The latest increases in Perth residential property prices, coupled with continued low levels of stock, are further signs there’s plenty of heat left in the market, with key indicators in place for continued growth.
REIWA figures showed that 233 suburbs recorded increases in median house sales price across the winter months as the wet weather failed to dampen demand, despite typically being regarded as a quieter period.
But the numbers are just part of the story, says Jennifer Wakeman, our General Manager at Momentum Wealth.
“A drop in the total number of listings for sale, widespread skills shortages and interstate migration are all favouring market growth, with no sign that the current growth phase has run its course,” Jennifer says.
Growing pressure on shrinking supply
In August there were 8,511 total listings for sale in Perth, reflecting a 21.95% decrease compared to the same time last year, and a 40.69% drop compared to August 2019.
Jennifer says we’re likely to see a continued tightening of supply in Perth’s residential market for some time yet.
The slow delivery of new homes, promised by the spike in Perth housing approvals in the past 12 months, is a contributing factor.
Not only is there a lag from approval to construction, but delivery is being hampered by labour constraints, as well as supply-chain constraints linked to high building demand, the needs of the mining industry and overseas building booms drawing on materials.
The need to fill WA’s high number of job vacancies is also putting pressure on shrinking housing stocks.
The Internet Vacancy Index, sourced by Bankwest Economics Centre, shows WA has the highest rate of advertised vacancies in Australia.
As of May 2021, there were more than 45,000 advertised job vacancies in WA.
The increase in the number of projects in WA’s mining/resources and construction sectors has contributed to reports of widespread skills shortages in key roles, especially machinery operators, technicians and trade workers.
Movement from interstate will heighten demand
While limits on cross-border movement mean it’s currently challenging to recruit interstate, Jennifer predicts more interstate migration from skilled tradespeople and professional workers to fill roles when borders do open up again.
“This in turn will increase demand for housing, tightening stock further and pushing up prices,” she says.
WA has previously reported higher levels of interstate migration with people moving to Perth for work, including FIFO roles, as well as returning residents on the back of COVID-19.
In the March 2021 quarter, WA returned a positive net interstate migration figure of +1,639.
But what does this all mean for your property search?
Investors are already facing stiff competition in the Perth property market, with all the signs pointing to competitive conditions for some time to come.
“On the ground, our buyer’s agents are reporting low sales stock, resulting in high levels of buyer competition for high-quality properties in investment-grade suburbs,” Jennifer says.
“Purchasers are often having to stand out against multiple offers from other interested parties, with some properties going under offer immediately after, or even before, the first home open.”
Standing out from the crowd is becoming increasingly important, but there are some easy steps you can take that could make all the difference.