As Perth’s residential property market continues to experience strong demand, our team analyses the key trends influencing the market in March 2023 and why Perth continues to hold strong in the face of interest rate rises.
High levels of buyer interest in March
March is historically a strong month for home sales in Perth and this year was no exception. Despite ten consecutive rate rises, buyers in the Perth property market remain extremely active, with the median time on market just 13 days in March (REIWA, 2023).
Across the country, residential property values increased by 0.6%. Sydney increased by 1.4%, Melbourne by 0.6% and Perth 0.5% while Hobart and Canberra recorded falls of -0.9% and -0.5% respectively. Perth dwelling values are up 0.1% over the past quarter and up 3.0% annually. (CoreLogic, 2023).
There remains strong attendance at home opens with well-presented properties in desirable suburbs receiving multiple offers.
Housing supply continues to fall
The tightening of supply across Perth’s residential property market has shown little sign of easing, with only 1,918 properties listed for rent at week ending 2 April (REIWA). This is down from 2,365 the same time last year. The low levels of rental supply within Perth have caused vacancies to remain at 0.7% in March 2023.
Source: REWIA and Momentum Wealth Research
A similar trend is being seen across the sales market. There were only 7,076 properties listed as for sale during the week ending 2 April 2023 which is down from 7,103 four weeks prior and down from 7,774 in the same week 12 months prior.
Continued construction cost escalations and labour shortages have caused the supply of newly constructed dwellings to be unable to meet the demand from purchasers. This will inevitably place upwards pressure on housing and rental prices in Perth.
The National Housing Finance and Investment Corporation (NHFIC) is now expecting a shortfall of 25,200 dwellings that would be required for Perth’s population forecast from 2022 to 2027 (The Sydney Morning Herald, 2023).
The graph below demonstrates the downward trend of stock availability within the Perth market.
Source: REWIA and Momentum Wealth Research
Perth’s population growth set to continue
Western Australia’s population has continued its growth trajectory. During the September 2022 quarter, the state recorded an annual increase of 1.8% which is up from the 1.3% annual growth recorded in the previous quarter.
This growth was largely attributed to an increase in overseas and interstate migration since the borders reopened in 2022, and is expected to continue as WA becomes more accessible and the demand for skilled labour remains strong.
Source: REWIA and Momentum Wealth Research
Affordability and rental demand driving investor interest
The continued tightening of rental supply across Perth is placing upwards pressure on median rents, which increased to $550 per week in March 2023 which is 14.6% more than the year prior.
This uplift in rental values, together with the relative affordability of Perth’s property market, is supporting strong rental yields which is appealing to investors and no doubt behind the rise in investor activity recorded across WA since mid-2020.