Property prices, rents soar throughout regional Western Australia

Regional Western Australia, particularly the southern half of the state, is generating the sort of capital growth that belittles the rest of the country.

While the country’s combined regional markets have experienced annual price gains of 5.9 per cent and the national property market has climbed 3.7 per cent, Western Australian regional centres are delivering double-digit growth.

Among the hottest markets in Australia is Geraldton, which has seen house sales prices soar 26.8 per cent in 12 months, with Bunbury in the state’s south west not far behind at 21.3 per cent.

On Tuesday (19 August), REIWA’s Regional Spokesperson, Joe White, noted population growth and the constraints in the building industry had created a range of issues across all regional centres in the past few years.

“While growth may be slowing in some areas now, we’ve seen significant sale price growth in the past five years,” he said.

“This has made it much harder for first home buyers to enter the market, particularly in the very popular South West areas like Busselton, Dunsborough and Margaret River, where median prices are higher than the Perth median house sale price.

“In the regional rental markets, rising prices and low supply have created a situation I haven’t seen before in my 30 years in the industry.

“It’s challenging for anyone looking for a rental, but I’m deeply concerned for the more vulnerable in our society, for whom the private rental market has become unaffordable and social housing is unavailable.” 

His concern for renters is borne out by some savage rent increases at either end of the state.

The mining hub of Karratha has seen rents explode over the past 12 months, rising 30 per cent to a median weekly rent of an eye-watering $1,300.

Emphasising the local factors at play, just 240 kilometres up the road, rents in the mining town of Port Hedland, while still high at $950pw, have not moved in the past year.

Albany in the south of the state also had rents that rose by almost 20 per cent.

Eleanor Creagh, REA Group’s Senior Economist, said regional hubs are likely to continue attracting interest, particularly as affordability constraints remain in play and population growth increases pressure on already tight housing supply.

“Further interest rate cuts expected later this year will continue to ease borrowing costs, adding to the momentum in housing demand and reinforcing recent price growth.

“Looking ahead, while stretched affordability will remain a constraint, a chronic lack of new housing supply, population growth, and targeted buyer incentives are expected to keep upward pressure on prices.”

The red hot property market in Geraldton saw house prices rise 5.1 per cent over the June quarter, to $520,000 (up from $495,000 in March), according to REIWA data released Tuesday.

Mr White said the Geraldton regional centre’s continued strong growth was being driven by strong demand from both owner occupiers and investors, and ongoing constraints in the building industry. 

“There is a lot of infrastructure investment in and around Geraldton that is providing employment opportunities. This includes the hospital expansion, port works, road works, Oakajee industrial area, and wind farms,” he said. 

“This is retaining current residents and attracting people to the region, which is boosting the demand for housing. 

“Geraldton is also an attractive FIFO base, with workers and their families living locally and flying up to the Pilbara for their swing. For FIFO workers, Geraldton’s appeal lies in its affordable housing when compared to the Pilbara, lifestyle and amenities, such as a great choice of schools.”

A slowdown did not appear imminent, he added.

“While the region is seeing strong demand for housing, the cost and extended timeframes of building a new home are focusing this demand on the established homes market and putting upward pressure on prices. 

“At the moment, with the investment in the area and demand, we expect prices to continue to increase.” 

Around the country, Mr White said Eastern States investors also remained active and have increased their budgets. 

Western Australia’s booming regional markets are wildly out of synch with the rest of the country’s non-capital city markets.

The combined regional markets (1.7 per cent) are no longer outperforming the capitals, with the rolling quarterly gain once again favouring the combined capitals (1.8 per cent).

The stronger capital city trend comes after nine months where the quarterly trend rate of growth has been stronger across regional Australia.

The stronger capital city trend isn’t evident everywhere, with regional markets in Victoria (1.4 per cent), Queensland (2.5 per cent) and South Australia (2.0 per cent) continuing to outperform their capital city counterparts (1.2 per cent, 2.3 per cent and 1.5 per cent respectively), albeit with relatively modest gains.