Why winter can’t chill Perth’s housing market

Joe White, the institute’s president, said the record-breaking selling period is due to demand continuing to go from strength-to-strength, driven by several factors.

“Demand is being fuelled by population growth, along with more people turning to the established homes market due to the delays and rising costs in the building industry and the challenges of the rental market,” he stated.

During the month, the fastest selling suburbs were Greenfields and Parmelia (three days); Balga, Dudley Park and Port Kennedy (four days); and Bertram, Cooloongup, Armadale, Carlisle and Leeming (five days).

Mr White highlighted eight of the top 10 fastest selling suburbs had median house prices well below the Perth average, noting affordability played a key role factor for buyers who acted quickly when they saw value.

Notably, Port Kennedy, Greenfields, Bertram, Armadale also secured a coveted spot in the Smart Property Investment FAST 50 ranking for the upcoming year. “While demand has remained strong in the face of 12 interest rate rises, buyers are definitely more budget-conscious. They are factoring in more rate rises and buying within their means,” Mr White said.

CoreLogic’s latest Home Value Index (HVI) showed Perth home values rose by 0.9 per cent in June and 2.8 per cent over the past three months. Currently, the city’s median house price stands at $551,000, 0.2 per cent higher than May and 4 per cent higher than June 2022.

While data showed all major capital city markets’ performance continued to improve, Perth was the only one to grow over the past 12 months after it recovered from a relatively modest -0.9 per cent decline through last year’s downturn.

REIWA’s data showed top performing suburbs for house price growth in June were Beeliar (up 3 per cent to $625,000), Hammond Park (up 2.6 per cent to $533,500), Dawesville (up 1.9 per cent to $550,000), Cooloongup (up 1.8 per cent to $417,500), and Caversham and Armadale (up 1.4 per cent to $547,500 and $329,500, respectively).

Other notable movers during the month were Palmyra, Butler, Waikiki and Cloverdale, which all recorded growth of over 1 per cent.

Mr White forecasts median house prices in the city will rise further in coming months, stating: “The trend for house prices shows a steady increase and we will see more significant growth towards the end of the year,” he said.

For units, the executive sees growth “remaining fairly stable”, adding “little change is expected in the near future.”

Currently, the average price tag on an apartment in the city stands at around $400,000.

Another factor adding to the fast turnover of properties in the market is the supply trend in the market, according to REIWA.

“There is a lot of talk about undersupply at the moment and whether people are reluctant to sell,” Mr White said.

At the end of June, the number of properties available for sale in Perth fell to 5,384 – a 13-year low. The figures are also down 4.4 per cent from May, and 37.5 per cent lower than 12 months ago.

“New listings traditionally decline over the winter months, which is part of what we are seeing at the moment,” Mr White commented.

Additionally, the executive noted Perth is experiencing “unique market conditions”, presenting equal challenges for both sellers and buyers or tenants alike, which is impacting listings.

“Sellers have the issue of finding somewhere else to live but with homes selling in just over a week and the difficulty in finding a rental also a challenge, many are waiting to buy before they sell. It takes time to find the right property before sellers can list their current home,” he stated.

The delays in building completion are causing individuals to stay in their current properties, according to Mr White.

Looking forward, he predicts the rise in building completions will allow more homes to enter the market.

But it’s not all bad news for buyers on the hunt for a property in the city. REIWA’s data showed there was an increase in new listings towards the end of the month, while the number of sales dropped below the number of new listings again.

“For the last two months, the sales volume has been around 13 per cent above the number of new properties coming to market. Properties have been selling soon after they’re advertised, and this was keeping the number of properties available for sale low,” Mr White said.

In comparison to three months ago when sales were 8 per cent below new listings, and even lower at 18 per cent a year ago, the recent data as of the end of June indicates a much smaller difference, with sales now only 1 per cent below new listings.

“The difference between them may be small, but it shows a shift in the trend and is a good sign for people looking to buy,” Mr White commented.

He added buyers “didn’t need to worry about missing out”, noting “properties are still coming on to the market; it just takes patience and persistence.”

“The speed of sales does mean that buyers need to have their finances in order so they can act quickly when they see a property they like. And in most cases, they won’t have time to view a property and circle back to it in a few weeks after seeing what else comes to the market – it is likely to have sold in that time,” he stated.

Notably, the same tight conditions were observed in Perth’s rental market, which drove median rents for both houses and units in the city to reach new heights in June.

REIWA’s data showed the median house price hit a record $580 per week, up from $570 in May and $500 at the same time last year.

The median unit price also set a new record, rising $20 over the month to $520 per week. This figure represents a significant $80 rise compared to rent prices from the same period a year ago.

Overall, Perth’s median dwelling rent price remained unchanged at $550 per week, reflecting a large number of leases around the price range.

“We can expect the median rents to continue to increase as 12-month fixed-term leases come up for renewal,” Mr White said.

The suburbs which recorded the biggest growth in their median rent price in June were Claremont (up 44 per cent to $828 per week), Sorrento (up 43 per cent to $1,000), Victoria Park (up 33 per cent to $600), Inglewood (up 28 per cent to $600), and West Leederville (up 23 per cent to $750).

Data showed it took a median of 16 days to lease a rental during May, one day slower than April, and two days slower than three months ago.

“The slight slowing in the time to fill vacancies is also an indication of a change in the market. We expect a slight easing in the vacancy rate soon,” Mr White commented.

Suburbs recording the fastest median leasing times were Piara Waters, Dayton and Port Kennedy (nine days); Spearwood, Bassendean, Bull Creek, East Cannington, Kelmscott and Thornlie (10 days); and Crawley (12 days).

On the supply side, there were 2,146 properties available for rent at the end of June, a 7.4 per cent increase on May, but 5.7 per cent lower than June 2022.

While the upward shift is minimal, Mr White noted it’s an early sign pressure on the rental market is easing.

“For example, while the number of listings is about 6 per cent lower than in June 2022, this is a big improvement compared to the past few months when it’s been about 20 per cent lower year-on-year,” he stated.

He reiterated building completions are playing a role in the increase in listings, citing reports from the institute’s agents of more tenants moving out from their rental properties into the principal residences and consequently, 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,” Mr White said.