With Perth’s property market growth leading the nation throughout 2024 with around 24 percent growth in property values, some property commentators are predicting a slow-down in capital gains as the year progresses. Core Logic data showed Perth ahead of the rest of the nation in growth for 2024 with Brisbane and Adelaide still performing strongly with double-digit gains whilst price gains peaked in Sydney and Hobart and fell in Melbourne.
Perth is at its market peak reaching a median house value of $745,000 at the end of last month. Yet, despite Perth’s strong market performance, our local market remains a relatively affordable major capital city aside from Darwin in terms of median prices comparative to average family incomes.
It is this relative affordability, strong economy, full employment, an uplift in migration intakes and limited housing supply that will continue to drive our market forward. Whilst it is always difficult to accurately predict property markets, in the absence of significant and unexpected market shocks, WA residential property is likely to put in another strong showing in 2025 with REIWA predicting a further 10 percent gain.
Turning to the rental market, with vacancy rates around 1 percent for most of 2024 caused by a lack of housing supply, it will take some time to deliver enough homes to the market sufficient to bring the rental market back into balance.
Rents have risen sharply since mid-2020 after a decade of falling and stable rents, rising a further 9 percent last year. Strong demand from incoming residents and low supply remains the core cause making it tough on tenants struggling to secure suitable accommodation. Mind you, there are around 1,000 more properties listed for rent on reiwa.com compared to this time last year, despite remaining supply constraint conditions. House rents have moved from $350 per week in 2017 to $650 per week today although rents have been stable now for three consecutive quarters.
Investors have come back to the Perth market as they exited the peaking east coast city markets looking to capitalise on the prospect of price growth and nation-leading yields. As more supply comes to market, rents are likely to stabilise this year, although further rent rises of between 2 and 5 percent is likely thanks to the slow construction cycle and lacklustre dwelling approval numbers.
Overall, WA remains the place to watch in 2025 as interest rates adjust downwards and its property market continues to expand from a base of relative affordability.
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