Perth's affordable outer suburbs flying off the shelves

Houses in Perth’s outer suburbs are flying off the shelves in less than a week, as the most affordable properties in the country’s most affordable capital surge in demand.

With interest rates biting into the budgets of prospective property buyers, many families and first home buyers are taking their search for a home further afield.

Suburbs in Perth’s southern fringe in and around coastal Mandurah, as well as other outer northern coastal and inland eastern suburbs are selling fast and at higher prices than ever before.

Properties in Greenfields sold in a median of five days, with Cooloongup, Beechboro, Huntingdale, Leeming, Merriwa, Piara Waters, Port Kennedy and Waikiki recording six days. 

Seven more suburbs recorded a median seven days on market, according to the Real Estate Institute of Western Australia (REIWA). 

Jill Duffy, Licensee of Duffy Real Estate Mandurah, said a poor reputation as being a rough area was no longer a deterrent for buyers drawn to larger blocks and access to important infrastructure.

“Greenfields has a bad reputation but it’s actually got many plusses, with lots of trees, the Serpentine River running through the area, and it’s the closest suburb to the local train station and has schools, a hospital and good shops,” Ms Duffy told API Magazine.

She pointed out that block sizes were larger than in neighbouring suburbs and a modern four-bedroom, two-bathroom house could be picked up for just $350,000.

Speedy sales weren’t limited to the suburbs named above, with the median time on market for the whole of Perth just 13 days.  

“The fastest median time to sell in the past 23 years was 12 days in March 2021,” REIWA CEO Cath Hart said. 

“March is usually a strong month for sales and, despite 10 consecutive interest rate rises, 2023 was no exception, with properties changing hands very quickly,”

“Buyer interest remains high, with good attendance at home opens and many properties receiving multiple offers – some even before an inspection. 

“And sales figures exceeded 1,000 in two different weeks in March - they have only done this three times so far this year.” 

Property prices defying interest rate pressure

The national property market has just recorded its first increase since April 2022 but Perth real estate has had steady growth, or at worst been stable, throughout this period.

Although investors continue to exit the market, Perth’s home value index increased 0.5 per cent in March and is up 1.9 per cent over the year. 

As with the median sales time, many outer suburbs are delivering the best capital growth.

The top performing suburbs for house price growth in March were Sorrento (up 4.7 per cent to $1,362,500), Dayton (up 2.6 per cent to $492,500), Yokine (up 2.1 per cent to $715,000), Madora Bay (up 2.0 per cent to $650,000) and Wanneroo (up 1.8 per cent to $499,000). 

Fringe suburbs such as Armadale, Maddington, Kallaroo, Bertram and Eglinton also recorded respectable growth. 

Rents rising but investors still not tempted

Perth rents have risen by 20 per cent in the past year but it has still not been enough to stop investors from fleeing from the market.

The pool of rental properties up for grabs continues to shrink, with 5,000 fewer properties listed for rent than this time last year.

Tanya Steinbeck, CEO of the Urban Development Institute of Australia WA (UDIA WA), said 10 consecutive rate rises took their toll.

“The spectre of the mortgage cliff is concerning and I think the RBA has made a prudent decision to wait and see the impact more fully of previous decisions by keeping rates on hold this week,” Ms Steinbeck said. 

“The housing supply shortage that is being felt across Australia, including in Western Australia, is at critical levels and interest rate rises have added further disincentives for investment in the current climate,” Ms Steinbeck said.

Source: REIWA.

As well as rising interest rates, another key factor concerning investors was legislative uncertainty, particularly around WA’s Residential Tenancies Act (RTA). 

“The data is unequivocal about what happened after Covid - as soon as the moratoriums on evictions and rent increases were lifted, investment property owners began a mass exodus from the WA market, which is what has meant there are now 19,000 fewer rentals in WA than in January 2021,” Ms Hart said.

“There are already significant pulls to exit the WA market with ten interest rate rises, a bulk of mortgages switching from variable to fixed rates and a broad recovery in WA home values.”

Mortgage repayments on a $500,000 loan are up 44 per cent since April 2022.

“While there is a perception that investors are hiking rents every time their mortgage goes up, the reality is they’re limited as to how often they can do this – every six months depending on the lease agreement.

“Calls on the government to limit this more would simply further diminish confidence in the regulatory environment and negatively impact investor sentiment.”

A continued rental crisis seems inevitable as the number of houses for rent remains at near-record lows.

According to REIWA, the suburbs that saw the most rent price growth were Inglewood (up 44 per cent to $620 per week), Mosman Park (up 43 per cent to $600), Wembley (up 29 per cent to $550), Mount Lawley (up 29 per cent to $580), and North Coogee (up 27 per cent to $700).