- 18 Oct 2023
- By API Magazine
The lowest listings in 30 years, a booming population and soaring rents are driving the Perth property market and luring investors from around Australia and internationally.
A range of dubious records are driving Perth’s property values to record highs.
Listings are at the lowest level in 30 years, with fewer than 5,000 properties on the market. The number of REIWA listings has declined to 4,931, a massive drop of 40 per cent on a year ago.
In September, Perth’s median house value reached $646,700 – a 9.0 per cent increase on the same time last year, according to CoreLogic.
The record low vacancy rate is also attracting investors seeking high rents and first home buyers trying to escape them.
Perth’s vacancy rate dropped to 0.4 per cent in September, according to SQM Research data released Tuesday (17 October), a decline of 0.1 percentage points from the same time last year. This is the lowest vacancy rate among state capitals, well below the national level of 1.1 per cent and a balanced market’s 2-3 per cent range.
“Long term trends show rental listings tend to decline in the lead up to the end of the year, so the vacancy rate is likely to remain low in the coming months,” REIWA CEO Cath Hart said.
Tight conditions in Perth’s rental market were being driven by low supply and high demand.
Suburbs with the most growth in the last three months – Houses.
| RANK | SUBURB | MEDIAN HOUSE PRICE YEAR TO AUG 2023 |
3-MONTH CHANGE | SELLING DAYS JUN-AUG 2023 |
|---|---|---|---|---|
| 1 | Cottesloe | $3,300,000 | 9.6% | 32 |
| 2 | Pearsall | $560,000 | 8.7% | 8 |
| 3 | Hammond Park | $560,000 | 7.7% | 13 |
| 4 | Ferndale | $510,000 | 7.5% | 8 |
| 5 | Wannanup | $620,000 | 6.9% | 19 |
| 6 | Cooloongup | $438,000 | 6.8% | 5 |
| 7 | Kelmscott | $395,000 | 6.2% | 9 |
| 8 | Seville Grove | $440,000 | 6.0% | 5 |
| 9 | Armadale | $343,000 | 5.5% | 6 |
| 10 | Wellard | $485,000 | 5.4% | 6 |
Source: REIWA. Houses, > 1 HA, 20 or more settled sales June-August 2023 as at 13 October 2023
Julie Kelley, Global Sales and Marketing Manager for aussieproperty.com, said rapid population growth and investor interest from overseas and the eastern states was behind Perth’s strong property market performance.
“With more people arriving in Perth every day, it is bolstering demand for rental properties while the ongoing delays within the building industry are keeping people in their rental properties longer, impacting the usual market turnover,” she said.
“While we continue to see heightened interest from eastern states investors and the decline in the number of rental properties in the market stabilises, demand continues to exceed supply.
“It’s a problem that’s been years in the making and won’t be solved overnight.”
Perth’s property price growth for the September quarter of 3.6 per cent was behind only Adelaide (4.3 per cent) and Brisbane (3.9 per cent).
CoreLogic’s research director, Tim Lawless, attributed Perth and the smaller capital cities’ growth rates outpacing Sydney and Melbourne to the premium housing sector losing some steam after leading the recovery cycle.
Investors pouring into Perth
WA is experiencing the fastest population growth rate of any Australian state and territory, growing by 2.8 per cent to 2.855 million in the year to March 2023. The March quarter saw one of the biggest recorded population increases at 0.9 per cent.
The scant number of properties that are finding their way onto the market are being snapped up in record time too. The average days-on-market is 13 days, with suburbs such as Leeming, Harrisdale and Gwelup at eight days, Palmyra and Bicton at seven days, and Shenton Park at a blink-and-you’ll-miss-it four days, according to REIWA.
Ms Kelley said that with such limited housing stock, competition has increased among all buyer segments, including first home buyers, investors, owner occupiers, downsizers and migrants.
“We are seeing an influx of overseas and interstate migration; they are cashed up and needing somewhere to live.
“Investors are across all types of property too; from land banking for future development to property that is primed for fast capital growth, as well as affordable housing with attractive rental yields.”
Property investors have played a big role in driving Perth property prices higher.
The latest Australian Bureau of Statistics lending figures for August 2023 show the total value of property investment loans in Western Australia totalled $827 million, the highest monthly figure for property investment since early 2015.
Catherine Doherty, WA Branch Manager, Property Club, said if current trends continue the overall property investment in the state could soon top $1 billion per month.
Ms Doherty agreed the more affordable suburbs would offer the most capital growth potential for investors.
“In particular the lower to mid-priced sections of the Perth real estate market should perform very well over the coming year as they are viewed as extremely affordable by eastern states investors.
“At a micro level, Property Club also predicts that affordable suburbs that will be the focus of new infrastructure, such as new rail links, will attract significant investor activity and as a result rising property values over the coming years.”
While investors and home owners had that rosy outlook, renters were again the ones facing the toughest prospects.
“Despite this large jump in property investment activity we predict the rental market in Perth will continue to remain very tight because of the huge influx of people into the state from interstate and overseas,” Ms Doherty said.
“We predict vacancy rates will continue to remain low in Perth, resulting in rising rents during 2024 as well as increases in property prices.”
With renters trying to get a foot on the property ladder at a time of rising house prices, units were becoming a target of many buyers.
CoreLogic data showed Perth’s median unit price was $437,800 in September, a 6.5 per cent increase from September 2022.
Suburbs with the most growth in the last three months – Units.
| RANK | SUBURB | MEDIAN UNIT PRICE YEAR TO AUG 2023 |
3-MONTH CHANGE | SELLING DAYS JUN-AUG 2023 |
|---|---|---|---|---|
| 1 | Mosman Park | $380,000 | 8.6% | 24 |
| 2 | North Fremantle | $930,000 | 5.5% | 37 |
| 3 | Palmyra | $474,500 | 5.4% | 13 |
| 4 | Glendalough | $279,000 | 5.3% | 20 |
| 5 | Burswood | $657,500 | 5.2% | 36 |
| 6 | Cloverdale | $364,500 | 4.1% | 15 |
| 7 | Nollamara | $365,000 | 3.3% | 8 |
| 8 | Midland | $294,000 | 3.2% | 18 |
| 9 | Tuart Hill | $355,000 | 2.9% | 10 |
| 10 | North Perth | $465,000 | 2.6% | 22 |
Source: REIWA. Units, 15 or more settled sales June-August 2023 as at 13 October 2023
Peter Gavalas of Resolve Property Solutions said unit and strata properties are increasingly emerging as the go-to choice for homebuyers and investors alike.
“While Perth is still one of Australia’s most affordable capital cities, some homebuyers are starting to find it more challenging to enter the detached housing market,” he said.
“This is where unit and strata properties come into play, as they typically offer a more affordable entry point.”
Beyond affordability, Mr Gavalas said unit and strata properties also offered an increasingly attractive proposition for many buyers, as they typically require less maintenance than houses.
“The reduced maintenance responsibilities can be particularly appealing to investors, as it can translate to lower ongoing costs and potentially higher rental yields,” he said.
Perth means business
As well as permanent residents migrating to the state, there has also been a marked increase in business travellers to the state, which in turn attracts further property investment.
Perth has seen the largest growth in incoming international business travellers over the past year, with a 34 per cent increase between June-December 2022 and January-July 2023.
Perth is in the running to outpace Melbourne in international business travellers this financial year, as Victoria’s capital city only increased its arrival figures by seven per cent for the same period. Likewise, Sydney’s growth in total international business travellers only increased by eight per cent.
Tom Walley, Corporate Traveller’s Australian-based Global Managing Director, says the rise in international business travel is partly due to Western Australia’s continued growth in the construction and mining sectors.
“Corporate Traveller data from earlier this year revealed that the construction industry is the leading sector for travel spend, having increased its expenditure by 98 per cent between the first quarter of 2022 and 2023.
“It’s a clear indicator that business is booming with more travel required for employees and stakeholders needing to visit new sites and projects across Australia.
“With Western Australia’s continuing prosperity in mining and resources, it’s no surprise business travellers from interstate and international locations are flocking to the state for this reason.” Mr Walley said.
Article Q&A
Why are Perth property prices rising?
Listings in Perth are at the lowest level in 30 years, with fewer than 5,000 properties on the market. The near-record low vacancy rate is also attracting investors seeking high rents and first home buyers trying to escape them.
What is the vacancy rate in Perth?
Perth’s vacancy rate dropped to 0.7 per cent in September, a decline of 0.1 percentage points from August.
Where are house prices rising fastest in Perth?
Over the last three months, the fastest rising house prices were in Cottesloe (9.6 per cent), followed by Pearsall, Hammond Park, Ferndale and Wannanup.
Where are unit prices rising fastest in Perth?
Over the last three months, the fastest rising unit prices were in Mosman Park (8.6 per cent), followed by North Fremantle, Palmyra, Glendalough and Burswood.
