Property market update: Perth, May 2021

While the overall Perth median house sale price in the most recent quarter failed to eclipse the market’s 2014 peak, parts of the region have hit historic highs, according to data from REIWA. 

In its latest report, REIWA revealed that 20 Perth-based suburbs have now surpassed their 2014 counterparts when it comes to the average sale price, with 12 suburbs now valued at more than $1 million or more.

“While the market still has a 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,” REIWA president Damian Collins said.

REIWA is now projecting that the median house price in the city will hit $545,000 by the end of the year, a further increase of just under 7 per cent. The WA-based institute previously forecasted a 15 per cent price rise in the state by the end of 2021. However, they now believe that a 10 per cent growth in property prices has already been achieved across 20 suburbs in the region.

With the WA capital now on its 10th consecutive month of recording growth, the market outlook for the city continues to be optimistic. Can the WA capital live up to these growth forecasts? For now, let’s take a closer look at the highlights of Perth’s property market in May 2021. 

Property values 

Figures from reiwa.com showed that Perth’s median house price reached $510,000 at the end of May, marking its 10th consecutive month of increase and indicating a growth of 10 per cent since July 2020. 

As mentioned, 81 suburbs recorded house price growth in May, with two suburbs apiece in Melville and Cockburn grabbing a spot in the top five.

According to reiwa.com data, the top-performing suburbs were Attadale (up 4.9 per cent to $1.25 million), Scarborough (3.8 per cent to $755,000), Melville (3.6 per cent increase to $860,000), South Lake (3.6 per cent to $400,000) and Hamilton Hill (3.5 per cent to $490,000). 

Notably, Atwell and Bicton also posted significant growth during the period. 

CoreLogic also reported a 1.1 per cent monthly increase in Perth’s dwelling prices during the month, bringing the annual growth rate to 8.5 per cent and the median property value in the city to $521,688. This indicates that the property prices in the city rose by $8,090 over the month. 

Perth’s median house price increased to $545,620 in May from $537,020 in April. Meanwhile, the median prices of units in the city stood at $392,321 in May, modestly higher than the $387,658 recorded in the previous month. 

Supply and demand  

In the week ending 30 May 2021, REIWA reported that there were 9,212 properties for sale in Perth, which is 1 per cent more than the previous week. 

A closer look at listing stock levels shows house listings increased 1 per cent, listings for units decreased 2 per cent and listings for vacant land increased 4 per cent. 

The increase likely reflected the previous rental stock coming onto the market in the wake of the rental moratorium ending, as well as people hoping to sell their properties for a more competitive price than in recent years.

Meanwhile, figures from SQM showed the mismatch between supply and demand in the capital city markets. Data showed that total property listings in the city fell from 22,467 to 22,075 in May.

A more telling indicator of the overwhelming demand is the steep decline in old listings or properties that have been on the market for 180 days or more. SQM Research managing director Louis Christopher said the number of old listings across the country had fallen by 44 per cent over the past 12 months, falling from 139,686 listings to just 78,260.

Mr Christopher said the decline is ‘abnormal’, noting that the old listings are usually left unsold for a reason. “Either the vendor is asking too much for the property, it’s in a bad location or there are maintenance issues,” he said. 

But it seems buyers are overlooking any of these reasons. In Perth, at least 46 per cent of old listings sold over the 12 months to May. 

Auction market

CoreLogic reported that a total of 2,905 capital city homes were taken to auction, down from the initially expected 3,162 after Victoria entered into a seven-day snap lockdown in the week ending 30 May 2021. Out of the 2,884 results collected, a final clearance rate of 73.5 per cent was recorded. The clearance rate was the lowest recorded over the year to date, down by more than 2 percentage points from the prior week’s final clearance rates when volumes were at an almost similar level (2,838). 

In Perth, only 38 properties went under the hammer during the period, with the lowest clearance rate among its capital city peers at 29.7 per cent. 

Looking ahead, Archistar’s chief economist, Dr Andrew Wilson, forecasted an easing in auction market activity come June.

“Following unprecedented autumn auction market results, activity will ease over June as the quieter mid-year selling season emerges.

“June buyer and seller engagement will, however, follow the record levels reported over May, with relatively high early winter numbers and rising prices set to continue over coming weeks – notwithstanding a continuation of the current lockdown restrictions on the Melbourne market,” Dr Wilson said.

Rental market 

There are indications that conditions in Perth’s rental market (which has been extremely tight during the first quarter of the year), slightly eased in May.

Perth’s rental market has seen house rents rise by 16.6 percent and unit rents rise by 14.2 per cent over the past year, according to CoreLogic. Data showed that monthly growth in rents slowed, but rents were still 1 per cent higher over the month in the city. Gross rental yields stood at 4.4 per cent in May. 

CoreLogic noted that generally, the first quarter of the year is a seasonally strong period for rental markets, so a slowdown in rental growth is expected.

Data from REIWA showed that Perth’s median rental price held steady at $420 per week during the month and listings for rent rose by 3.8 per cent. Four per cent more properties were leased during May compared with April. Any vacancies were filled quickly, with the median time to lease a property at 18 days.

“The median time to lease a property has been relatively stable since September 2020, hovering between 17 and 19 days,” Mr Collins said.

“On an annual basis, however, property investors are finding tenants for their rentals nine days quicker than they were this time last year.”

While the monthly increase may not seem significant, rental listings have climbed 7.4 per cent over the quarter, a breakthrough following a long period of quarterly declines. It is also seen to lessen the pressure on the city’s rental market. 

The areas with the biggest jump in rental listings in May were Kewdale, Balcatta, Maddington, Mount Pleasant, Como, Cloverdale, Yanchep, Mindarie, Forrestfield and Claremont, REIWA reported. 

Mr Collins said it was only the second time this year the median had remained unchanged.

“The increase in listing volumes, coupled with stable rents, suggests the challenging market conditions facing tenants are beginning to ease,” he stated. He added that while the rental market still has some way to go before balancing out, the signs indicate that it is on ‘the right track’.  

Vacancy rates 

Figures from Domain showed that Perth’s vacancy rate was unchanged on a monthly basis at 0.8 per cent, but is still 1 per cent lower compared with the same period last year. 

Areas in the WA capital with the highest vacancy rates were revealed to be Perth City (1.7 per cent), Cottesloe – Claremont (1.5 per cent), South Perth (1.1 per cent), Belmont – Victoria Park (1.1 per cent), and Canning (1 per cent). Meanwhile, if you’re looking for a place to rent, you might find it difficult to get a place in Kwinana (0.3 per cent), Wanneroo (0.4 per cent), Serpentine – Jarrahdale (0.4 per cent), Cockburn (0.4 per cent) and Swan (0.4 per cent). 

Outlook

As several suburbs in Perth continue to pull away from the pack and record outstanding growth rates, REIWA believes that Perth’s property market is on track to overtake its previous record median sale price of $545,000.

“While the market still has a 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,” Mr Collins said.

According to PRD’s most recent Major City Market Update research, “The Perth market showed promising signs of a market turnaround in the past 12 months, with its median house prices growing across all rings. Despite this, affordability remains comparatively higher due to historic price softening”. 

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