Perth ‘well placed’ to weather rate hike storm, says REIWA

Perth’s property market cut a steady figure among its capital market peers in the face of rising interest rates in November, according to the latest data from CoreLogic.

Data showed that the West Australian capital’s home value index remained stable during the period, remaining unchanged over the month.

For comparison, other cities are recording steep retreat in property values on a monthly basis, with Brisbane and Hobart being the biggest decliners at 2 per cent. 

The only other city to buck the downturn was Darwin, with the Tasmanian capital posting a 0.2 per cent increase month on month.

REIWA chief executive Cath Hart said the Perth index had hardly changed since May when interest rates started rising. 

“Rising interest rates have clearly impacted prices and borrowing capacity in the eastern states. Perth, on the other hand, is very well placed to weather the changes in interest rates,” she stated. 

The Reserve Bank of Australia (RBA) kicked off its monetary policy tightening cycle in May with a 25 basis points cash rate hike to keep the surging inflation within its target band of 2 to 3 per cent. 

As of its November policy meeting, the RBA board has pumped up the country’s official cash rate for the seventh consecutive month to 2.85 per cent. 

Since the RBA has started the rate rise cycle, Perth’s bigger southern counterparts — Melbourne and Sydney — have been hit with significantly steeper declines in property values. 

While the Victorian and NSW capital’s pullback in values eased in the latest month to -1.3 per cent and 0.8 per cent, respectively, the markets have been the epicentre of the market downturn.

Ms Hart remarked that Western Australia’s economy and finances “are among the strongest in the world”, which continues to underpin the strength of the property market. 

“The population continues to grow, and WA has one of the lowest unemployment rates in the country. At a recent RBA meeting, they noted there were currently more ads for jobs in WA than active candidates. 

“Meanwhile, Perth is the most affordable capital city in Australia. These factors are all supporting the property market, and there is nothing right now indicating that house prices will fall drastically any time soon,” she said. 

The top-performing suburbs for house price growth in November were Bentley (up 3.1 per cent to $500,000), Subiaco (up 2.1 per cent to $1,675,000), Bayswater (up 2.1 per cent to $720,000), Dawesville (up 2 per cent to $520,000) and Falcon (up 1.9 per cent to $453,500). 

The other suburbs to record strong house price growth were Sorrento, Parmelia, Kelmscott, Heathridge and Tapping. 

In terms of supply, REIWA reported that there were 8,642 properties for sale at the end of November. The figures represent an increase of 5.8 per cent on the 8,169 reported last month, but 5.1 per cent lower than levels seen a year ago. 

Ms Hart said that the delays in the building industry, coupled with some hesitancy, are affecting the number of properties for sale. 

“People who are building new homes are reluctant to list their current home before their new home is complete. People looking to buy an established home are also waiting to sell until they have found a new home. This reduces the number of properties for sale,” she explained. 

Ms Hart expects building completions in the city to improve over the next 18 months, which in turn will bolster the number of available listings. 

She noted that this low supply is matched by a strong demand for properties in the market. 

“Perth houses are selling at a remarkable rate and have done so since the March quarter 2021,” Ms Hart said. 

Data showed the average number of days it took to sell a house was 15 days during November, unchanged from October and three days faster than three months ago. 

The fastest-selling suburbs during the were East Cannington (four days); Meadow Springs (five days); Orelia, Mount Lawley, Cooloongup and Golden Bay (six days); followed by Parmelia, Beeliar, Bayswater and Butler (eight days). 

On top of the steady days-on-market trend, Ms Hart noted that while there are fewer people at home opens, properties listed are still getting multiple offers. 

“Naturally, some buyers have been impacted with reduced purchasing power, but demand is still high enough to see properties selling quickly,” she said. 

Meanwhile, Perth’s rental market continued to be tight during the month, with strong population growth increasing demand pressure. 

“Population growth continues to support the strong rental market,” Ms Hart said. 

Perth’s median rent price was $500 per week during November, which is unchanged from October. 

“Both net interstate and overseas migration are in positive territory for the first time since 2013 and, as many migrants prefer to rent initially, this is seeing increased demand and competition for rentals. This, in turn, is maintaining pressure on prices. 

“We do not expect prices to fall until the rental shortage eases,” the REIWA executive stated. 

Ms Hart noted that despite the monthly increase in the number of available rental listings on the market in November, rental supply is unable to keep up with the demand.

“The rental shortage remains a critical issue for the WA rental market,” Ms Hart said. 

REIWA’s data showed there were 1,870 properties for rent at the end of November, an increase of 12.8 per cent on the 1,658 reported at the end of October. However, the figures are still 20.5 per cent lower than the same time last year. 

“Over the past 18 months, we have seen a significant reduction in the number of private rentals as investors sell to take advantage of capital growth or take their property off the rental market for their own use,” she stated. 

Meanwhile, it took a median of 14 days to lease a rental during November, one day faster than in October and three days faster than three months ago. 

Suburbs recording the fastest-median leasing times were Byford (seven days); Meadow Springs, Seville Grove and Innaloo (eight days); Canning Vale, Tuart Hill, Duncraig and Yanchep (nine days); and Mosman Park and Balga (10 days). 

Ms Hart reiterated a call by the institute for more investors to enter the market. 

“We desperately need more investors; unfortunately, those who want to invest are faced with the same difficulty of buying a property in this market as owner-occupiers,” she concluded.