"Houses are selling like hotcakes," says peak body head
House prices in Western Australia are expected to experience moderate growth throughout 2023, according to a new property market report.
The median house price is projected to potentially reach $580,000 by the end of the year, the Real Estate Institute of Western Australia reported. Additionally, rents are expected to continue rising.
In the first quarter of the year, the median house price saw a growth of 0.9%. This was followed by a nearly 2% increase in the June and September quarters, bringing the median house price to $570,000. Overall, this represents a total growth of 4.6% since the end of 2022.
“Resilience was the theme earlier this year, but ‘records’ is the key word now,” said REIWA CEO Cath Hart. “In the last quarter we’ve seen new records for house prices, the median time to sell and a new record low in the number of listings advertised for sale.”
The strong appetite for WA property is driven by a population growth rate of 2.8% in the year to March, the highest in the country. However, the availability of housing stock remains low, with the number of homes coming to the market being 6.3% lower than the same period last year. Despite this, the number of sales has increased by 16.4%, reflecting the strong demand.
“Houses are selling like hotcakes and the number advertised on www.reiwa.com hit a 30-year low of 4,931 at the end of September, well below the 12,000 that is considered a balanced market,” Hart said.
While house prices are rising, Western Australia remains one of the most affordable places to buy property in the country. The combination of higher-than-average incomes and lower-than-average mortgages makes it easier for people to buy and service a mortgage, despite the significant rise in interest rates since May 2022, REIWA reported.
In contrast to the house market, the unit market has not performed as well, with a 1.2% decrease in the median price from the end of last year to $400,000 at the end of September.
WA rental market
The rental market has also experienced new records in the third quarter of the year. The median house rent reached a record high of $600 per week at the end of August, compared to $550 in December 2022, according to REIWA. Similarly, the median unit rent price rose from $475 at the end of last year to $550 in August.
The rental market remains challenging for tenants, with a vacancy rate that has remained extremely low. Despite a slight increase to 0.9% in July, the vacancy rate dropped back to 0.7% in September, REIWA reported. Property managers continue to see high demand and low supply, resulting in queues at home opens and multiple applications for rental properties.
The tight rental market is expected to maintain upward pressure on prices, and median rents are anticipated to increase throughout the remainder of the year.
Regional WA
Regional centres in Western Australia have shown similar growth rates to Perth in terms of house prices. Rent prices in some regional centres have also reached record highs. While the South-West region experienced strong growth during the pandemic, the focus has shifted to the North-West, with Karratha and Port Hedland among the top performers for both house price growth and rent price growth.
“Lifestyle was a key driver for the southern regions, particularly during the early stages of COVID,” Hart said. “However, employment is a factor now. There are a lot of regions investing in infrastructure or with organisations looking to expand. There is demand for employees and they need to be housed. This difficulty in finding housing though is hampering expansion and is seeing some businesses look to different solutions, such as buying motels to house their staff or buying homes to rent to staff.”
Hart said that regional WA faced the same issues as Perth, and was seeing similar upward pressure on prices.
“Regional buyers and tenants are facing the same constraints as those in Perth,” she said. “And while building in Perth still has some challenges, it is harder in the regions and this is continuing to focus demand on established homes.”
Have something to say about this story? Let us know in the comments below.
