As Perth’s residential property sector continues to experience a decline in supply, our team analyse the key trends influencing the market in August 2022, including why property values are remaining resilient to interest rate rises.
Perth records new low for stock on market
The tightening of supply across Perth’s residential property market has shown little sign of easing, with properties listed for rent falling below 2,000 in August (Real Estate Institute of Western Australia). The continued downward trend in rental stock has brought vacancy rates in Perth to record lows, falling to just 0.8% in August.
A similar trend is being seen across the sales market. There were only 8,406 properties listed for sale during the final week of August (REIWA), with the median time on market averaging just 17 days. With construction cost escalations and labour shortages causing a slowdown in dwelling approvals, we anticipate it will be some time before supply catches up with demand.
Affordability and rental demand driving investor interest
The continued tightening of rental supply across Perth is placing upwards pressure on median rents, which increased by $10 to $480 per week in August (REIWA). This uplift in rental values, together with the relative affordability of Perth’s property market, is supporting strong rental yields of 4.4% (CoreLogic, August 2022) – the second strongest of Australia’s capital city markets behind Darwin. The appeal of strong yields, along with the strength of WA’s economy and labour markets, are no doubt behind the rise in investor activity recorded across WA since mid-2020.
56 Perth suburbs record price growth in August
Despite the pressures of rising interest rates, Perth’s median dwelling value remained relatively stable across August, recording a minor dip of 0.2% in CoreLogic’s Home Value Index. While we anticipate some short-term impact to market activity as buyers adjust to new cash rates, REIWA data showed that 56 suburbs recorded median house sale price growth across Perth in August. This mirrors what we are seeing on-the-ground, with our buyer’s agents reporting strong competition for investment-grade stock. The continued resilience of Perth’s property market in the face of rate rises can be attributed in part to its relative affordability and the pre-existing shortage of supply, which continues to support price growth in many areas.
Eastern markets experiencing the crunch of rate measures
In contrast to Perth and Darwin, the more expensive markets on the east coast continue to feel the crunch of rising living costs. Sydney (-2.3%), Brisbane (-1.8%), Melbourne (-1.2%), and Canberra (-1.7%) all recorded more acute drops in CoreLogic’s Home Value Index for August. These affordability pressures have had a particular impact on first-home buyer activity, with the proportion of finance to this segment continuing to decline nationally.