"Strong demand is maintaining pressure on the market"
Perth's median rent prices reached new highs in August, according to the Real Estate Institute of Western Australia.
After remaining stagnant at $550 per week since March, the median dwelling rent rose to $575, reflecting increases in both house and unit rents. House rents increased to $600 per week, while unit rents reached $550 per week.
According to Cath Hart, REIWA CEO, market conditions suggest that further increases are likely.
“Strong demand is maintaining pressure on the market, with rental listings falling below 1,700 at the end of the month,” Hart said. “They dropped below 1,500 for the two weeks around Christmas and New Year, but other than that they are at their lowest levels for over a decade. While members are reporting a lot of activity from Eastern States buyers and builders are reporting increasing completions, supply can’t keep up with demand. Unfortunately, the green shoots we saw in the last two months didn’t bear fruit and under current conditions we expect the vacancy rate to tighten towards the end of the year.”
The suburbs that experienced the most significant growth in their median rent prices in August were Erskine, which saw a 47% increase to $515 per week, followed by North Fremantle (38% increase to $900), Lathlain (32% increase to $600), Quinns Rocks (31% increase to $700), and Joondanna (29% increase to $600).
As of the end of August, there were 1,673 properties available for rent on REIWA's website, which is a 10.2% decrease from July and 12.2% lower than August 2022. Hart said that rental listings typically decline towards the end of the year, suggesting that the market will tighten further leading up to Christmas.
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One of the major challenges facing the market is the limited supply of rental properties. The average number of new home builds in Western Australia should be around 22,000 per year, but it has fallen short in recent years, REIWA reported. Additionally, there is concern about the lack of new builds in the apartment market, as there have been only two new starts this year, significantly lower than the average of 14 new builds per year. These supply issues are expected to have repercussions in the coming years.
In terms of leasing times, it took a median of 15 days to lease a rental property in August, one day faster than in July. The suburbs with the fastest median leasing times were Erskine (four days), Willetton and Coolbellup (eight days), and Maddington, Girrawheen, Innaloo, and Wembley (nine days).
Sales market
Moving to the sales market, Perth's median house price increased to $562,550, while unit prices remained steady at $400,000. The underlying trends suggest that further growth can be expected throughout the rest of the year, albeit at a slower rate, REIWA said.
The top-performing suburbs for house price growth in August were Wannanup (up 4.1% to $619,000), Swan View (up 2.2% to $460,000), Nedlands (up 2% to $2,000,000), Warnbro (up 1.8% to $460,000), and Craigie (up 1.8% to $580,000).
According to CoreLogic's home value index, Perth experienced a 0.9% increase in home values in August and a 2.9% increase over the past three months. Perth, Adelaide, and Sydney are the only capital cities that have shown growth over the past year, with Perth leading the way with a 4.5% increase.
As of the end of August, there were 5,170 properties available for sale in Perth, which is 1% higher than July but 36.8% lower than the previous year. Properties are selling rapidly, which has resulted in a low number of listings on REIWA's website. Certain suburbs, such as Greenfields, are particularly popular, with properties being sold within days of being listed.
The median time to sell a house in August remained unchanged from July at 10 days, eight days faster than a year ago. Interestingly, the speed of unit sales has increased, with units selling in a median of 16 days in August, compared to over 20 days earlier this year and 35 days a year ago. Units are attracting buyers due to their affordability and proximity to popular lifestyle precincts or the city centre, according to REIWA. They also offer good rental yields, making them appealing to investors.
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