Property market update: Perth, November 2021

Despite the city’s upward trajectory getting sidetracked in October, Real Estate Institute for West Australia’s chief executive Damian Collins claimed that the city’s property market was firmly in recovery, following approximately 14 per cent price growth in 2021.

He also highlighted that the Western Australian capital’s spring selling season had turned up a notch, with November marking the fourth consecutive month of increased sales, which exerted upward pressure on prices during the period. 

“It was another strong month of sales in Perth, with REIWA members on the ground reporting high sales turnovers across all price points,” he stated. 

But while local experts continue to be optimistic about Perth’s market conditions and growth prospects, CoreLogic noted in its latest report that the country’s property boom may be past its peak. 

“Virtually every factor that has driven housing values higher has lost some potency over recent months,” CoreLogic research director Tim Lawless said.

The analyst noted several factors that are seen to further weigh down on prices, including rising fixed mortgage rates, surging listings that are easing FOMO among buyers, increasing affordability issues and lower credit available to home buyers. 

On the upside, affordability continues to be Perth’s advantage over other cities, as prices in the city remain attractive by comparison to other major Australian capital cities.  

“Despite the strong price growth recorded in 2021, WA is still the most affordable state in the country for housing, with prices in most regions across the state yet to catch up to their 2014-15 peaks,” Mr Collins said.

How will the city perform in 2022? For now, let’s see how Perth fared in November 2021. 

Property values 

CoreLogic’s Perth home value index increased 0.2 per cent during November, recovering from the 0.1 per cent decline in the previous month. 

Compared to the same period last year, dwelling values in the Western Australian capital are now up 14 per cent, bringing the median values in the city to $528,540.

The city’s housing market also rebounded in November. After a 0.1 per cent drop in October, median values for houses saw a 0.2 per cent increase this month to  $552,158. Compared to the same period last year, Perth house prices have risen by 14.8 per cent. 

Perth’s unit market also saw growth in November, albeit at a slower pace. The city’s unit sector saw a 0.1 per cent increase during the period, slowing down from the 0.2 per cent increase in October. Median unit values in the city now sit at $400,831. Compared to November 2020, unit prices in Perth are now up 12.4 per cent. 

Meanwhile, REIWA’s data showed Perth’s median house sale price stood at $520,000 in November. 

Weighing in on the figures, Mr Collins said: “Whilst overall price growth is modest, the suburb level data tells a very different story with 90 suburbs recording price growth during the month.”

The suburbs to record the biggest house price growth during November were Willagee (up 4 per cent to $625,000), Golden Bay (up 3.8 per cent to $395,000), Kingsley (up 3 per cent to $655,000), Spearwood (up 2.9 per cent to $525,000) and East Victoria Park (up 2.9 per cent to $700,000).

Other suburbs to record strong gains during the period were North Perth, Wembley Downs, Currambine, Willetton and Dudley Park.

Despite the strong annual growth in dwelling values, Western Australia is still the most affordable state in the country for housing, according to the Real Estate Institute of Australia’s latest Housing Affordability Report.

The report showed that housing affordability improved in Western Australia during the September 2021 quarter, with the proportion of family income required to service average loan repayments reducing by 0.1 per cent to 26.3 per cent.

In a testament to how affordable the state’s local market is, Western Australia once again had the largest percentage of first home buyers in its owner-occupier market at 42.4 per cent.

Data showed that out of the total number of first home buyers who purchased during the September 2021 quarter, 14.7 per cent were from Western Australia.

It was more affordable for first home buyers to purchase a home in Western Australia during the September 2021 quarter than the June 2021 quarter, with the report showing that the average loan taken out by first home buyers reduced 0.6 per cent to $365,815.

Supply and demand  

Perth’s property market saw a traditional spring selling season in terms of supply. 

“As is typical for this time of year, we’ve seen a steady increase throughout spring in the number of properties for sale in Perth as sellers look to capitalise on the strong market conditions,” Mr Collins said.

REIWA data showed there were 9,271 properties for sale at the end of November, which is 7 per cent more than October.

On an annual basis, listings for sale are 6 per cent lower than they were at the end of November 2020.

Meanwhile, SQM’s data showed that total residential listings in the city fell by 1 per cent in November from 22,623 to 22,407. Over the year, total listings are still down by 1.1 per cent.  

But according to Louis Christopher, managing director of SQM Research, the decline in listings is expected following a strong increase in October. During the previous month, Perth listings rose by 8.4 per cent over the month by 1,756 to 22,623. 

While listings still rose in November, the demand for properties in the city remained strong, as evidenced by the strong sale volumes and shorter median selling time during the period. 

REIWA reported that the median time to time to sell a house during November was 14 days, which is one day faster than it took in October and eight days faster than November 2020.

Mr Collins noted that competition among home buyers heated up during the month. “Properties sold very quickly in November, with the median time to sell now just two weeks. That is exceptionally fast and illustrates buyers are needing to act swiftly in this market and put in competitive offers to ensure they don’t miss out on a property,” he stated. 

The fastest-selling suburbs in November were Heathridge (five days), Shenton Park (six days), Claremont (six days), Kingsley (six days) and Leeming (six days).

Other suburbs to record fast median selling times were Inglewood, North Perth, Hocking, Floreat and Bull Creek.

Meanwhile, REIWA reported that activity increased 9 per cent in Perth during November 2021, with the average weekly sales figure clocking in at 1,048 during the month, which is 24 per cent higher than November 2020.

The five suburbs to record the highest increase in sales during the period were Hamilton Hill, North Perth, Karrinyup, Greenfields and Shoalwater, according to REIWA. 

Auction rates  

According to CoreLogic, around 118 properties in Perth went under the hammer throughout November, with a clearance rate of 61.1 per cent. 

For more updates, expert industry insights and stories about Australia’s auction markets, follow our weekly updates in our News section. 

Rental market 

Perth’s rental market remained tight throughout November, as listings continued to be outpaced by demand. 

According to REIWA, there were 2,358 properties for rent at the end of November, which is 10 per cent more than October.

The suburbs to record the biggest increase in rental listings during the month were Clarkson, Hamilton Hill, Success, Halls Head and Bentley.

“There was a notable jump in the number of available rentals on the market between October and November. We still have a long way to go to achieve a balanced rental market, but this is an encouraging trend and welcome news for Perth tenants searching for a rental,” Mr Collins stated. 

REIWA also reported that Perth’s median weekly rent rose by $10 to $440 in November, the first notable increase since July. 

Mr Collins described the price movement as “quite remarkable” given the tight stock levels in the city over the last couple of months. 

But despite weekly rents increasing, he noted that the city remains affordable for renters. “Even though rents have increased, they are still $10 a week more affordable than they were in 2014 when the median weekly rent price peaked at $450,” Mr Collins said. 

The suburbs to record the biggest increase in median rent during November were Cloverdale (up $20 to $420 per week), Carlisle (up $20 to $440 per week), Maddington (up $13 to $370 per week), Armadale (up $10 to $320 per week) and Gosnells (up $10 to $350 per week).

In terms of leasing time, REIWA reported that it took a median of 16 days to lease a rental during November, which was one day faster than October and one day faster than November 2020.

The suburbs to record the fastest leasing times during November were Kelmscott (11 days), Wellard (11 days), Byford (12 days), Scarborough (12 days) and Innaloo (13 days).

Other suburbs to experience fast median leasing times were Butler, Canning Vale, Cloverdale, Gosnells and Nollamara, REIWA noted. 

Heading into 2022, REIWA forecasts Perth’s rental shortage to improve slightly next year as new constructions are completed and investor activity grows.

“Whilst rental listings are likely to remain lower than historical averages, we do expect to see more available rentals on the market in 2022 than we saw this year,” Mr Collins said.

He pointed out that investor finance levels rose in Western Australia during 2021, which is seen to translate into more properties opening up to renters in 2022. He also noted that as construction projects are completed and people move into their new homes, more listings will be available. 

REIWA is estimating median rent prices to jump between 10 and 15 per cent during 2022, which will attract investors.

“Tenant demand will remain high in 2022, which will see rents continue to rise. Despite this, the Perth rental market is still very affordable, with WA tenants enjoying the cheapest rental market conditions in the country,” Mr Collins said.

However, there are also headwinds for the city’s rental market in the coming year. 

Mr Collins said that a significant threat to the rental market in 2022 and beyond is the major changes being considered by the Western Australian government to the Residential Tenancies Act 1987 (RTA).

“The outcome of the RTA review could have dire consequences for the state’s rental market if investors’ rights are taken away,” he warned. 

“The tenancy laws must remain fair for both rental providers and tenants, or we will see investors exit the WA market in large numbers, putting added pressure on the already short rental supply, and causing more harm to tenants in the long-run.” 

Vacancy rates 

Domain reported that Perth’s vacancy rates held steady in November, remaining at a historic low of 0.5 per cent from the previous month. Compared to the same period last year, vacancy rates in the city have declined from 0.7 per cent. 

During the month, the areas with the highest vacancy rates were Perth City (1.1 per cent), Canning (0.8 per cent), South Perth (0.7 per cent), Cottesloe – Claremont (0.6 per cent), and Joondalup (0.6 per cent). 

Meanwhile, the areas with the lowest vacancy rates were Wanneroo (0.3 per cent), Serpentine – Jarrahdale (0.3 per cent), Mundaring (0.3 per cent), Fremantle (0.3 per cent), and Cockburn (0.3 per cent). 

Perth is still operating in favour of landlords, according to Domain. It noted that high vaccination rates and the reopening of international borders could see rental markets become more competitive. 

What’s next for Perth’s property market? 

As Perth moves forward into 2022, price growth appears to be continuing – although at a moderated pace.

The city’s strong property market conditions are expected to continue, with REIWA’s 2022 outlook estimating Perth house prices will rise a further 10 per cent next year.

Mr Collins also expects sales volumes to hold at current healthy levels in 2022, which will put upward pressure on house prices over the next 12 months. 

“The Perth residential sales market is in a very good position for further growth as we exit 2021 and move into 2022,” Mr Collins said. 

And with the state border set to reopen on 5 February 2022, there are high hopes that the city’s residential market will see renewed growth as interstate migration resumes, driven by lifestyle and employment demands. 

In terms of supply, Mr Collins said listings for sale should increase modestly in 2022 as sellers seek to capitalise on strong price growth. However, they will remain below historic averages.

“Current listing levels are 11 per cent lower than they were this time last year and almost 50 per cent lower than what they were three years ago,” Mr Collins said.

“The increase in new listings to market next year should be offset by the resumption of migration once interstate and international borders open. As more people arrive in WA, this will add to the demand for housing and keep listings below historical averages.”

While the outlook for 2022 is positive, REIWA acknowledged that interest rate increases loom as a possible deterrent.

“Interest rate rises have the potential to slow the market in 2022. Whilst most people are aware that interest rate rises will occur at some stage, if there are multiple interest rate rises too close together, this could reduce market activity and slow projected growth,” Mr Collins said.

But he noted a rate hike would not completely derail the market, stating: “WA has some of the most affordable housing in the country and one of the strongest economies in the world. We also have very low ‘for sale’ and ‘for rent’ stock. All of these factors point to another strong year of growth.”

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