Property market update: Perth, March 2022

The long-awaited restart was not only a reprieve for the state’s economy but also gave Perth’s property market a shot in the arm, as the rebound in market activity helped the city post another month of growth in property values. 

The monthly gain also indicates the city’s resilience as the property boom that filled the country’s headlines in the last two years also began to lose its spark. 

CoreLogic’s latest report showed price growth in Australia’s two biggest cities, Melbourne and Sydney, has come to a standstill, suggesting both markets have well and truly peaked. 

In other parts of the country, gains have seen a surprising boost in March, and there may be more gas left in the tank. 

According to CoreLogic’s research director Tim Lawless, the market has evolved from what once can be described as a uniform and broad-based upswing to a “multi-speed” boom. 

“At one end of the spectrum Australia’s two largest cities, Sydney and Melbourne, are recording flat to falling housing values, while at the other is Brisbane and Adelaide, where the quarterly pace of growth continues to rise at an annualised pace of more than 20 per cent,” Mr Lawless said.

The expert stated that while the monthly rate of growth was up among some cities and regions, there is rising evidence that housing growth rates are losing momentum.  

“Virtually every capital city and major rest-of-state region has moved through a peak in the trend rate of growth some time last year or earlier this year,” Mr Lawless said.  

But he pointed out that there are outliers to this trend. “There are a few exceptions to the slowdown, with regional South Australia recording a new cyclical high over the March quarter and some momentum is returning to the Perth market where the rate of growth is once again trending higher since WA re-opened its borders,” he said. 

REIWA president Damian Collins said that Perth’s property market has experienced strong market conditions since the end of 2020 and there are no signs of this momentum slowing.

Weekly reported sales in the city hit a 12-year high in March, indicating strong demand. “The appetite for property is strong in Perth. If this sales trajectory continues, we are very likely to see another solid year of price growth,” Mr Collins said.

He also expressed his confidence that headwinds forecast to weaken the real estate markets in the coming months – particularly an impending interest rate hike by as early as June 2022 – will not rattle the city’s strong outlook. 

“Even with interest rates tipped to increase later this year, WA is in a very good position. We have the most affordable housing in the country and one of the strongest economies in the world,” Mr Collins said.

Will Perth continue to be one of the last men (or rather cities) standing tall in the property boom in the coming months? For now, let’s take a closer look at how Perth performed in March 2022.  

Property values 

CoreLogic reported that the median value of a property in Perth increased by 1 per cent in March, accelerating from the 0.3 per cent in February. 

The figures mark the third 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 1.9 per cent, edging up from the 1.3 per cent increase seen in the previous rolling three-month period. 

Compared to March 2021, property values in the city have risen by 7 per cent, bringing the median dwelling value to $535,335. This represents a monthly price increase of $7,000 month-on-month.

The city’s dwelling values remain one of the lowest among capital markets, with prices in Perth only above that of Darwin’s $495,573. Perth’s price point also strikes a dramatic contrast with Sydney’s $1,116,889, Melbourne’s $805,232, and Brisbane’s $749,293 median values.

Median values for houses in Perth rose 1 per cent over the month, up from the 0.3 per cent seen in February. 

Compared to the same period last year, Perth house prices have risen by 7.2 per cent, with the average cost of a detached house in the city now selling for  $568,108. The figures indicate a more than $8.20 increase in median prices on a monthly basis.  

Meanwhile, the city’s unit sector rose by 0.6 per cent month-on-month, a marked improvement from the 0.1 per cent gain recorded in February.   

Compared to March 2021, Perth’s unit prices are now up 5.6 per cent, with the city’s units now selling for an average value of $406,120. Over the month, median unit prices have risen by over $4,000. 

Meanwhile, data from REIWA showed Perth’s median house sale price was $525,000 in March, with the figures unchanged from the previous month. 

Commenting on the figures, Mr Collins said: “Perth is firmly on track to achieve the 10 per cent price growth forecast by REIWA last year.” 

The suburbs to see the biggest increase in median house sale price growth during the month were East Fremantle (up 4.8 per cent to $1.376 million), Mount Hawthorn (up 4.3 per cent to $1.16 million), Treeby (up 3.8 per cent to $577,000), East Victoria Park (up 2.8 per cent to $705,000) and Waikiki (up 2.6 per cent to $390,000), according to REIWA. 

Other big movers during the month were Yangebup, Craigie, Lakelands, Spearwood and Swan View.

Separate data from REIWA also showed that the value of homes across Perth had increased almost 22 per cent two years since the pandemic hit in March 2020. 

Supply and demand

Strong demand from buyers meant supply continued to be tight in Perth at the end of March. 

CoreLogic data showed total advertised stock levels in the city are 6.2 per cent lower than they were 12 months ago. New listings in the city are also down by 0.8 per cent compared to the same period last year.  

According to CoreLogic, the supply levels in capital cities help explain the divergence in housing growth trends. 

Mr Lawless said the cities where housing values are still increasing continue to show a clear lack of available properties to purchase.

Meanwhile, SQM Research’s data showed total listing volumes in the city rose by 1.8 per cent in March to 21,411 from 21,128 in the previous month. Compared to 12 months ago, total residential listings have increased by 0.5 percent. 

Perth’s new listings (or properties that have been on the market less than 30 days) saw a 0.3 per cent increase over the month from 7,356 to 7,377.  Compared to the same period last year, new listings in the city are also up by 13.7 per cent, the biggest annual decline among capital cities. 

Meanwhile, data revealed that old listings or property listings over 180 days fell by 0.1 per cent from 3,793 in March to 3,788 in February. On an annual basis, old listings in the Western Australian capital have fallen by 28.5 per cent. 

Louis Christopher, the managing director of SQM Research, said there is still a shortage of stock in the market.

The expert also noted that the stock in the market could continue to decline in the coming months. “Going forward I expect we will shortly enter into a lacklustre period of activity in the lead up to the federal election. After that point, there will be a looming interest rate rise for the market to consider,” he said.

Data from REIWA revealed there were 7,796 properties for sale at the end of March, which is 2 per cent higher than February and 6 per cent lower than the end of March 2021.

“We saw a slight increase in for sale stock over the month, but listings remain very low – especially when compared to historical averages,” Mr Collins said.

In terms of demand, CoreLogic reported that sales activity in the city continued to be high. 

Compared to the same period last year, data showed Perth has seen an increase of 40 per cent in the number of transactions.

Local data backs this observation, as REIWA reported sales in the city hit a 12-year high in March, indicating an average of 1,078 transactions per week.

In another indication of strong demand, REIWA reported that the median time to sell a house during March was 15 days, which is one day faster than February 2022 and the same as March 2021.

“Properties are still selling very quickly in Perth, with buyers needing to act quickly and competitively in order to secure the property,” Mr Collins said.

The fastest-selling suburbs in March were Merriwa (six days), Woodvale (six days), Tapping (seven days), Carramar (seven days) and Currambine (seven days), according to the state’s peak real estate body. 

Other suburbs to record fast median selling times were Cooloongup, Harrisdale, Kingsley, Atwell and Floreat.

Vacancy rates 

Perth’s tight rental market was not afforded some breathing room in March, as rental supply continued to be outpaced by demand. 

Data from SQM Research showed the city’s vacancy rate fell from 0.6 in February to 0.5 per cent in March. The figures are also down from the 0.9 per cent vacancy rate recorded in the same period last year. 

The monthly decline caused the number of available rental listings in the city to decline from 1,390 in February to 1,204 in March. 

Mr Christopher said the figures showed that the rental crisis has deepened, with the national vacancy rate collapsing to 1 per cent. “As a result, market rents have exploded. Some of our capital cities and regions are recording asking rental increases in excess of 15 per cent  over the past 12 months,” he said. 

He further warned that the worst is yet to come. “The recent monthly data suggests we are still not at the worst point of the crisis. We were thinking at least regional Australia may have started to have some relief as people return back to the cities. But that has not happened as of yet,” the expert explained. 

Mr Christopher said that with many localities and towns having rental vacancy rates close to zero, actions must be taken to avert the crisis. 

“Clearly, we are not going to resolve this overnight, but I do hope the various state and territory governments will ramp up their rental assistance packages in order to cushion the rental accommodation emergency we have here and now,” he said.

Domain’s data painted a similar picture, with Perth’s vacancy rate standing at a record low of 0.5 per cent for the month. The figures are unchanged from the previous month and lower than the 0.6 per cent level seen in March 2021. 

Tenants looking to rent in Armadale, Kalamunda, Mundaring, Bayswater – Bassendean, and Gosnells would find it hard to find a vacant listing, as the suburbs all recorded the lowest vacancy rates in the city at 0.3 per cent. 

On the one hand, the areas with the highest vacancy rates were Cottesloe – Claremont (1 per cent), Perth City (0.9 per cent), Canning (0.7 per cent), Melville (0.5 per cent), and Fremantle (0.5 per cent).  

According to Domain, the number of vacant rental listings continues to trend lower across most of the capital cities, with increasing demand in the first quarter of 2022 absorbing availability.  

It noted that rental stock is significantly lower in most capitals annually and compared to March 2020 (except Melbourne), indicating a sharp recovery in the rental market. 

REIWA’s data showed there were 2,364 properties for rent on reiwa.com.au at the end of March, which is 9 per cent more than there were at the end of February.

While listings for rent increased during the month, Mr Collins admitted that the city is still a long way off from rectifying the rental shortage. “We need to entice investors back to the WA market to help house tenants and keep our rental market affordable,” he said. 

Data from REIWA also revealed that it took an average of 16 days to lease a rental during March, which was the same as February and three days faster than March 2021.

The suburbs that recorded the fastest median leasing times during March were Wellard (10 days), Piara Waters (11 days), Parmelia (12 days), Willetton (12 days) and Alkimos (13 days).

Other suburbs to record fast median leasing times were Butler, Canning Vale, Harrisdale, Innaloo and Maylands.

Rental market

Domain’s latest rental report brought welcome news for landlords in Perth, as low rental supply and high demand continued to bolster rental prices in the city. 

House rents rose 4.3 per cent over the quarter to $480, a weekly rate that is only $10 lower than the mid-2013 record. Compared to the same period last year, the figures are up by 11.6 per cent. 

Meanwhile, unit rents hit their highest point since 2014 at $400 a week, after increasing 2.6 per cent over the quarter and 8.1 per cent over the year. 

Investors will also find that gross rental yields for houses and units are at the highest point on record for Perth, standing at 5.24 per cent and 5.93 per cent, respectively, at the end of the month.  

Domain highlighted that Perth house rents are poised to hit a new record in the coming quarter as it would only need half of the growth recorded over the recent quarter for rents in the sector to be back at the record high of 2013. 

The report also declared that Perth is a landlord’s market and remains one of the more competitive capital cities for tenants, driving rent increases.

The boost in demand was attributed to the lifting of strict Western Australia border controls in early March, which freely allowed an easier relocation from overseas and interstate, according to Domain. 

Strong migration into the city is also seen as the main driver of demand, which has been a huge change for the Western Australian capital that had seen a drain of residents in recent years. 

Domain forecasts that open borders, high vaccination rates, and eased restrictions could provide clarity for residents and could create a shift in tenancies, with some residents choosing to return home.

Separate figures from SQM showed that rent prices for a house in the city jumped 12.2 per cent in the 12 months to $580 per week.

Unit rents in the city also rose 11.7 over the year, bringing the weekly rate to a record high of $431 a week.

Meanwhile, REIWA’s data showed the median rent price held at $450 per week for a fourth straight month during March.

“It is quite remarkable that the median rent price has been unchanged since December given how fierce competition for rentals is. Despite the rental shortage, WA tenants continue to enjoy the most affordable rental environment in the country,” Mr Collins said.

The suburbs to see the biggest gains in median rent during the month were Applecross (up $90 to $740 per week), Canning Vale (up $20 to $520 per week), Maylands (up $15 to $475 per week), Willetton (up $15 to $495 per week) and Armadale (up $10 to $340 per week).

Other suburbs to record significant increases were Como, Spearwood, Byford, Banksia Grove and Secret Harbour.

Outlook for Perth’s market 

CoreLogic said that while some cities continued to record solid gains last month, the outlook for housing remains “skewed to the downside”.

The property data provided noted that in addition to rising fixed-mortgage rates and the prospect of higher variable interest rates later this year, other factors such as rising inflation, affordability issues, increasing supply, and worsening consumer sentiment are also seen to add the pressure against price growth, according to CoreLogic. 

“The pace of growth in housing values started to ease in April last year, when fixed-term mortgage rates began to face upwards pressure, fiscal support was expiring and housing affordability was becoming more stretched.

“With rising global uncertainty and the potential for weaker consumer sentiment amidst tighter monetary policy settings, the downside risk for housing markets has become more pronounced in recent months,” Mr Lawless said.

But local observers are more optimistic about Perth’s growth prospects. Mr Collins highlighted the city’s advantages over other capital markets for buyers, particularly the Western Australian capital’s status as the most affordable Australian capital city to live in. 

“Perth is in a very enviable position compared to its eastern state counterparts. Our strong economy, resilient property market and affordable house prices has kept the Australian dream of home ownership alive and well in WA,” he stated. 

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