Records tumble as Perth recovery goes into overdrive

Perth’s real estate revival is continuing to gather pace, with 20 suburbs hitting record-high prices, apartment development starting to ramp up and new land sales remaining strong despite the expiration of state and federal government stimulus measures.

Sales data released this week by the Real Estate Institute of Western Australia showed a wide range of suburbs were on an upwards trajectory, with 20 suburbs now having median values higher than what they were at the Perth market’s previous historical peak in 2014.

A dozen of those suburbs setting records now have median home values in excess of $1 million, an indication that the biggest price growth is occurring at the top end of the market.

Premium beachside suburb Cottesloe recorded the biggest rebound, with its median price up 22 per cent since 2014 to hit $2.262 million.

Nearby Floreat was close behind, with 19 per cent growth since June 2014 for a median price of $1.565 million.

REIWA president Damian Collins said while the biggest gains were in prestige property, there was still good representation of all areas setting new median price records.

More affordable suburbs setting new highs include Mount Helena at $545,000, Glen Forrest at $615,000, Mount Nasura at $472,500 and Hilton at $583,000.

New median price records were also set in mid-range suburbs such as Karrinyup ($861,000), Bull Creek ($770,000), and Bedfordale ($820,000).

The median sales price for the Perth metropolitan area in the March quarter was $500,000, Mr Collins said, which remains well under the previous peak of $545,000.

“When the Perth market hit the bottom in the June 2020 quarter, the Perth median house price sunk to $475,000,” Mr Collins said.

“A lot of homeowners lost value in their properties during the downturn, so it’s pleasing to see the quick gains that have occurred over the last eight months.

“While the market still has a long way to go before it is back to its 2014 peak, the signs are very encouraging that we will achieve that before the end of the year, which will be welcome news for Perth owners and sellers.”

Meanwhile, Perth’s apartment market appears to be awakening from its half-decade long slumber, with approvals for unit development up 42.8 per cent in March, compared to the same time last year.

Archistar chief economist Andrew Wilson said unit prices in Perth were set to record their highest growth in years in 2021, forecasting median price growth of around 6 per cent.

Momentum is stronger, however, in Perth’s new homes market, with ABS data showing 5,726 houses have received approval in the year to March 2021, with only Melbourne recording a higher level of house approvals.

Data from the Urban Development Institute of Australia showed the end of the federal government’s HomeBuilder and the WA state government’s Building Bonus had not stopped the growth in land sales, with new lot sales up 5 per cent in the March quarter.

UDIA WA chief executive Tanya Steinbeck said land sales were up 31 per cent in the March quarter as compared to the same time last year, with 1,927 lots sold.

“Despite concerns that the Building Bonus and HomeBuilder grants pulled forward demand and market activity would slow significantly once the financial boosts ended, our figures show that the new land market remains buoyant,” Ms Steinbeck said.

“Buyers are clearly making the most of WA’s strong economic position, low unemployment, record-low interest rates and accommodative lending conditions.”

Ms Steinbeck said land values were relatively stable in Perth, up 1 per cent over the quarter for a 7 per cent annual gain.

“Perth remains one of the most affordable capital cities in Australia and that is a major drawcard for investors and those looking at coming to Perth to settle down,” Ms Steinbeck said.

Urbis director David Cresp said Perth’s North East growth corridor was Perth’s strongest selling, with estates in Brabham, Henley Brook and Bennett Springs experiencing high levels of sales activity.

Mr Cresp said while first homebuyers were behind much of the momentum growth, investors were also starting to make their presence felt.

“Record low interest rates coupled with rising prices and rents has begun to entice investors into the residential market to achieve reasonable returns,” Mr Cresp said.

“The value of new loan commitments for residential investment in WA nearly doubled, from $237 million in March 2020 to $462 million in March 2021, matching the loan commitment values seen in early 2016.”