Property market update: Perth, April 2022

The latest data from CoreLogic showed that the West Australian capital’s property values reached a new record high during the month, as the 1.1 per cent monthly gain took the city’s market values 0.9 per cent higher than the previous record high seen in June 2014.

The property data provider reported that Perth’s dwelling values have risen by a cumulative 24.5 per cent from June 2020 to April 2022.

According to CoreLogic’s head of research in Australia Eliza Owen, it has taken 94 months for the Perth market to stage a recovery in property prices.

Perth dwelling values saw a peak to trough decline of 20 per cent between June 2014 and September 2019 – indicating a $95,000 fall in dwelling value over a period of 5.3 years, CoreLogic’s data revealed.

“As it stands, growth in the Perth dwelling market has been led by houses, with unit values still 13.6 per cent below the record high seen in September 2013,” Ms Owen stated.

The expert said that it was a positive mix of factors that has primed the market for growth.

“Recent growth in home values has been supported by a recovery in mining activity, a sub-4 per cent unemployment rate, strong jobs growth, and positive interstate migration to WA since the September 2020 quarter,” Ms Owen explained.

Weighing in on the figures, REIWA president Damian Collins said that with another solid month of price growth recorded, the Perth property market was firmly on track to achieve 10 per cent price growth in 2022.

“The Perth property market remains in a very good position for continued price growth. Even with interest rate rises expected soon, REIWA does not anticipate this will adversely impact our local market,” Mr Collins said.

On 3 May, the Reserve Bank of Australia increased the cash rate by 25 basis points — the first hike in the central bank’s official rate in 11 years.

However, Mr Collins only doubled down on his growth forecast in the wake of RBA’s decision, pointing out that the figures have factored in the interest rate rises that were expected to occur in 2022.

He added that REIWA does anticipate moderate rises to have much impact on the local property market due to several factors.

“With low levels of stock for sale and building completions still sluggish, continued strong demand from buyers suggest the Perth residential sales market will be buoyant for some time,” Mr Collins explained.

The local expert added that another key reason why REIWA does not anticipate interest rate rises having the same impact on the local market is its housing market’s relative affordability compared to other capital markets.

“However, the good news is that WA has some of the most affordable housing in the country, which means most buyers will be able to afford price increases and the looming interest rate rises,” Mr Collins said.

Will Perth continue its growth streak in the coming months? Or will there be unexpected headwinds that will derail the West Australian capital recovery?

For now, let’s see how Perth’s market performed in April 2022.

Property values

CoreLogic’s latest data showed dwelling values in Perth recorded a 1.1 per cent increase over April, a 0.1 per cent gain from March.

The figures mark the fourth consecutive month of growth for the city and continued recovery from the 0.1 per cent drop in property values recorded in October 2021.

On a quarterly basis, property values are up by 2.4 per cent, up from the 1.9 per cent growth recorded in the previous rolling three-month period.

Compared to April 2021, the average price of a property in Perth is now up 6.7 per cent, with the median dwelling value in the city now at an all-time high of $552,128.

Despite the almost $17,000 month-on-month increase in median dwelling prices, Perth still has the second-lowest dwelling value of the capital cities behind Darwin at $501,182.

Data also showed median values for houses in Perth rose 1.2 per cent over the month, speeding up from the 1 per cent gain seen in March.

The monthly gains brought the city’s annual growth up to 6.9 per cent, with the average price of a house in Perth currently standing at $578,751.

Meanwhile, the city’s unit market saw a meagre 0.3 increase over April, slowing down from the 1.4 per cent gain seen in March.

On an annual basis, the median price of a unit in Perth is up 4.7 per cent, with the average price tag of an apartment now at $409,747.

Separate data from REIWA showed Perth’s median house sale price stood at $525,000 during April, with the figures unchanged from the previous month.

The suburbs to record the biggest median price growth during the period were Wembley Downs (up 2.9 per cent to $1.31 million), Maddington (up 2.8 per cent to $360,000), Waikiki (up 2.7 per cent to $407,125), Carramar (up 2.7 per cent to $565,000) and City Beach (up 2.5 per cent to $2.33 million).

Other suburbs that saw significant gains in median house prices during the month were Wanneroo, Thornlie, Ballajura, Karrinyup and Mosman Park.

Supply and demand

Strong demand – both from local and interstate buyers – coupled with low levels of stock available on the market, continued to be Perth’s recipe for growth in April.

SQM Research’s latest data showed total residential listings rose by 4.5 per cent over the month, from 21,411 in March to 22,373 in April.

Despite the monthly gain, the annual trend showed listings in the city are down by 0.4 per cent from 25,314 in April 2021.

New listings (or properties that have been on the market less than 30 days) rose by a mere 0.8 per cent from 7,377 in March to 7,438 in April. Compared to April 2021, new listings in the city are up by 7.5 per cent.

Meanwhile, data showed that old listings or property listings over 180 days rose by 2.7 per cent from 3,788 in March to 3,889 in April. Year on year, old housing stock in Perth has declined by 26.2 per cent, indicating strong absorption rates in the West Australian capital.

According to CoreLogic’s director of research Tim Lawless, persistently low levels of property listings help to explain the strength across the smaller capitals and regional markets.

“The cities where housing values are rising more rapidly continue to show a clear lack of available properties to purchase,” the expert said.

He stated this is the case for cities such as Perth, where total residential listings are 4.3 per cent lower than the same period a year ago.

This observation is backed by REIWA’s data, which showed there were 7,920 properties for sale in the city at the end of April.

The figures are 1 per cent higher than March and 11 per cent lower than the end of April 2021.

“Listings for sale remain low across Perth, which is fuelling competition amongst buyers and putting upward pressure on prices. We expect to see more properties come to market as interest rates rise, but not enough to dampen demand,” Mr Collins said.

In a show of strong demand, the median time to sell a house during April was 13 days, which is one day faster than March 2022 and the same as April 2021.

“Median selling times in Perth are back below two weeks which is exceptionally fast. In this market, buyers must be very prepared and willing to act quickly when they see a property they want to purchase,” Mr Collins said.

The fastest-selling suburbs in April were Cooloongup (six days), Tapping (seven days), Waikiki (seven days), Woodvale (seven days) and Bedford (seven days).

Other suburbs to record fast median selling times were Coolbellup, Currambine, Brabham, Heathridge and Bayswater.

Auction markets

Data from CoreLogic showed that over April, a total of 64 properties went under the hammer in Perth, with a final average clearance rate of 52.6 per cent.

If you want to be in the loop about what’s happening across auction markets in the country, follow our weekly updates in our News section.

Vacancy rates

Domain’s data showed Perth’s rental market saw an increase in vacancy rates over the month but still remained low, indicating that tenants are still having a hard time finding an available rental space.

According to the latest data, the city’s vacancy rate stood at 0.6 per cent in April, up by 0.1 basis point from March.

The areas with the highest vacancy rates across Perth were Cottesloe – Claremont (1.3 per cent), Perth City (1.1 per cent), Fremantle (1 per cent), Mandurah (1 per cent), and Melville (0.8 per cent).

Meanwhile, the suburbs of Kwinana, Mundaring, Kalamunda, and Gosnells had the lowest vacancy rate of 0.3 per cent, while Rockingham recorded a rate of 0.4 per cent.

According to Domain, the number of vacant rental listings in Perth increased over the month across most of the capital cities after recording their lowest levels last month.

Despite the increase, Domain noted rental stock still remains low annually and compared to March 2020 (except Melbourne), continuing the recovery post-COVID.

REIWA’s data showed there were 2,446 Perth properties for rent at the end of April, which is 3 per cent more than at the end of March but 14 per cent lower than the same time last year.

Mr Collins acknowledged that a shortage in available rental listings remains a “significant challenge” for Perth’s rental market and that there is no easy resolution for the issue.

“There is no quick solution for this problem, which is why it is imperative that the WA government does not make major changes to the Residential Tenancies Act that will discourage property investment in WA at a time when we desperately need more rental stock,” Mr Collins said.

Rental market

REIWA’s data showed Perth’s weekly rent price averaged $460 in April, indicating an increase of $10 over the month.

This marks the first time average weekly rental prices rose in 2022 and is the highest median rent price the city has recorded.

But Mr Collins noted that while rent prices are at a record high, it has been seven years since the city saw a new rental peak price.

He added that while there have been alarm bells ringing over a rental crisis across the country in recent months, Perth is still a good option for those looking for a bang for their rental buck.

“While it has been a challenging time for tenants, we still have the most affordable rental market in the country,” Mr Collins said.

The suburbs to record the biggest increase in median rent during April were Wilson (up $18 to $438 per week), Southern River (up $20 to $500 per week), Mount Lawley (up $25 to $625 per week), Hammond Park (up $13 to $473) and Warnbro (up $10 to $390 per week).

Other suburbs to record notable increases were Scarborough, Victoria Park, Canning Vale, Wellard and Forrestfield.

In terms of leasing time, it took a median of 16 days for a vacant rental property to be taken off the market during April, which was the same as March and three days faster than April 2021.

The suburbs that recorded the fastest median leasing times during March were Hamilton Hill (12 days), Hammond Park (13 days), Alkimos (13 days), Butler (13 days) and Clarkson (13 days).

Other suburbs to experience fast median leasing times were Success, Willetton, Harrisdale, Spearwood and Byford.

CoreLogic’s data showed that rents for houses and units rose by 6.4 per cent and 5.4 per cent over the year.

Meanwhile, the gross rental yield in the city stood at 4.4 per cent in April, the highest of all capital markets.

Ms Owen predicts the city’s high gross rental yield may cause a short-term increase in demand from the investor segment.

“The city arguably has better prospects for medium-term capital gains, and a low buy-in price,” she said.

“Lending indicators data from the ABS show investors currently comprise only 25.7 per cent of mortgage demand in WA, well below the national average of 35.2 per cent and the second-lowest proportion of investment activity across the states and territories after Darwin,” Ms Owen added.

Where to next for Perth’s market?

Despite Perth’s strong showing so far in 2022, Ms Owen warned that Perth is not immune to the same economic conditions that threaten to claw back much of the gains made in the housing market last year.

Ms Owen added that while several tailwinds may provide more fuel for the Perth market’s growth, further monetary policy tightening may be a “blunt force for housing demand”.

“Perth may eventually follow other Australian markets into a broad-based downswing as a result, just as record-low interest rates aided the recent recovery,” she warned.

The RBA also tempered expectations of further growth in dwelling values for the rest of the year, stating in its latest Financial Stability Review that said both banks and borrowers needed to consider the potential for a drastic drop in property prices.

“After nationwide housing prices increased by 22 per cent over 2021 (the strongest annual growth rate since the late 1980s), the pace of housing price growth moderated in most markets in early 2022,” the review said.

“Future increases in interest rates could also weigh on housing and other asset prices,” the central bank added.

The Reserve Bank also cited the historical relationship between interest rate rises, as well supply and demand factors, and estimated a major fall in property prices could be on the horizon.

“A 200 basis point increase in interest rates from current levels would lower real housing prices by around 15 per cent over a two-year period,” the RBA forecast.

Meanwhile, local experts remain optimistic about Perth’s growth prospects, with Mr Collins expressing his confidence that the city is still positioned for further gains.

“WA’s affordable housing and strong economy mean that most property owners and buyers are in a good position to be able to afford price increases and manage interest rate rises,” he stated.

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