Perth is around 3,000 homes fewer than in 2022 at this time last year.
- Perth is the only capital city in the country where property prices are still at record highs.
A good indicator of whether a property market is experiencing any measure of FOMO is the average number of days it takes for properties to sell; prices for Perth real estate remain very high and homes are selling very quickly.
Investors in the city are starting to splash out at a moment’s notice lest they find that their ideal home has been snapped up by someone with greater initiative.
“Stock levels this time last year were 3,000 more properties available to purchase and even more in 2020, so it’s becoming apparent that when stock is coming onto the market people are learning lessons quicker; that they cannot muck around and have to make decisions,” said Vivian’s Real Estate director, Trent Vivian.
“This hasn’t been the case in WA for many years.”
Trent Vivian, director/sales, Vivian’s Real Estate
Research from CoreLogic shows that Perth is the only capital city in Australia where home values are at record highs. In June, it took properties in Perth a median of just 10 days to sell, with many homes selling after less than a week on the market in suburbs like Greenfields, Balga, and Carlisle.
In contrast, CoreLogic data from March revealed that the median property price in Sydney recorded a 13.4% dip, with the suburb of Bayview recording the most severe depreciation, 25.8%.
Are interest rates affecting the Perth property market?
It is safe to say that Australia’s largest capital city’s real estate market responded to interest rate rises the way the RBA intended.
Over 3,000 kilometres westward in Perth however, property prices have stubbornly refused to budge, despite the best efforts of Australia’s central bank.
“The WA property market has proven to be remarkably resilient to the 12 interest rate rises over the past 14 months. This is due to strong demand, a strong economy, low unemployment and relatively affordable housing.
“In particular, our lower average loans, higher average wages and relatively affordable housing has meant Western Australians are in a better position to manage higher repayments.”
Prices rose 2.4% in Western Australia’s capital in April. This resilience has proven to be a boon for vendors, with property prices in the city again tracking 0.64% higher in May, an increase of 4.21% year-on-year.
It’s anyone’s guess as to why the home of one-eyed footy fans and wide-soled beach thongs property prices are holding out against wave upon wave of RBA-enforced interest rate pain.
“There is such a huge demand for housing in WA, especially in the very popular family-friendly suburbs with good public schools and very few homes on the market,” said Realmark North Coastal sales associate, Frances Goncalves.
“We have a strong economy with low unemployment rates and the population continues to grow. All of these factors, not just interest rates, have an effect on the housing market.”
Frances Goncalves, Sales Associate, Realmark North Coastal
Many suggest it might have something to do with federal stimulus savings that were squirrelled away during the oft-maligned era of border restrictions and lockdowns.
Perhaps it’s the mass immigration that the Albanese government has implemented in a supposed effort to jump-start the economy.
Perth real estate is both increasing in value and selling like hotcakes, with many suggesting that low stock levels, high rental yields, and high demand for rental properties are contributing to the trend.
“Rentals have fallen by 5,000 homes in the past 12 months and properties for sale are down 41% from the 5 year average.
Frances Goncalves, Sales Associate, Realmark North Coastal
“As long as there are persistently low levels of housing available to purchase and such a tight rental market, prices in Perth should rise or hold firm,” added Goncalves.
Are there any other cities in Australia where property values are up?
Research in 2022 claimed that Australian property prices were in for a huge dip, with one economics research firm claiming that by 2025, median property prices could reduce as much as 43.5%.
Such scare-mongering aside, property values did set records for depreciation on a nationwide basis earlier this year.
Compared to 2022, the Australian property market has declined more than 7% this year, the fastest decline on record, with Perth as one of the golden children, bucking the trend and appreciating steadily.
In terms of movers, however, Adelaide has seen the biggest increase in median property value in the early to mid stages of 2023, March saw prices rise by 5.1%.
The trend continued in June, with values increasing by 0.58% on the previous month and 5.6% year-on-year. The median was $660,000 in the South Australian capital by the end of the month.
Getting back to WA, if the promising property market indicators are sustainable in the long term, the city could still represent some of the best-value property markets for investment in the country, the state of the local economy certainly seems to suggest that this may be the case.
The state’s monstrous gross state product of $361.8 billion is shared amongst a relatively small population of just over 2.5 million, according to the 2021 census.
“One of Perth’s biggest problems has always been its accessibility to the rest of the world. Now with a lot more direct flights opening up, the word is quickly spreading about the lifestyle and how good it is here,” said Vivian.
“We firmly believe that Perth is now finally in the conversation of ‘top 3-5’ places to reside in the country.”
Trent Vivian, director/sales, Vivian’s Real Estate
This, combined with predictions that the economy will grow by more than 4% in 2023, thanks mainly to its very well-serviced mining industry have served to buoy prices in the West.
“When mining capital expenditure decreases, as it did during the WA property market’s extended downturn, people leave WA seeking employment elsewhere. You also see an increase in unemployment,” said Hart.
“These factors contribute to a decline in demand and a decline in house prices.
“Currently mining expenditure is rising, which is a positive sign for the market.
Cath Hart, CEO, REIWA
Although Perth is a great distance from most of the bigger mine sites, a large section of the population and many of its property owners are fly-in-fly-out workers, making high-value, low-maintenance properties the order of the day.
“At the moment we are seeing huge demand and a lot of buyer competition in people upsizing to large family homes particularly ones that have been renovated, as buyers are not sure if they will be able to find tradies to do renovation work and they are unsure about the costs,” said Goncalves.
“They prefer to buy homes that are already modernised and ready to move into.”
Frances Goncalves, Sales Associate, Realmark North Coastal
Many are pointing to the high number of people entering WA in the first half of 2023 as a driving factor in demand for housing, which will serve to maintain property values and keep growth stable.
“WA recorded 2.3% population growth in the year to December 2022 and is forecast to grow 1.8% in 2023-24.
“This will maintain the demand for housing.
Cath Hart, CEO, REIWA
Industry bodies such as the Real Estate Institute of WA (REIWA) say that despite the presence of a degree of FOMO for buyers of Perth real estate, discerning investors are still crunching numbers and keeping an eye on the RBA when considering a purchase.
“While the speed of sales suggests a high degree of FOMO in the market, 12 interest rate rises have seen buyers become more budget conscious than a couple of years ago,” said Hart.
“While they are acting quickly, they are buying within their means and factoring in the potential of more interest rate rises.”
