Perth’s strong property growth continues
CoreLogic reports that during October 2024, residential property increased by 0.3% throughout Australia. With a 1.4% increase, Perth has now held its position as the nation’s strongest performing capital city for 13 consecutive months. Adelaide, Hobart and Brisbane followed, with 1.1%, 0.8% and 0.7% increases, respectively. In contrast, Canberra (-0.3%) and Darwin (-1.0%) recorded the biggest contractions. (CoreLogic, 2024)
Dwellings in Perth rose by 4.1% over the past quarter and by 22.6% over the past year – the strongest rises in the nation (CoreLogic, 2024).
Property listings increase
In the week ending 27 October 2024, there were 4,929 properties listed for sale according to REIWA. This is an increase from 4,054 listings recorded four weeks prior and decrease from the 5,031 recorded in the same week last year. (REIWA, 2024)
The time to sell a house in the Perth market increased to 11 days in October 2024, which is 3 days slower than a year ago. The time to sell a unit also increased to 12 days during this period. (REIWA, 2024)
The graph below shows the trend of stock availability within the Perth market to the week ending 27 October 2024.
Source: REIWA and Momentum Wealth Research
Rental market shows signs of reaching affordability threshold
According to REIWA, Perth’s median rental dwelling price once again remained at $650 per week in October 2024, which is 10.2% more than 12 months prior but may indicate that the rental market has hit its affordability threshold. The median rental price for houses also held steady at $650 per week, while units rose to $612 per week. This indicates that the rental market may have hit its affordability threshold and many tenants are now looking for alternatives in light of rising living expenses, including shared housing or more affordable units.
There were 1,915 properties listed for rent in Perth in the week ending 27 October 2024. While this is a decrease from the 2,088 listings recorded four weeks prior, it is higher than the 1,719 listings recorded from the same time last year (REIWA, 2024).
The graph below shows the changes in Perth’s rental listings and vacancy rate.
Source: REIWA and Momentum Wealth Research
Perth’s vacancy rate rose again in October 2024, reaching 1.9%. This is the highest level since August 2020; however, despite this recent rise, rental vacancies remain well below the range expected for a balanced market, which is typically between 2.5% and 3.5%. In October 2024, it took a median of 16 days to lease a property, the same rate as the previous month, but one day slower than 12 months ago. (REIWA, 2024)
Housing supply deficit pressures property prices
The net supply of dwellings is used to identify how the supply and demand of housing influence residential house prices within the Perth market and is determined by deducting the estimated quarterly demand for dwellings by the number of dwellings added onto the market, less demolitions.
The estimated levels of demand are based on the quarterly population growth in Western Australia. With ABS data since 2005 indicating an average household within Western Australia is occupied by between 2.55 to 2.62 people, we can divide the quarterly population increase by the quarterly household size to estimate the net increase in demand for dwellings.
ABS’s most recent March 2024 quarterly population data shows that Western Australia recorded the strongest annual growth in the nation at 3.1%. During the March 2024 quarter alone, Western Australia’s population grew by 23,118 people reflecting a net demand rise of around 9,066 dwellings.
However, only 4,305 dwellings were completed during the March 2024 quarter, while 340 dwellings were approved for demolition. After allowing for the demand from population growth and the supply from completions less demolitions, this left Western Australia with a net housing supply deficit of around 5,101 dwellings during the March 2024 quarter. (ABS, 2024)
With the increasing supply shortage in Western Australia, it is anticipated that property prices in Perth will continue to grow.
Source: ABS and Momentum Wealth Research