Perth outer suburbs deliver price growth, inner suburbs the rent hikes
Soaring inner suburban rents are not translating into capital growth, with Perth's outer areas the ones selling at record speed and continuing to deliver strong capital growth.
Rents are booming in Perth’s affluent western suburbs but it’s the affordable outer areas that are generating the greatest capital growth this year.
A lack of supply is limiting the amount of possible sales in areas close to the CBD and between the city and the beach but is also driving rents up at a stratospheric pace.
Yet it is the outer suburbs that for a year have dominated as the suburbs delivering price growth, a trend that has continued in the past month.
The top-performing suburbs for house price growth in June were Beeliar (up 3 per cent to $625,000), Hammond Park (up 2.6 per cent to $533,500), Dawesville (up 1.9 per cent to $550,000), Cooloongup (up 1.8 per cent to $417,500), and Caversham and Armadale (up 1.4 per cent to $547,500 and $329,500 respectively).
Those figures are a reflection on how the Perth market has played out over the past 12 months.
Perth's fastest Growing Areas
|Rank||Suburb||Region||Median Value||Annual Change|
|1||Rockingham||Perth - SW||$526,814||9.4%|
|3||Kwinana||Perth - SW||$449,570||9.0%|
|4||Armadale||Perth - SE||$490,228||7.9%|
|5||Gosnells||Perth - SE||$498,222||6.8%|
|6||Serpentine - Jarrahdale||Perth - SE||$545,880||6.0%|
|7||Wanneroo||Perth - NW||$547,549||4.1%|
|8||Swan||Perth - NE||$526,404||3.3%|
|9||Cockburn||Perth - SW||$630,383||3.0%|
|10||Canning||Perth - SE||$647,456||2.3%|
Properties hitting the market in Perth’s outlying areas are being sold within a few days of being listed.
It took a median of 10 days to sell a property in June, the fastest time on record, according to REIWA.
All are outer suburbs or, in the case of Balga and Carlisle, emerging suburbs with prices near Perth’s median.
Mismatch between rents and property prices
The lack of supply in the pricier so-called golden triangle from Perth west to Fremantle and Scarborough has seen some eye watering rent increases as the lack of sales options and desirability of those suburbs leads to intense rental competition.
Buyers factoring in interest rate rises are also being drawn to the outer suburban areas where bang for buck is greater in terms of block size and price.
Wanneroo in Perth’s north has been among the fastest growing suburbs in terms of price over the past year.
Andy Bredow, Principal of AB Realty, said they had seen a real boom driven by families looking for larger blocks with room for the kids to play.
“The suburb was home to many migrant families and saw a real growth spurt in the 1970s and nowadays younger families are buying up these larger lots and renovating and extending these older style brick and tile homes that were built to last.
“Wanneroo is also becoming very attractive to local investors and eastern states buyers looking for a fantastic rental return on these properties, with rental yields on these investments currently sitting anywhere between 6 and 10 per cent.
“With the desire for these larger blocks forever increasing we have also seen enormous capital growth that we’d expect to continue,” he said.
Mr Bredow added that Perth’s resources economy would continue to be a catalyst for capital growth across the city as a whole.
In the western suburbs, rapidly rising rents have not correlated with home value increases.
Although based on relatively low lease numbers, the staggering one-month change in rental prices above 40 per cent in suburbs such as Claremont and Sorrento highlights the overwhelming demand for properties near the beach and city.
But only two suburbs among the top ten fastest growing monthly rent increases actually saw an increase in median dwelling values (Victoria Park and Wembley). The others either flatlined or dipped in value.
|Suburb||Leases||1-month change||Median Rent||1-month change||Days to Rent||Annual Median House Sale Price||1-month change in House Price|
Hamish Laidlaw of Xceed Real Estate has extensive experience in the Perth’s western suburbs and said prices were holding firm but a lack of supply was making it difficult to read this market.
“Due to a lack of properties available for sale there is not the volume of sales to evidence price increases,” he said.
“With the influx of international job campaigns plus the interstate interest relating to our mining sector has created a more diverse and complex buyer pool, which the current Perth market cannot capitalise on.”
CoreLogic’s Perth home value index increased 0.9 per cent in June and 2.8 per cent over the past three months, with the Western Australian capital the only one to record growth over the year.
Perth’s listings crunch
Backing up Mr Laidlaw’s comments is REIWA data showing listings are at a 13-year low.
With building completions low and winter listings traditionally delivering a yearly ebb, sellers are sitting on the sidelines wary that they may not be able to find a home to buy or rent after a sale.
REIWA President Joe White said with active listings in Perth dropping below 5,500 there are concerns the city is facing a shortage of homes for sale.
“The number of sales reported by our members each week has been 10-15 per cent higher than the number of weekly new listings since mid-April, which has led to the shortfall in active listings.
“Since 2010, sales volumes have usually been 15–30 per cent lower than new listings, which enabled active listings to grow.
“For sales to be this much higher than new listings is unusual and has only happened a few times in the past 13 years, and never for two months in a row.”
Mr White said there was a striking difference between the supply issues affecting Perth compared to the same issue felt in the eastern states.
“There is definitely undersupply in other states, but Perth is in a different position.
“Demand has been a much greater factor in the decline in active listings here, while in east coast markets it is a reflection of seller sentiment.
“A big reason for this difference is that in the east prices dropped significantly when interest rates started to rise last year, and many sellers have been waiting for prices to recover before putting their home on the market.
“WA is more resilient and has held its value in the face of interest rate rises, while remaining much more affordable.”
Peter Gavalas, buyers agent from Resolve Property Solutions, said the Perth’s falling property supply was making it increasingly challenging for homebuyers to find suitable options.
“While it is typical for new listings to decline during the winter months, the current situation in Perth is unprecedented,” he said.
“Taking it at face value, we currently have the same number of listings as in 2010 but when you crunch the numbers, it’s actually much lower in per-capita terms.”
WA’s population grew at a hectic 2.3 per cent over the 2022 calendar year, driven by strong overseas and interstate migration, according to the Australian Bureau of Statistics.
Due to Perth’s status as one of the most competitive capital cities for potential tenants in Australia, many of these migrants are choosing to buy rather than rent.
“Add in the skyrocketing cost of construction as well as home-building delays, and it’s no wonder demand for established properties is soaring and homes in the city are being snapped up in a record median of just 10 days,” he said.
“This increasingly competitive environment will likely keep pushing prices upwards for the foreseeable future.”