The Urban Developer’s latest Perth housing market insights reveals the city endured a consecutive month of falling home values, however, the rate of decline remains mild relative to the larger cities.
This resource, updated periodically, will collate and examine the economic levers pushing and pulling Perth’s housing market.
Combining market research, rolling indices and expert market opinion, this evolving hub will act as a pulse check for those wanting to take a closer look at the movements across the market.
| Type | Month | Quarter | Annual | Median |
|---|---|---|---|---|
| All | -0.4%▼ | -0.4%▼ | 4.1%▼ | $558,879▼ |
| Houses | -0.4%▼ | -0.5%▼ | 4.3%▼ | $584,941▼ |
| Units | -0.1%▼ | 0.6%▼ | 2.6%▼ | $413,265▼ |
^Source: Corelogic - September 2022
Western Australia has fared better than most other states and territories in recent months, where rising interest rates have caused house prices to slump.
Since March 2020, property prices in Perth have surged by 24.5 per cent.
Corelogic data shows while house prices dropped -6.1 per cent in Sydney and -3.7 per cent in Melbourne in the three months to September, reversing by -0.4 per cent in Perth.
Perth, however, was the only capital city to record a decline over the quarter for both houses and units.
House prices have lifted by $21,500 since the start of the year while units have bumped up in value by $9500.
The five suburbs to record the biggest increase in price during September were Singleton, up 3.9 per cent to $535,000, Ocean Reef, up 2.8 per cent to $915,000, Beckenham up 2.7 per cent to $467,500, Bibra Lake up 2.7 per cent to $610,000 and South Perth up 2.5 per cent to $1.5 million.
Other suburbs to perform well were Falcon, Safety Bay, Dawesville, Bullsbrook and Melville.
Interestingly, more than half of properties in the Perth are now selling at a loss, making the area the least profitable in the country, with sellers losing on average $66,000 after holding on to the dwelling for just over 10 years.
In Subiaco, 28.7 per cent of properties were sold at a loss of around $45,000.
Melville had the highest profit-making percentage, with just 4.6 per cent of properties sold making a loss.
More than 92 per cent of houses in Perth sold at a profit during the June quarter compared to just 64.2 per cent of units. The disparity between the two is the highest in the country.
Loss-making sales are rare overall. Sellers made a profit on 93.8 per cent of resales in the June quarter across Australia, edging back from 94.1 per cent in the three months to April as the property market started to weaken and interest rates rose.
With just 8250 properties currently listed for sale in the entire metropolitan area, down -3.5 per cent on a year ago and well below levels seen in the 2010s, buyers are now wary of a falling median price are still being drawn to quality properties.
A number of suburbs have surged this year with 30 across Perth recorded median house sale price growth of more than 10 per cent during the 2022 calendar year to date.
Suburbs include inner suburbs such as Mount Hawthorn, North Perth, Attadale, East Fremantle and Subiaco recording median price growth about 13 per cent.
House rents soar to a record high median
Affordability constraints, overseas migration and the return of foreign students saw unit rents jump 5 per cent over the quarter to reach the highest point since 2013.
Although rents remain on the rise there were signs of a slight reprieve for tenants seeking a house with the rate of quarterly and annual growth in rent easing, suggesting that the peak growth phase could have passed.
WA’s nation-leading inflation piles further pressure on
Annual headline inflation jumped to 7 per cent in July, the highest level since mid-1990, driven by soaring building costs, global oil prices and a marked uptick in the price of fresh fruit and vegetables.
The pace of price rises dipped slightly in August to 6.8 per cent as petrol prices eased, however the reprieve will likely be temporary as the soaring cost of energy across the east coast begins hitting households.
Looming ‘brain drain’ threatens Perth’s property revival
Predictions of a looming “brain drain” from Perth as young people leave the West Australian capital for better careers elsewhere, along with lower interstate migration and rising interest rates, threaten the city’s patchy property recovery after years of price falls.
Perth’s isolation and economic over-reliance on the mining industry meant many potential home buyers would move away to further their career.
Tim Lawless
Head of Research
Corelogic
“It’s possible we have seen the initial shock of a rapid rise in interest rates pass through the market and most borrowers and prospective home buyers have now ‘priced in’ further rate hikes.
“We are still seeing some resilience to value falls around the more affordable areas of Adelaide and Perth, as well as some regional markets associated with agriculture, mining and tourism.”
Shane Oliver
Chief Economist
AMP Capital
“Home values will fall 15 to 20 per cent from their Covid peak. It’s also best to assume the future pace of growth will be lower than in previous decades.
“The tailwind to medium-term investment returns that’s been in place for the last 30 to 40 years from the downtrend in inflation and interest rates is now likely over.”
Nicola Powell
Chief of Research and Economics
Domain
“Perth continues to operate in a landlords' market with little relief for tenants who are operating in a severely undersupplied [environment] that favours landlords.
"Vacancy rates have fallen to their lowest point on record, falling 35 per cent over the past year, meaning rental demand remains ahead of available supply.”
Louis Christopher
Managing Director
SQM Research
“Rental vacancy rates continued to tighten across the country and there is nothing yet in the data to suggest a reprieve. The rental crisis continues on unabated and as a result rents are skyrocketing.
“It will get to the point where, particularly younger people, will not be able to afford to go out on their own or with one other person to rent a property, they will have to share the load with more people.That may well free up some properties because we may see a reversal of household size from this dip we think has happened.”
ANZ has tipped house prices to rise slightly across 2022 before falling by -12 per cent in 2023 as the post-pandemic boom cools.
CBA now expects Perth house prices to bottom out in mid-2023 after falling by 8 per cent over the next six months.
NAB is forecasting Perth house prices decline by -13.9 per cent in 2023 on the back of Reserve Bank policy changes.
Westpac has also updated its property forecasts, with Perth real estate prices tipped to fall by as much as -14 cent in 2023.
| Week | Clearance rate | Total Auctions |
|---|---|---|
| Week ending 4 September 2022 | 16.7% | 6 |
| Week ending 11 September 2022 | 53.3% | 15 |
| Week ending 18 September 2022 | 45.0% | 20 |
| Week ending 25 September 2022 | 25.0% | 8 |
^Source: Corelogic - September 2022
New property listings down were down -7.1 per cent lower in September when compared to the previous month of August.
On average the time taken to currently sell a property in Perth is 54 up from June’s low of 47.
The median time to sell a house declined to 15 days in September, which is two days faster than August.
The suburbs to record the fastest selling times were Cooloongup—three days, Palmyra—five days, Warnbro—six days, Tapping—six days and Success—six days.
The other fastest selling suburbs were Clarkson, Butler, Nedlands, Darlington and Seville Grove.
While experiencing strong price growth over the past 12 months, Perth continues to offer the most affordable median house sale price of any capital city in Australia.
In Perth, the average house goes for roughly $584,000, while the median house price in Sydney comparativley is $1.3 million.
With relation to the CBD, Perth also offers a plethora of affordable properties within 30 kilometres, which, again, is unique when compared to Sydney and Melbourne, where many people are priced out of the CBD.
There are 10 suburbs in Perth that have median house sale prices under $375,000, and nine of those 10 suburbs have a median house price of $350,000 or less.
The cheapest suburb of Perth is Camillo, 26 kilometres from the CBD, with a median house sale price of $299,000.
Just 13 kilometres from the CBD, Balga’s median house sale price is $350,000. Another attractive option is Lockridge, which comes in as the fourth most affordable suburb at $337,500.
With median selling times of only seven days, Inglewood, Heathridge, Kingsley, and Woodvale are emerging as suburbs that are booming in Perth.
Perth boasts 20 suburbs with increasingly quick median selling times, with all of them recording nine days or less in 2021-22.
More typical selling times in a balanced market, by comparison, are up to 40 days. Overall, Perth posted a median selling time of 15 days.
In Heathridge, the median selling days was seven and the median house sale price was $530,000. The price in Coolbellup was $550,000, the price in Cooloongup was $355,000, and the price in Merriwa was $380,000—with each posting median selling days of nine.
On the other end of the spectrum, North Perth saw the strongest growth with a median house sale price rising by nearly 26.7% to $1.14 million. Shenton Park increased by 17.5% to $1.715 million.
| City | Vacancy rate | Monthly % change | Vacancies | Net change |
|---|---|---|---|---|
| Perth | 0.4% | 0.0%▶ | 914 | 78▼ |
^Source: SQM Research - September 2022
Perth’s rental crisis has hit a new low with the number of homes available for rent in the city fell to its lowest level in more than a decade.
Typically, a vacancy rate between 2.5 and 3.5 per cent represents a balanced market. The current vacancy is 0.4 per cent.
The latest data from SQM Research showed that the number of rental properties on the market at the end of September stood at a mere 914.
It took a median of 16 days to lease a rental during September, which is the same as August.
The fastest-leasing suburbs were Maddington, Tapping, Byford, Tuart Hill and Piara Waters, with properties all being scooped up on a nine day average.
Other suburbs to record fast leasing times were Greenfields, Warnbro, Yanchep, Joondanna and Gosnells.
The vacancy rate nationwide has plunged to 0.9 per cent, its lowest level in 16 years. But there are signs that the rapid pace of rent growth is easing as affordability takes its toll on tenants.
REIWA president Damian Collins said now was a challenging time for tenants, with rental supply struggling to keep up with Perth’s growing population.
“Perth’s population has increased by 20 per cent since November 2010, which highlights how low the current rental stock is,” Collins said.
“Construction delays and labour shortages means families are renting for longer while they wait for houses to be built, which is contributing to the tight rental market.
“Mum-and-dad investors who have rental properties to offer to tenants in WA are critical for ensuring rents remain as affordable as possible.
“Our research shows that 72 per cent of people who own investment properties only own one, and are most likely working as school teachers, nurses or other health care professionals.
“Any changes to WA’s tenancy laws that discourage investors from buying residential property in WA will make an already tough situation worse.”
| Type | Rent | Monthly % change | Annual % change |
|---|---|---|---|
| Houses | $606.00▲ | 0.8%▲ | 16.3%▲ |
| Units | $455.00▲ | 1.1%▲ | 12.6%▲ |
^Source: SQM Research - September 2022
Rental increases across the national apartment market, and particularly in Perth, continue to outpace inflation.
The fastest pace of interest rate hikes in three decades has continued to add an extra layer of pressure to Perth’s already critical rental market, as tenants live through the longest stretch of continuous rental price growth on record.
Prices hit record highs in Sydney, Melbourne, Adelaide, Hobart and Perth in September. Only Canberra—the country’s most expensive capital city in which to rent—saw a slight fall in its rental asking price.
Perth house rents have risen by 16.3 per cent in the past 12 months, averaging $606.00 a week, while units have lifted by 12.6 per cent to now be at around $455.00 a week.
Nationally, unit rents surged by 11.3 per cent over the past 12 months, their strongest annual growth rate on record.
Corelogic economist Kaytlin Ezzy said rental affordability was likely to be the main factor impacting rental demand, with many renters searching for more affordable rental alternatives as rents continue to rise.
“Now that national unit rents are recording the strongest annual growth on record, it’s likely a number of renters are looking to form larger households, reversing the trend seen over the Covid period, in an attempt to share higher rental cost across a larger tenancy base,” Ezzy said.
“At the same time, we’ve also seen the number of overseas migrants bounce back in recent months which has potentially offset the reduced demand caused by the currently anecdotal trend towards larger rental households.”
“Given that vacancy rates are at near-record lows and rental demand remains strong across most capitals, it’s likely rents will continue to rise for some time yet.
“How high rents rise will be limited only by what prospective tenants are willing or able to pay, with rental affordability becoming a larger factor impacting rental demand.”
| Dwelling | Approved | Monthly % change |
|---|---|---|
| Houses | 1218▲ | 10.8%▲ |
| All dwellings | 1388▲ | 15.2%▲ |
^Source: Australian Bureau of Statistics - August 2022
New building activity is drying up but the massive pipeline of work yet to be completed is still making its way through the system.
The total number of homes under construction hit a record high in the June quarter as measured by the national statistics bureau.
In the June quarter, work was under way on 241,926 homes, beating the last record of 240,156 in the March quarter.
But new construction work is slowing down, with total new dwelling starts falling 2.7 per cent to 48,076.
New house building fell just -0.2 per cent, the Australian Bureau of Statistics figures revealed, whereas other types of residential dwellings - such as units - fell 3.1 per cent.
The number of dwelling approvals rose in all states in August, surging by 13.6 per cent in Western Australia and approvals for private sector houses lifting by 8.9 per cent.
Construction industry bodies have been warning of a slowdown in new construction work as the sector battles high interest rates, soaring inflation and ongoing labour and material shortages.
Western Australia is currently facing a shortage of about 20,000 homes within four years, with fears this will keep local house prices rising.
According to the REIWA the state needs to build 19,500 homes a year to keep up with population growth, new demolitions and to address the existing shortage.
Western Australia completed fewer than 14,000 new homes—which includes both houses and apartments—across 2021 as the local property sector struggled with labour and supply shortages.
Official state government population projections, contained in the recent Budget papers, anticipate an extra 150,000 people living in Western Australia over the next four years. To meet that demand the state needs to build 4875 homes each quarter.
| Type | Lending ($bn) | Monthly % change |
|---|---|---|
| New loan commitments for owner occupier housing | 1.88 | 7.4%▲ |
| New loan commitments for investor housing | 0.68 | 6.2%▲ |
^Source: Australian Bureau of Statistics - August 2022
The Reserve Bank increased official interest rates by a quarter of a percentage point to a nine-year high of 2.6 per cent last month as policymakers try to tame surging inflation.
The bank increased the official cash rate this year for a sixth consecutive time, ratcheting it by 2.5 percentage points since May.
Unsurprisingly, the value of new home loan commitments fell 3.4 per cent nationally to $27.4 billion in August, according to the Australian Bureau of Statistics. It comes after a fall of 8.5 per cent in July.
ABS head of finance and wealth Katherine Keenan said the value of new owner-occupier loan commitments fell 2.7 per cent in August 2022, and the value of new investor loan commitments fell 4.8 per cent.
“Although lending continued to fall from the high levels of June 2022, the value of loan commitments in August remained elevated compared to pre-pandemic levels,” Keenan said.
“Owner-occupier loans in August were 36 per cent higher than for February 2020, while investor loans were 70 per cent higher.”
Notably the number of new loan commitments to owner-occupier first home buyers rose by 10.4 per cent in August to 9258—the largest rise since August 2020. First home buyers—the cohort of borrowers most exposed to rising borrowing costs—have been the hardest hit in recent months.
This was the largest rise recorded since August 2020, although well below the 16,330 peak in January 2021.
There was increased demand from first home buyers across most of the country, especially in Victoria, up 11.9 per cent, Queensland, up 14.3 per cent and Western Australia, up 13.9 per cent.
| Type | Lending | Monthly % change |
|---|---|---|
| Average loan sizes for owner-occupier dwellings | $464,408 | -0.9%▼ |
^Source: Australian Bureau of Statistics - September 2022
At the national level, the average loan size for owner-occupier dwellings—which includes construction and the purchase of new and existing dwellings—fell in August from $609,000 to $589,000, though it remained 23 per cent higher than that seen in February 2020.
Average loan sizes fell in every state, however rose slightly in both territories.
Refinancing is now expected to increase rapidly because fixed-rate loans—including loans split between fixed and variable rates—worth more than $450 billion are due for renewal over the next 18 months. Refinancing hit another record of almost $9 billion in August.
Lenders continue to adjust rates after the October cash rate increase, but the lowest rate is 4.09 per cent.
| State | Arrivals | Departures | Net change |
|---|---|---|---|
| Western Australia | 9161▲ | 7522▲ | 1639▲ |
^Source: Australian Bureau of Statistics - March 2021
Western Australia’s strong management of the pandemic saw thousands of people from interstate migrate west to escape extended lockdowns in the Eastern States, data from Australian Bureau of Statistics shows.
The pandemic spurred a record level of interstate migration between 2020 and 2021, with Western Australia seeing an influx of people, as states like New South Wales and Victoria endured extended lockdowns and restrictions.
Compared to pre-Covid years, Western Australia enjoyed a net interstate migration increase of 11,423 people.
Only Queensland, with an eye-watering 54,000 interstate migrants, did a better job of attracting Australians from other states.
In net terms over this time, NSW shed 54,466 residents and Victoria lost 31,726. Over the same period, 3,737 people moved from NSW to Western Australia in net terms.
Western Australia had its largest ever quarterly interstate migration inflow in the final months of 2021 with more than 13,000 people moving west, following a year and a half of harsh lockdowns and restrictions in other States.
Western Australia’s housing affordability and very strong jobs market throughout the course of the pandemic helped drive these results.
