Unit prices expected to stay relatively stable
According to a recent quarterly update by the Real Estate Institute of Western Australia, house prices in Perth are on track to see moderate growth in 2023, while unit prices are expected to remain relatively stable.
“Perth’s annual median house price has increased 1.5% to $552,000 since the end of 2022,” REIWA CEO Cath Hart said. “Resilience has been the theme for 2023 so far, with house prices continuing to grow in the face of 12 interest rate rises. Demand for homes is strong and is supported by population growth. This is expected to continue, with WA recording a 2.3% increase in its population over the year to December 2022 and forecast to grow another 1.8% in 2023-24.”
However, the unit market experienced an annual median price drop of 1.5% to $399,000 from the end of last year. REIWA cited building completions and interest rates as the wildcards for the market.
“There are over 20,000 homes under construction at the moment and as they are completed we will see people move out of their current residence and into a new home, freeing up some supply in the sales and rental markets. This is already starting to be seen in the rental market,” Hart said. “However, this won’t have a significant negative impact on prices as population growth will offset the increase in supply. In addition, these homes will not all be completed at the same time, so the market will not be flooded by more properties to sell or rent.”
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While house prices have shown resilience to interest rate changes, it was noted that there has been a decrease in sales activity, particularly in the sub-$500,000 price bracket segment of the market. Buyers and homeowners' budgets are more sensitive to the increase in interest rates and cost of living.
The rental market in Perth continues to remain challenging for tenants, with the median house price reaching a record $580 per week at the end of June, up from $550 in December 2022, REIWA reported.
Hart noted that there were multiple applications and that demand would maintain pressure on prices, with median rents expected to increase as 12-month fixed-term leases come up for renewal at current prices.
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