Perth’s property prices to hold steady in first half of 2023: REIWA

Property values in the Western Australian capital posted a 0.9 per cent increase during the first quarter of the year, with median prices rising from $540,000 to $545,000. 

“We expect prices to continue to hold firm in the next quarter even if there are one or two more rate rises. However, should we see a period of interest rate stability or even cuts, we would expect to see consumer confidence rise, boosting activity and prices,” Ms Hart stated. 

Strong demand and supply dynamics continue to drive growth in the market, with data showing properties moved quickly in the first quarter, selling in a median 13 days in March.

On the supply side, the number of listings for sale hit a 12-year low of 6,931 at the end of December 2022, with Ms Hart noting, “We have seen the number of properties for sale drop even lower than that recently.” 

“Properties are still coming to the market at good numbers, and at levels higher than pre-COVID, so the low number of listings on [our website] is more a reflection of the speed of sales rather than a lack of properties. We do expect the speed and number of sales to decline slightly in April, which is typically a quieter month,” the executive commented.

Forecasting the future of supply and demand in the state, REIWA expects housing demand to “remain relatively strong”, bolstered by population growth.

“WA’s population grew 1.8 per cent in the year to September 2022 and the state government’s recent mid-year budget review forecast further growth of 1.5 per cent in 2022–23 and again in 2023–24,” Ms Hart said.  

The executive highlighted that delayed building completions “remain a wild card” for both sales and rental markets. 

“As more COVID building-incentive new homes are completed, there may be an easing in both markets, but this will be offset by population growth. New home approvals have also been falling, so this will also affect housing supply in the future.” 

While the home sales market has been stable, Perth’s rental crisis continues, with rental prices up 5.8 per cent since the end of 2022, REIWA reported.

“This has been fuelled by declining supply and increasing demand, and more rent price increases are expected this year,” Ms Hart explained, adding “it will take something significant to change the rental market.”

With supply still a major issue, tenants are facing a “challenging” 2023, Ms Hart said, as the vacancy rate in the city stood at 0.7 per cent in January, February and March. 

“Homes are leasing in a median 14 days and property managers are still seeing queues at home opens and receiving multiple applications.”

Ms Hart cautioned that some potential tenants, desperate to find a home, are falling for scams. 

“Unfortunately, some tenants are using platforms like Gumtree or Marketplace to look for rental properties and falling victim to scammers,” she said. “We remind people they should follow proper processes and to use legitimate real estate websites to apply for rentals.”

Providing more insight as to what is tightening the screws on the city’s rental market, Ms Hart said declining supply and increasing demand are at the heart of the issues the rental market is facing. 

“Investors continue to leave the market, with 800 fewer rental properties available now than at the start of the year and a decline of 19,200 since January 2021,” she said. 

While there is still reported interest in the Western Australian market from eastern state investors, Ms Hart said it “hasn’t been enough to replace the properties that have been lost.” 

The executive highlighted the proposed changes to the Residential Tenancies Act and called for other reforms, such as rent capping and limiting when increases can take place, to remain a concern for investors in 2023. 

“The vast majority of rental stock in WA is owned by small, private investors. They’re listening to the debate over rental reform in various states and they’re telling us they’re very nervous about some of the changes being considered,” she added. 

And while the institute is optimistic about Perth’s growth outlook, Ms Hart acknowledged the possibility of a downturn across property markets may have not yet reached its tail end, adding that “low price growth is still a possibility across 2023.”