Perth's property momentum appears set for an extended run

Perth’s capital growth outpaced all capital cities in the past year and is 11 per cent above national average, achieving a record dwelling median of $703,502, with no sign of a slowdown.

Since the onset of Covid, property prices in Perth have increased 56 per cent, or by a median $253,624, with the ongoing upward trend buoyed by high immigration, low supply, and despite growth, ongoing affordability.

CoreLogic’s March Home Value Index recorded a monthly, quarterly and annual dwelling value rise nationally of 0.6, 1.6 and 8.8 per cent, but for the same periods, fast-paced Perth values grew more than all capitals at 1.9, 5.6 and 19.8 per cent.

Median house and unit values are between $100,000 to $150,000 lower than national averages ($833,854, $640,162), where Perth’s record house median is $735,276 and for units $495,360.

Compared to Sydney’s median $1.4 million, Perth is a remarkable $680,000 less, and almost $200,000 less than Melbourne’s $900,000, and lower than Canberra and Brisbane by $228,000 and $175,000 respectively.

Unit median value is $340,000 cheaper than Sydney, $117,000 than Melbourne, and about $85,000 cheaper than Brisbane and Canberra.

Recent Real Estate Institute of Western Australia (REIWA) figures found houses sold in a median of eight days, unchanged from February, and five days faster than March 2023, while units sold around 10 days faster than a year ago.

Suburbs with the quickest turnaround for houses in March were Cooloongup, Parmelia and Shenton Park (four days); and Butler, Clarkson, Golden Bay, Huntingdale, Lakelands, Palmyra and Port Kennedy (five days), according to REIWA.

Rethink Investing Managing Director Scott O’Neill said Perth’s affordability is a driver for the strong momentum the market is experiencing, boosted by high immigration and low supply.

“Perth’s attractive price point is drawing a wide array of investors, keen on securing both immediate profits and long-term value increase.”

CoreLogic’s March Pain and Gain report also found 90 per cent of Perth was at its most profitable since 2015 in the December quarter, when 97.4 per cent of houses and 77.9 per cent of unit sales achieved nominal gains.

The rate of loss-making resales continued to decline alongside a 5.1 per cent increase in home values through the quarter.

REIWA figures show suburbs with the most house sale price growth in March as Yangebup (up 4 per cent to $644,500), Camillo (up 3.5 per cent to $445,000), Beeliar (up 3.4 per cent to $695,000), Mount Pleasant (up 3.3 per cent to $1,550,000) and Belmont (up 3.2 per cent to $590,000).

Ballajura, Scarborough, Inglewood, Palmyra and Secret Harbour were also among the top performers, recording growth of 2.8 per cent or more over the month.

CoreLogic data shows the top three Perth suburbs for dwelling growth in the 12-months to March were Armadale, up 28.6 per cent to a median value of $609,672, Gosnells, up 27.1 per cent to $617,139 and Rockingham, up 26.7 per cent to $647,424.

Even the tenth suburb in Perth’s top 10 list for highest median growth, Kalamunda, grew 20 per cent in the past year, ahead of Sydney’s top performing region of Eastern Suburbs-South, up 14.8 per cent and Melbourne’s best, Darebin-North up by 8.6 per cent.

Does outer suburban Perth still offer value?

Perth real estate agent, HouseSmart Managing Director Adam Bettison, said he’s receiving many more calls from first time Perth market investors but warns cheaper outer suburbs can come at a cost, and the 10 to 20 kilometres ring around the CBD is the better long-term choice.

“For people buying cheaply in the outer suburbs there is a trade-off with tenant quality and that higher headline rental yield may get eroded by higher operating costs because they’re likely to have higher rent arrears and defaults, and higher levels of property damage.

“Three suburbs for value purchases in the 10–20-kilometre radius outside the CBD, however, would be Lockridge, Cloverdale, and Langford, which are all quite affordable and do have larger blocks of land available at a good price.

Located right on the 20-kilometre line is Gosnells, where Mr Bettison recently sold a house he said was in a poor condition but on a 3,600 square metre block, which had a rezoning proposal for multi-unit site underway and sold for $663,000.

Perth’s rental market

The growing migrant population driven by employment opportunities is also being met by a groundswell of demand from locals, creating a shortage of rentals or properties to buy, Mr Bettison said.

“So, you’ve got that rental demand which is typically provided by your mum and dad investors buying in the under $600,000 properties in the outer suburbs, then you’ve got the first home ownership demand which is in the same space.

“Those two combined mean that any of my sale listings for properties under $550,000 are very popular from a wide variety of buyers, then there are still some properties even cheaper, so if you push under $450,000 the phone is just ringing off the hook.”

According to online property listing site Domain, the Perth vacancy rate in February 2024 was 0.3 per cent.

“Rental listings are chronically low, and they’ve been below 2,000 for 13 out of the last 15 months and haven’t been consistently above 2,000 since early 2022,” REIWA CEO Cath Hart said.

At the end of March, there were 1,840 properties available for rent on REIWA’s website, 10.8 per cent higher than February, and 4.2 per cent lower than the same time last year.

REIWA data shows median house rents were stabilising at $650, which was18.2 per cent higher than March 2023 and units rose to $600 per week, up 3.4 per cent month-on-month and 20 per cent higher year-on-year.

Suburbs with the most growth in their median weekly dwelling rent price in March were Rockingham (up 10 per cent to $550), Mosman Park (up 8.3 per cent to $813), Morley (up 8.3 per cent to $650), Gosnells (up 5.5 per cent to $580) and North Coogee (up 5.3 per cent to $790).

Suburbs recording the fastest median leasing times were Highgate (six days); Piara Waters (seven days); Doubleview (eight days); Inglewood and Palmyra (nine days); and Westminster, Balcatta, Fremantle, Innaloo and Treeby (10 days) (REIWA).

CoreLogic data shows gross yields from houses were at 4.4 per cent in March but lagged slightly behind units which offered 6.2 per cent last month, and both are ahead of the national median of 3.5 per cent for houses, and 4.5 per cent for units.

“Buying to rent in the outer surburban areas tend to have episodic growth, so there’ll be surges, like now, then long intervals of minimal or no growth because realistically they don’t have the level of amenities or demand for residents that the suburbs closer to the city have, so if someone’s going to get a long-term buy and hold, they should try to get as close to the CBD as they can afford,” Mr Bettison said.

Mr O’Neill said given the dynamics, Perth’s property market is not only expected to maintain its demand but also to offer substantial investment returns.

“The future looks bright for Perth’s real estate, propelled by several growth-inducing factors.

“The city is witnessing economic diversification, moving away from its traditional mining base towards burgeoning sectors such as technology, tourism and education.”