Perth’s property market has had its fair share of ebbs and flows over the years with market downturn the major feature of our market in the past decade. The years of 2014 to 2019 saw Perth property values drift back for more than 60 months, with house prices shedding 20 percent over that time. This came off the back of two sharper recent market declines in 2010-11 and 2008-9 where our market lost 10.3 percent and 12.1 percent respectively.
Recent price rises off the back of record low interest rates during the peak-COVID years were challenged once rates began to rise and high inflation began to bite, had abated by a mere 0.9 percent and are once again on an upward trajectory. The price gains across Perth (up 1.6 percent in 12 months) have been concentrated to the more affordable regions, including Mandurah (up 8.7 percent in 12 months), Kwinana (8.4 percent), Rockingham (7.5 percent) and Armadale (5.9 percent) in the top four. At the other end of the scale, affluent Claremont is still recovering with a -3.8 percent price drop in 12 months. Fremantle is holding steady with prices back where they were a year ago.
Buyer choice is diminishing.
Compared to east coast markets, the combined capitals are off 7.4 percent over the past 12 months with Sydney down 9.2 percent, Melbourne 8 percent lower and Brisbane down 9. 5 percent. Adelaide is up 0.6 percent putting Perth at the top of the capital city list with 1.6 percent growth.
So where to from here? The major contributor to Perth’s property surge is the lack of housing supply. Normally, when interest rates rise and inflationary pressures curb spending, property values pull back. This time, the underlying lack of supply and migration rising has trumped those macro economic factors that would see values fall.
Demand is high whilst listing supply continues to drop. Total listing supply is a huge 40 percent below the decade average and continues to trend down. The measure of new listings coming to market is 22.9 percent below the volumes coming to market last year and active listings across WA are 39.5 percent under the five-year average. Meanwhile, sales volumes remain above average levels with about 1,000 sales completed each week. Buyer choice is diminishing.
Market conditions point to continued improvement in the Perth market which remains the most affordable of the state capitals as median house prices here reach $599,240, still a long way adrift from Sydney’s $1,253,759.
Rents continue to rise too with Perth’s vacancy rate the lowest in the nation at 0.6 percent for houses and 0.8 percent for units. Rents are now at a median value of $592 per week for houses, $516 per week for units.
There are no definitive reasons to be found that suggests Perth’s property values will fall in the short term. Thanks to Core Logic for the excellent, comprehensive data set.
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