Affordable suburbs rise fastest as Perth’s rebound eases
Affordable suburbs rise fastest as Perth’s rebound eases
The Perth property market’s strong rebound over the past year is showing signs of tempering, with its July growth rate by far the slowest among the nation’s capitals.
The city’s 0.3 per cent change in dwelling values for the month was well below the next lowest, Melbourne at 1.3 per cent, and less than a third of the pace in Canberra (2.6 per cent).
Among the more affordable suburbs, however, median prices continue to surge as they play catch-up to values last seen in the early 2010s.
Data released this week by the Real Estate Institute of Western Australia (REIWA) shows the suburbs to record the biggest increase in median house sale price during July were Spearwood (up 3.3 per cent to $485,000), Kingsley (3.1 per cent, $620,000), Leda (2.9 per cent, $300,500), Success (2.8 per cent, $521,000) and Greenfields, near Mandurah in the far south of the metropolitan area (2.8 per cent, $297,500).
Catering to a large blue collar workforce in the nearby industrial strip and a high proportion of fly-in fly-out resources sector workers, suburbs in the City of Kwinana, including Leda, are growing at a pace that even outstrips the nation’s capital.
A specialist in the Kwinana property market, Michael Coulson, director of Coulson & Co Real Estate, said while Perth's lockdowns to date had been short compared to other capitals, buyers nonetheless had placed a premium on larger blocks and backyards.
“Leda, as well as many of Kwinana’s other suburbs, has been experiencing explosive growth in the last 12 months,” he said.
“Values in each suburb are rising to match increases in neighbouring suburbs, as demand pushes values up in the Kwinana real estate market, which offers excellent amenities and proximity to the beach and freeway, with affordable prices and good block sizes, most exceeding 600 square metres.”
Mr Coulson said suburbs in the more affordable price brackets were now attracting first home buyers and investors.
“The first home loan deposit scheme has made home ownership for first home buyers more achievable and attractive, with the cost to rent exceeding cost to own," Mr Coulson said.
“It’s similarly great for investors, with the supply of rental properties not meeting the increasing demand.”
Echoing the sentiment of agents operating in suburbs around the Perth median dwelling value of $532,392, Mr Coulson said there was also a renewed level of interest from interstate investors, “which we haven’t seen for a number of years.”
REIWA data shows the median time to sell a property in Perth was 17 days in July.
“Even though this figure is one day slower than June, houses are still selling 27 days faster than they were a year ago,” REIWA President Damian Collins said.
The 10 fastest selling suburbs in July were Kingsley (six days), Willetton (seven days), Heathridge (eight days), Kinross (eight days), Palmyra (eight days), Waikiki (nine days), Greenwood (10 days), Leeming (10 days), Hocking (10 days) and North Perth (10 days).
With operations encompassing the fastest selling suburb, 20 kilometres north of Perth's CBD, Professionals’ The Wright Team director Justin Wright said strong demand had come from formerly eastern states-based FIFO workers who could no longer do the trans-continental commute and were seeking sizeable suburban homes near high-quality schools.
“Although the prices have increased in recent times, the value for money is still there compared to some of the coastal suburbs and I cannot see anything to indicate demand will drop off,” Mr Wright said.
“For this to happen there would need to be an influx of stock and there are no signs that point to this happening anytime soon.”
Rain not dampening demand
Perth’s wettest July in decades hasn’t dampened buyer appetite, with REIWA revealing listings for sale dropped 2.3 per cent in July and are down 6.4 per cent compared to April 2021.
Stock was being soaked up quickly, despite 28 days of rain in the 31-day month.
“Normally wet weather dampens people’s interest in attending property inspections, but July was still a very strong month for sales,” Mr Collins said.
“As we transition out of winter into spring, this should put the Perth property market in a good position to continue its strong recovery.
Mr Collins said the decline in the number of new properties being listed for sale was strongest for houses, which were down 6.2 per cent over the month and 11.9 per cent over the quarter.
The suburbs to record the biggest decreases in listings in July were Banksia Grove (down 44 per cent), Lockridge (down 37 per cent), Darlington (down 33 per cent), Glendalough (down 33 per cent) and Helena Valley (down 33 per cent).
Perth’s median rent was stable in July, holding at $425 per week.
“Although the Perth median rent price has increased over the last year, we are still $25 cheaper than the peak median rent price of $450 per week in 2013 and 2014. It’s reassuring for tenants that the rate of growth has slowed since the end of the rental moratorium,” Mr Collins said.
Mr Wright said rental yields are probably around 10 per cent better than they were 12 months ago.
“While rents are up 20-plus per cent, some of the yield has been lost in price growth.
“Vacancies are still low but demand has come back a little over the last month, once again probably more to do with the constant rain than anything else.”
In Kwinana, Mr Coulson said month-on-month they are seeing rents yields increasing and vacancy rates at an all-time low, presenting opportunities for nascent investors and established investors diversifying their portfolio.
There were 2,734 properties for rent in Perth at the end of July. Listings for rent have increased 13 per cent since the height of the rental shortage in December 2020.
“Although there is still a rental shortage, this is an encouraging trend that needs to continue to achieve a balanced market,” Mr Collins said.
"The increase in listings since January reinforces that investor confidence is slowly starting to return,” Mr Collins said.
"This is also backed up by Australian Bureau of Statistics data that shows investor loan approvals in Western Australia increased to $498 million in May 2021, which is 10 per cent more than April 2021 and 209 per cent more than May 2020."
Apartment sales in affluent areas are also demonstrating Perth's high level of buyer demand.
Construction recently started on private developer Blackburne’s $350 million luxury apartments project The Grove Residences, located on the borders of prestige suburbs Claremont, Peppermint Grove and Cottesloe.
The developer’s managing director, Paul Blackburne, said more than 85 per cent of The Grove Residences had been sold, with construction works to be undertaken by building giant Multiplex.
“As buyers, residents and visitors watch The Grove Residences being built, we think there will be a real sense of excitement and anticipation about living in the heart of the western suburbs for years to come,” Mr Blackburne said.
“In a modern community there needs to be housing diversity that allows for a range of age groups at different stages of life to live together, creating a truly vibrant lifestyle in an area they love and want to remain in for generations.”
The Grove Residences is expected to be complete by Spring 2023.