Local housing market shows "remarkable resilience," but rental crisis continues as investors flee, says peak body boss
Perth housing prices will remain steady in the first half of 2023, but rent prices will continue to climb, according to a new forecast by the Real Estate Institute of Western Australia.
The median house price in Perth inched up in the first quarter, posting a rise of 0.9%, from $540,000 to $545,000, according to REIWA CEO Cath Hart.
“The local market has shown remarkable resilience in the face of 10 interest rates rises, backed by strong demand and affordable prices,” Hart said. “We expect prices to continue to hold firm in the next quarter even if there are one or two more rate rises. However, should we see a period of interest rate stability or even cuts, we would expect to see consumer confidence rise, boosting activity and prices. Low price growth is still a possibility across 2023.”
While the home sales market has been stable, Perth’s rental crisis continues, with prices up 5.8% since the end of 2022, REIWA reported.
“This has been fuelled by declining supply and increasing demand, and more rent price increases are expected this year,” Hart said. “It will take something significant to change the rental market.”
Perth home sales
Properties continued to move quickly in the first quarter, according to REIWA data, selling in a median 13 days in March.
“The number of listings for sale hit a 12-year low of 6,931 at the end of December 2022, and we have seen the number of properties for sale drop even lower than that recently,” Hart said. “Properties are still coming to the market at good numbers, and at levels higher than pre-COVID, so the low number of listings on reiwa.com is more a reflection of the speed of sales rather than a lack of properties. We do expect the speed and number of sales to decline slightly in April, which is typically a quieter month.”
Housing demand in Western Australia is expected to remain relatively strong, bolstered by population growth.
“WA’s population grew 1.8% in the year to September 2022, and the state government’s recent mid-year budget review forecast further growth of 1.5% in 2022/23 and again in 2023/24,” Hart said. “As more people arrive in WA, this will maintain the demand for housing and keep listings low. And with such tight rental conditions, more people will look to buy rather than rent.”
Rental market
With supply still a major issue, tenants are facing a challenging 2023, Hart said.
“The vacancy rate was 0.7% in January, February and March,” she said. “Homes are leasing in a median 14 days and property managers are still seeing queues at home opens and receiving multiple applications.”
Hart warned that some prospective tenants, desperate to find a home, are being cheated.
Unfortunately, some tenants are using platforms like Gumtree or Marketplace to look for rental properties and falling victim to scammers,” she said. “We remind people they should follow proper processes and to use legitimate real estate websites to apply for rentals.”
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Hart said dwindling supply continued to tighten the screws on the WA rental market.
“Investors continue to leave the market, with 800 fewer rental properties available now than at the start of the year and a decline of 19,200 since January 2021,” she said. “And while many of our members are reporting interest from eastern state investors who see value in the WA market, it hasn’t been enough to replace the properties that have been lost.”
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