Growth comes after strong performance in 2023
Perth's house prices are projected to grow by 10% in 2024, according to the Real Estate Institute of Western Australia’s 2024 property market quarterly update. This growth comes after a strong performance in 2023, despite multiple interest rate rises throughout the year.
In 2023, Perth's house sale price growth accelerated, reaching a median price of $590,000, which is a new record for the city. This represents an 8.3% increase over the previous year and a 24.2% increase compared to 2020. However, it is only 8.3% higher than the previous peak of $545,000 reached in 2014.
The median unit sale price in Perth remained stagnant for most of 2023 but started to increase towards the end of the year, REIWA reported. It rose by 2% in the December quarter and 0.7% over the year, reaching a median price of $408,000. Despite this increase, the median unit price is still 9.3% below the record of $450,000 set in 2014.
Factors driving the market in 2024
REIWA CEO Cath Hart (pictured above) identified several key drivers for the Perth property market in 2024. Population growth, building completions, and the overall state of the Western Australian economy are expected to have a significant impact on the market.
“WA recorded a 3.1% increase in its population in the year to June, the strongest growth rate in the country, according to the Australian Bureau of Statistics,” Hart said. “That saw our population grow by nearly 87,000 people, with immigration and natural increases. That’s about 35,000 additional households in 12 months, if you assume there are 2.5 people per household. However, in the same timeframe about 14,000 new homes were completed. That’s a shortfall of over 20,000 dwellings, which is putting incredible pressure on the established homes market and driving up prices.”
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The state's strong economy is another contributing factor.
“The latest figures published in the mid-year budget review suggest the economy will remain strong, with the State Final Demand revised up from 3% at budget time to 4.5%. This builds on growth of 3.8 per cent in 2022-23,” Hart said. “Labour market conditions also remain strong, with employment growth more than double the budget forecast and the average unemployment rate over 2023-24 revised down to 3.755 from 4%. Mining, which is a significant contributor to the WA economy, is also performing well.”
Rental market trends
In addition to house prices, the rental market in Perth also experienced significant growth in 2023. The median dwelling rent reached a new high of $600 per week at the end of December, representing a 15.4% increase compared to the previous year. The median weekly house rent price also set a new record, rising 12.7% over the year to $620.
The rental market in Perth is expected to remain challenging for tenants in 2024, REIWA reported. Strong demand, driven by population growth and limited supply, continues to put upward pressure on rental prices. While the state government is implementing measures to boost supply, it will take time to increase the number of available rental properties. As a result, the pressure on the rental market is likely to persist.
Regional WA property market
The regional property market in Western Australia also experienced varying levels of growth in 2023, REIWA reported.
Some regional centres, such as Busselton and Albany, saw strong growth during the pandemic, and their house price growth rates are expected to slow in 2024. However, Bunbury, which offers affordability and employment opportunities, is likely to continue performing well. Port Hedland is also expected to perform strongly due to the expansion of the resource sector.
Rent prices in regional areas have also shown strong growth, with most regional centres reaching record highs, according to REIWA. The shortage of rental properties in these areas, coupled with strong demand driven by development and population growth, is expected to keep rental prices on an upward trajectory in 2024.
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