Property market update: Perth, September 2021

As the city notches staggering growth figures nine months into 2021, Perth’s days of being in the shadows of its bigger capital city counterparts seem to be a thing of the past. Following a lacklustre 2020, recent data shows that the Western Australian capital is firmly on track to end the current year with solid gains. 

“The turnaround of the WA market has been remarkably fast considering the downturn only hit rock bottom last year. We expect this recovery to continue throughout the remainder of 2021 and into 2022,” REIWA President Damian Collins said. 

In addition to the “perfect storm” of conditions supporting the widespread property market boom in Australia (e.g. low supply, high demand, low-interest rates), Perth’s tight market conditions are also underpinned by unique economic factors. The state’s commodity boom, labour shortage, and recorded population growth have also fueled the Western Australian capital’s price growth, experts said. 

As the spring selling market revs on, how will the Western Australian capital close out the year? For now, let’s see what went down in Perth’s property market in September 2021. 

Property values 

The latest data from CoreLogic showed that dwelling values in the city have only lifted by 0.3 per cent in September on a monthly basis. While the latest monthly figures indicate slowing growth, the bigger picture tells a brighter story. 

The analytics firm revised the annual price growth reported in June, which was originally posted as only 10.8 per cent. Perth was not included in CoreLogic’s monthly data report after the company noticed problems with one of its data sources, which had significantly undervalued homes in the city. The annual rate of growth was undervalued by 8.4 per cent. 

The updated September figures showed Perth’s property values have increased by 18.1 per cent in the past year. 

The price movement puts the median value of dwellings in the Western Australian capital at $524,589, which still makes it the cheapest capital city after Darwin. Meanwhile, regional Western Australia values were up 19.9 per cent over the past year.

Commenting on the CoreLogic figures, Mr Collins said it revealed that the city’s price growth trajectory had performed even better than anticipated, which was welcome news for home owners and sellers.

According to CoreLogic, median values for houses in Perth rose up 0.4 per cent over the month of September, and the current median value for a house in the city now sits at $548,351. Compared to the same period last year, Perth house prices have risen by 18.5 per cent. 

On the other hand, Perth’s unit market saw no price movement in September. Median unit values in the city now sit at $398,502. Compared to September 2020, unit prices in Perth are now up 15 per cent. 

The CoreLogic figures are supported by the REIWA’s data, which shows Perth’s recovery is being observed across all price points and segments in the market. 

Data from REIWA showed Perth’s s median house sale price was $520,000 in September, with 71 suburbs notching up price growth during the month.

The suburbs to record the biggest price growth in September were Cooloongup (up 4.5 per cent to $320,000), Bicton (up 4 per cent to $1.25 million), City Beach (up 3.4 per cent to $2.175 million), Spearwood (up 3.4 per cent to $500,000), and Harrisdale (up 2.8 per cent to $530,000).

Other suburbs that saw solid price gains during the period were Wanneroo, Forrestfield, Leda, Coolbellup, and Quinns Rock.

Of the 50 top-performing suburbs for median house sale price growth during the year to September 2021, twenty-one suburbs were priced in the lower end of the market. Meanwhile, 16 suburbs were in the middle and 13 suburbs were from the $1 million and above price bracket.

Further analysis from REIWA found three Perth suburbs had growth rates exceeding 30 per cent, while 11 recorded median house sale price growth above 20 per cent.

“It’s very encouraging that so many suburbs experienced price growth in September. The Perth market recovery is widespread and being felt across all price points and sub-markets,”  Mr Collins said.

Supply and demand  

Perth sellers are continuing to win big in Western Australia’s hot property market, with many vendors enjoying multiple offers when selling off their homes due to the shortage in supply.

According to REIWA, there were 8,368 properties for sale across Perth at the end of September, which is 2 per cent more than at the end of August. The total number of residential listings is 21 per cent lower than they were at the end of September last year. 

Annually, listings for sale are 21 per cent lower than they were at the end of September 2020, REIWA noted. 

Meanwhile, figures released by SQM Research showed total residential property listings in Perth rose in September 2021 by 0.8 per cent to 20,867 from 20,706 in August 2021.

Despite the monthly increase, property listings in the city are trending downwards on an annual basis. Over the year, the number of properties for sale in the city has fallen by 6.3 per cent from 22,272 in September 2020. 

With the spring selling season now underway, the city is seeing an increase in listing stock as more sellers come to market, Mr Collins noted. 

“We expect listing volumes will continue to grow in the coming months as more West Australians choose to take advantage of Perth’s strong price growth by listing their house for sale,” he said. 

On the demand side, buyers are snatching up properties — fast. REIWA reported that the median time to sell a home in Perth during September was 17 days, which is one day faster than it took in August and 11 days faster than September 2020.

The five fastest-selling suburbs in September were City Beach (five days), Heathridge (six days), North Perth (six days), Kingsley (seven days), and Ocean Reef (seven days), according to REIWA. 

“Properties are still selling very quickly in Perth, which illustrates that competition amongst buyers to secure a property remains high,” Mr Collins said.

According to property investment consultancy Momentum Wealth, the city can expect home selling activity to be consistent for quite some time as buyers continue to baulk at the lengthy wait times in the building market.

The firm’s research showed that Perth housing approvals had seen a surge in the last 12 months, but new home deliveries had been slow due to unsolved labour constraints, supply-chain issues and building materials in hot demand from international building booms and the mining industry.

Momentum Wealth general manager Jennifer Wakeman said labour was most in-demand in Western Australia’s booming mineral resources and construction sectors, leading the Perth market to be further tightened by the interest of skilled tradespeople.

“Limits on cross-border movement mean it’s currently challenging to recruit interstate, but as borders open up, there will be more interstate migration from skilled tradespeople and professional workers to fill roles,” Ms Wakeman commented. 

She said the development would have a domino effect on the property market. “This, in turn, will increase demand for housing, tightening stock further and pushing up prices,” she said. 

Auction rates  

According to CoreLogic, a total of 61 properties were taken to auction in Perth over September. Out of the 60 results collected, 38 auctions resulted in a sale.  

To keep track of the country’s auction market activity, check Smart Property Investment’s News page for the latest weekly auction results and previews. 

Rental market 

Perth tenants continue to grapple with record-high rents amid low rental supply in September. However, data shows that the rapid rate of rental growth in the Western Australian capital is beginning to stabilise.

Domain’s Rent Report showed that while house rents in the city rose 13.9 per cent during the year to September to $450 per week (the highest annual change recorded since 2015), prices continue to be unchanged on a quarterly basis. 

Meanwhile, weekly average rents for units remained unchanged during the September quarter at $380 and were $70 a week less than 2013 levels.

Domain chief of research and economics Nicola Powell said the stabilisation in rents was a new development from the past year, which saw the biggest upward movement in asking rents in more than a decade.

“I think what the story really is for Perth is these steady asking rents are a real shift from the rapid rent growth that we had seen because there had been four consecutive quarters of strong rates of growth in asking rents,” she said.

The expert also noted that the figures indicate that the peak rate of rent growth has passed due to the significant change in a very short span of time. 

Further commenting on the city’s rental market, she said that Perth was now the third most affordable capital city in which to rent a house or unit, which is a marked shift from last year. 

“[We] have to remember that mid-last year, Perth had the most affordable rents, so it has been such a change,” she said.

Meanwhile, Mr Collins acknowledged that rental shortage continues to affect the city’s rental market conditions. At the end of September, REIWA reported there were 2,253 properties for rent listed on their website. 

“Investors must remain an active part of the WA market, so there are enough rentals to house tenants and keep rents affordable,” he said.

It took a median of 18 days to lease a rental during September, which was one day faster than August and one day faster than September 2020, according to REIWA. 

Despite the strong competition amongst tenants to secure a rental, median rent price growth has slowed in Perth. 

REIWA figures showed the city’s median rent was unchanged over the month, holding at $430 per week in September and only up by $5 on a quarterly basis. 

“WA is the most affordable place in the entire country to rent. It’s important that we actively encourage investment in WA to ensure we retain the most affordable rental environment in Australia,” Mr Collins said.

Vacancy rates 

Perth’s vacancy rate further tightened in September to 0.6 per cent from 0.7 per cent in August, according to Domain. The monthly figures indicate that the percentage of properties open to tenants in the Western Australian capital is at a multi-year low.

The areas with the highest vacancy rates across Perth were Perth City (1.4 per cent), South Perth (0.9 per cent), Cottesloe – Claremont (0.9 per cent), Joondalup (0.7 per cent), and Mandurah (0.6 per cent). 

Meanwhile, the areas with the lowest vacancy rates were Kwinana, Gosnells, Kalamunda, and Rockingham, with 0.2 per cent. Wanneroo came in fifth place with 0.3 per cent. 

The tighter rental market conditions in the Western Australian capital could push asking rents higher, Domain noted, as tenants compete for reduced supply. 

As the states and territories move closer to their mass vaccination targets, the road map to opening up is becoming more clear, according to Domain.

Experts noted that the “reopening” of cities that were locked down by the recent Delta outbreak would be “a welcome boost to landlords” as the rental market becomes more competitive. On the one hand, tenants will likely face the prospect of higher rents.

What’s next for Perth’s property market?

As cities emerge out of lockdowns and as Australia reopens its borders, market observers are now closely monitoring which state or territory will flourish under the “new normal”.

Generally, Perth’s prospects for the remainder of 2021 continue to be positive. 

Mr Collins predicts that the city will continue to rebound as the spring season continues to heat up. “With the spring selling season now underway, Perth buyers are emerging from the winter slowdown ready to buy,” he said. 

The expert’s sentiment that Perth will see continued strength until the end of 2021 is shared by other market commentators. 

Westpac’s senior economist Matthew Hassan expects that the Western Australian capital’s housing sector will notch a 15 per cent growth at the end of the year. The optimistic forecast came after APRA’s move to tighten lending rules to cool down the markets. 

Mr Hassan said that while the move came “earlier than expected” he assesses that its impact on the market would be “marginal”.

To learn more about how APRA’s recent move may affect property markets, you can read our article or let our local Property Nerds help you cut the waffle on the regulator’s latest move. 

What are your predictions for Perth’s property market for the rest of 2021? Make sure you don’t miss out on anything happening in the real estate market by checking Smart Property Investment’s News Section, subscribing to our newsletter or tuning in to our podcasts!