While conditions across Australia’s largest property markets continue to dampen, we look at how and why Perth is countering this trend, and what leading indicators mean for the market’s performance in the months ahead.
Perth bucking national trend in days to sell and price growth
Results from CoreLogic’s July Home Value Index showed that Perth’s residential property market continues to buck national trends. While Australian dwelling values recorded an overall decline of -1.3% in July, Perth was one of the few state capitals to record growth in property prices, albeit subdued at 0.2% (an expected trend in the winter months).
A similar story is emerging with the average number of days to sell. While the median days on market across the nation rose to 30 in June – a ten day increase from the three months to November – this figure sat at just 18 days for the Perth market over the same period.
The comparative strength of Perth’s property market provides a great opportunity for local and interstate investors to capture growth opportunities in the western capital, particularly those who have benefited from rising equity in their home market in their respective upswing.
Population growth set to bolster demand in WA
While supply remains extremely constrained in the Perth market, data from the Australian Bureau of Statistics (ABS) is simultaneously revealing an upward trend in key demand metrics. Figures highlighted an increase of 11,423 people migrating to WA between 2020 and 2021 – a trend that is expected to continue off the back of WA’s strengthening job market, low unemployment levels and the comparative affordability of housing.
With major companies already embarking on a national and international recruitment drive to fill key job vacancies across the State, the WA treasury is anticipating further population growth of 150,000 in the next four years – a trend that will undoubtedly underpin demand for housing.
Perth & Darwin offering strongest rental yields
As at the end of July, Darwin and Perth continued to offer the strongest rental yields across the nation’s capital city markets, with CoreLogic figures revealing gross rental yields of 6.1% and 4.4% respectively. Rental yields were lowest in Sydney (2.8%) and Melbourne (3.0%), where median house prices remain the highest across the nation. While Perth was named the second most affordable state and territory capital in REIA’s March Housing Affordability Report, REIWA data shows median rents increased to $475 per week in July – both factors supporting the strong rental yield offering.
Growth in lending indicates investor return
Figures from the Australian Bureau of Statistics showed that lending for property purchases rose 1.7% nationally over the month of May 2022. While predominantly driven by an increase in owner-occupier loan commitments across most states, WA remains one of the few states that has experienced continuous growth in housing finance to investors since the start of the year. New investment housing finance in WA totalled $0.74 billion in May 2022, up from $0.48 billion the year prior – an indication that investors are taking the opportunity to capture favourable growth conditions.