Property market update: Perth, June 2021

A few factors that help to explain the decline in growth rate are an easing in the sales-to-listings ratio and trends observed in housing credit.

REIWA president Damian Collins stated that the smaller growth rate recorded in June was not unexpected, given that market activity historically cools during the winter months. 

And while the price growth during the month is the smallest seen so far this year, Mr Collins noted that it still has been a ‘positive year’ for the WA capital, recording a year-to-date total growth of 7 per cent. 

In the last financial year, Perth’s home values increased 9.8 per cent – a staggering result after years of subdued prices. 

Low mortgage rates, declining unemployment, elevated consumer confidence, the accumulation of savings through the COVID restrictions in 2020, have underpinned the strong demand conditions in the first six months of the year. Additionally, federal government initiatives also provided momentum.

But as we enter the second half of 2020, property market experts expect that the nationwide property market boom could lose some steam.  

In fact, CoreLogic data shows that across the capital cities, there is a loss of momentum across Perth and Darwin, while softer growth rates are also emerging at the high end of the market.

Let’s see how sectors of Perth’s property market performed in June 2021 and what it could indicate for the city’s outlook. 

Property values 

CoreLogic’s latest data showed that dwelling values in Perth barely rose over the month, recording a subdued 0.2 per cent increase, significantly easing from the 1.1 per cent seen in May. The median value of properties in Perth now stands at $526,166. 

The slowdown is evident across both the house and the unit markets.

House prices rose by 0.1 per cent month-on-month, with the median price almost unchanged at  $550,099. However, the sector’s annual growth rate remained in the double-digit territory, posting a 10 per cent growth compared with the same period last year. 

Meanwhile, the unit market rose by 0.6 per cent in June, bringing the median value to $395,979. Unit prices have increased by 8 per cent from June 2020. 

REIWA’s data showed a similar trend, reporting a 0.2 per cent monthly increase for June, with the median house price at $510,000. 

However, it noted that the WA capital’s cumulative growth over the first six months of the year had been substantial, recording year-to-date total growth of 7 per cent. 

“Although the June price growth rate is the smallest we have experienced this year, it has still been a positive year and brings the year-to-date total growth tally to seven per cent,” Mr Collins said. 

And despite Perth’s market showing signs of cooling, several suburbs still managed to deliver strong price growth in June.

REIWA data showed the suburbs to notch the biggest increase in median sale price during June were Parkwood (up 4.8 per cent to $450,000), Booragoon (up 4.1 per cent to $825,000), Merriwa (up 3.9 per cent to $335,000), Quinns Rock (up 3.9 per cent to $499,000) and Joondalup (up 3.2 per cent to $525,500).

Other suburbs highlighted by the REIWA included Subiaco, Kalamunda, Tapping, Nedlands and Wanneroo.

Supply and demand  

Over the June quarter, Perth’s sales to new listings ratio stood at 1.1, the lowest of any capital city, indicating that buyer demand and new stock levels in the WA capital were more evenly balanced compared to other capital cities. 

At the end of June, REIWA reported that there were 8,933 properties listed for sale at the end of June, 1 per cent lower than at the end of May.

“We saw a small decline in listings at the end of June compared to May, but compared to three months ago, listings for sale have increased 8.1 per cent. On an annual basis, stock levels remain 13.4 per cent lower than they were at the end of June 2020,” Mr Collins said.

The number of days it took to sell a property in the city also increased in June, to 15 from the 14 days recorded in May. 

“Despite the minor increase in median selling times, the figure for June is still close to the lowest we have seen in the past 15 years,” Mr Collins said.

Data showed that the suburbs to record the fastest median selling times in June were Kingsley (seven days), Wembley, Brabham, Craigie, Greenwood, Heathridge, Kinross, Palmyra, Willetton (all eight days) and Parkwood (nine days).

Meanwhile, SQM’s figures showed a decline in the total number of property listings in Perth by 2.4 per cent from 22,075 in May to 21,539 in June. Compared to June 2020, listings only declined by 1.3 per cent from 21,833.  

Auction rates 

As the delta variant of COVID-19 spreads in Australia, and vaccination rates remain low, several cities have succumbed to lockdowns. Despite this, the auction market seemed generally unaffected by the restrictions in June.  

A total of 2,960 homes were taken to auction across the combined capitals in the week ending 27 June 2021, higher than the 2,400 auctions held over the previous week. The final clearance rates stood at 75.4 per cent, slightly higher than the 74.1 over the week prior.

In Perth, only 25 homes went under the hammer during the last week of the month, with a clearance rate of 56 per cent.  

Ray White chief economist Nerida Conisbee said the gap between prices fetched by properties at auction and the highest pre-auction offer in the country had risen over the past 18 months based on a study of 9,500 sales.

The gap is now currently at a record high of 13. 1 percent, with Perth leading the pack. Ms Conisbee said this is not surprising, given how fast the market is moving in the city. 

CoreLogic’s head of research for Australia, Eliza Owen, said that while auction markets have remained resilient through lockdowns, the length of the lockdowns and fiscal support provided by the federal government are important factors that will affect market stability. 

Rental market

Perth remained one of the most affordable capital cities to rent in. Median rent price in the city stood at $425 per week in June, which is $5 more than it was in the previous month. 

“Despite the small increase recorded to the Perth median rent during the month, it is still $25 cheaper than it was in 2013 and 2014, when it peaked at $450 per week,” Mr Collins said.

Meanwhile, the average leasing time during June was 19 days, which was one day slower in May, but eight days faster compared to the same period in the previous year. 

REIWA revealed that the suburbs to record the shortest leasing times were Yanchep (11 days), Balga (13 days), Maddington (13 days), Innaloo (14 days) and Success (14 days).

Other suburbs to perform well were Thornlie, Wellard, Golden Bay, Beckenham and Brabham.

At the end of June, there were 2,818 properties for rent in Perth, a more stable figure compared to the previous month and 5.7 per cent higher than the last quarter.  The biggest growth in rental listings during the month were seen in Shelley, Piara Waters, Kardinya, Hamilton Hill, Coolbellup, Osborne Park, Dianella, Leederville, Nedlands and Secret Harbour.

While the data shows that Perth’s rental market is far from being out of the woods, Mr Collins said that the stock levels have started to stabilise and are improving on a quarterly basis. 

CoreLogic’s data showed gross rental yields hit a record low 3.1 per cent across the combined capital cities.Meanwhile, combined regional Australia has also seen a fresh record low of 4.5 per cent. Perth’s gross rental yield stood at 4.3 per cent in June. 

Vacancy rates

Ahead of an impending review of tenancy laws, Perth’s vacancy rate posted its highest monthly increase since April 2020.

According to the REIWA, Perth’s vacancy rate rose 1.2 per cent in June 2021. This figure represents the highest that the vacancy rate for the WA capital has been since August 2020, and the biggest monthly increase since April 2020.

REIWA’s Mr Collins said this trend is indicative of a return in investor confidence.

Meanwhile, Domain data showed that the vacancy rate in Perth was unchanged from the previous month at 0.8 per cent. On an annual basis, vacancy rate in the city fell by 1.0 per cent. 

The areas with the highest vacancy rates in the Perth were 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, the areas with the lowest vacancy rates were 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

What is the outlook for Perth in the coming months?

While some experts are expecting the property market growth to further ease in the second half of the year, several industry figures are still optimistic about Perth’s growth prospects. 

In particular, REIWA is expecting Perth to rebound come spring. “While the Perth sales market slowed slightly in June, it is still performing well and competition among buyers remains high. REIWA anticipates the Perth market recovery will continue throughout the second half of 2021 and into 2022,” Mr Collins said.

When asked about the impact of the recent COVID outbreak, Mr Collins is optimistic that it will not significantly affect the market.“The latest COVID-19 outbreak and subsequent lockdown are concerning, but as was the case in February and April, there should be minimal short-term impact on the real estate market, provided Perth can get on top of this outbreak quickly,” he added.