This article is from the Australian Property Journal archive
WESTERN Australia’s house prices are expected to reach a $580,000 median by the end of 2023, with rents likely to follow suit.
According to the latest update from REIWA, moderate growth before the end of the year will see prices reach the new median, following 0.9% or growth in the first quarter and 2% in the June and September quarters, reflecting 4.6% total growth.
“Resilience was the theme earlier this year, but records is the key word now. In the last quarter we’ve seen new records for house prices, the median time to sell and a new record low in the number of listings advertised for sale,” said Cath Hart, CEO at REIWA.
“Earlier this year I said the big drivers of the WA market over 2023 would be the three As – Availability, Appetite and Affordability. With WA’s population growing 2.8 per cent in the year to March, the most growth in the country, the appetite for WA property is strong and likely to remain this way for some time.”
Hart noted available stock across the state is still low with the number of homes coming to market down by around 6.3% compared to the same time last year.
This at the same time that sales volumes have surged by 16.4% over the year, reflecting far stronger demand than supply.
Houses listed on www.reiwa.com reached a 30-year low of 4,931 at the end of September, sitting far below the 12,000 needed to be considered a balanced market.
“When it comes to affordability, even though prices are rising, WA remains one of the most affordable places to buy in the country,” added Hart.
“Our house prices, higher than average incomes and lower than average mortgages mean it is easier for people to buy and service a mortgage here, despite the significant rise in interest rates since May last year.”
Despite strong demand, WA’s unit market underperformed the house market, with the median for units down 1.2% from the close of 2022 to $400,000.
In the Perth rental market new records were set in the third quarter, with median house rents reaching $600/week at the end of August compared to $550/week in December 2022.
The median unit rent price also set a new record, up from $475/week in December 2022 to $550 in August 2023.
“The vacancy rate remains at an extreme low. It was 0.7 per cent for the first half of the year, and while it rose to 0.9 per cent in July, offering some hope of change, it dropped back to 0.7 per cent in September,” said Hart.
“Property managers are still seeing queues at home opens and receiving multiple applications. Homes are leasing in a median of two weeks. Essentially one tenant moves out and another moves straight in.”
According to Hart, this trend of high demand and low supply is unlikely to change anytime soon, leaving upwards pressure on prices.
“There are promising signs for the future with the Government announcing a range of initiatives to boost housing supply over the longer term and builders reporting very strong interest from Eastern States investors,” added Hart.
“However, it will be some time before new homes can be brought to the market and a change felt.”
In regional WA, house price growth reflects similar rates seen in Perth over the year, with rents also surging to record highs in some centres.
“Population growth isn’t limited to Perth, the regions are also seeing their populations increase,” said Hart.
“Regional buyers and tenants are facing the same constraints as those in Perth. And while building in Perth still has some challenges, it is harder in the regions and this is continuing to focus demand on established homes.”
