Low supply and high affordability will largely offset jumps, peak body posits
Interest rate rises are unlikely to dampen demand for property in Western Australia, according to a peak real estate body.
Damian Collins, president of the Real Estate Institute of Western Australia, said that REIWA predicted a 10% rise in Perth property prices during the 2022 calendar year.
“This forecast, which was released late last year, considered the interest rate rises that were expected to occur in 2022, with REIWA not anticipating moderate rises to have much impact on our local property market,” Collins wrote in a blog.
Collins wrote that there were several reasons REIWA expected the impact of rising rates to be smaller in WA than other locations.
“One key reason is our low levels of listing stock,” he wrote. “At the end of April, reiwa.com data shows there were 7,920 properties listed for sale. To put that figure in context, we consider a balanced market to be around 12,000-13,000 properties for sale.”
With fewer properties available and building competition sluggish, competition among WA buyers is fierce, REIWA said. In April, the median time to sell a home dropped to just 13 days. The fastest-selling Perth suburbs were Cooloongup (six days), Tapping, Wakiki, Woodvale, Bedford, Coolbellup, Currambine (all seven days), Brabham, Heathridge, and Bayswater (all eight days).
“While interest rate rises will certainly have some impact on demand, there will not be enough new properties and listings coming to market to sufficiently stifle competition among buyers,” Collins wrote.
Read next: REIWA lauds WA housing measures
Another key reason for REIWA’s confidence is that WA continues to boast the country’s most affordable housing.
While Perth home values rose 13% last year and are up a further 3% so far this year, it still has the cheapest median sale price of any capital city in Australia at $525,000. By comparison, the median house sale prices in Sydney and Melbourne are $1.6 million and $1.125 million, respectively.
“WA’s affordable housing and strong economy means that most property owners and buyers are in a good position to be able to afford price increases and manage interest rate rises,” Collins wrote.
