Perth market kicks off 2023 on ‘steady’ footing

The latest data from CoreLogic showed that Perth’s capital home value index decreased marginally in January, sliding by 0.3 per cent from December and down just 0.1 per cent since October. 

For comparison, other cities are recording steep retreats in property values during the start of the year. Values fell most drastically in Hobart where they dropped 1.7 per cent during January, followed by Brisbane’s 1.4 per cent decline, and Sydney’s 1.2 per cent fall. 

Hobart also led Australia’s capital cities for quarterly declines (5.5 per cent), followed again by Brisbane (4.8 per cent), and Sydney (3.9 per cent).

REIWA chief executive Cath Hart highlighted that the Perth property market continues to hold steady in the face of the eight consecutive interest rate increases in 2022. 

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

At the end of 2022, the RBA board has pumped up the country’s official cash rate for the eighth consecutive month to 3.10 per cent. 

Since the RBA began its fiscal policy tightening, Perth’s bigger counterparts — Melbourne and Sydney — have been hit with significantly steeper declines in property values. 

“Our market remains resilient and stable, particularly when compared to the east coast,” she stated. 

The executive also stated that Perth, along with Western Australia, remains in an “excellent position” to weather future rate rises due to its “strong economy, growing population, limited stock levels and affordable housing.”

Data from REIWA showed that the top-performing suburbs for house price growth during the month were Fremantle (up 2.1 per cent to $1,062,000), East Victoria Park (up 2.1 per cent to $740,000), Yangebup (up 2.0 per cent to $540,000), Ballajura (up 1.7 per cent to $500,000), Mount Lawley (up 1.5 per cent to $1,217,500) and Success (up 1.5 per cent to $593,500). 

Ms Hart said that the low number of available properties relative to demand has helped to keep values stable. 

According to REIWA, there were 7,104 properties for sale across the WA capital at the end of January, up from the 12-year low of 6,931 reported last month but 10 per cent lower than levels seen a year ago.  

Further analysis of the data showed property listings levels have been below 8,000 and close to 7,000 since 25 December. 

Ms Hart said the number of new properties coming onto the market was of concern. 

“We saw the number of new listings decline 13 per cent in the second half of 2022, and new listings in January are down 24 per cent from a year ago,” she said.

Ms Hart said the ongoing supply trend was expected following the rate increases as people adopt a more “cautious” stance and “wait to see what happens”.

“However, if new listings remain low, we’ll see the number of properties for sale continue to decline and the housing shortage worsen,” she stated. 

Ms Hart said that the institute had expected some relief for the housing market as building completions increased later this year, but the latest data did not bring any comfort. 

“[HIA] data showed new home sales in the last quarter of 2022 were 30.9 per cent lower than at the same time in 2022, suggesting the supply of new housing will decline. This will further exacerbate the housing shortage,” she forecasted. 

In terms of demand, Perth properties took an average of 27 days to sell in January, which was nine days slower than in December and six days slower than a year ago. 

The fastest-selling suburbs in January were Huntingdale (five days); Quinns Rocks and Safety Bay (six days); Beeliar, Cooloongup and Kardinya (seven days); and Landsdale, Padbury, Tapping and Warnbro (eight days).

“Our data shows the median time to sell traditionally increases in January when people take holidays and businesses close for some time over the festive season,” Ms Hart said.

While this month’s figure is higher than January 2022, the executive highlighted that “market conditions have changed since then”. 

She reiterated that the rate increases have caused buyers to double-take before purchasing a property. “They are also quite discerning; there is limited choice, and they are waiting for the right property at the right price,” Ms Hart added. 

The same tightness in supply and demand was observed in Perth’s rental market, giving landlords a bigger reason to further boost rental prices in the coming months.

“Demand continues to exceed supply across Perth and, under current conditions, we can expect to see more price increases in coming months,” Ms Hart said.

While Perth’s median rent price stood unchanged from December at $520 per week for January, the weekly average is $20 higher than three months ago and $70 higher than in January 2022. 

“While the overall median remained steady, many suburbs recorded an increase in their weekly rent in January,” Ms Hart noted.

Top performing suburbs in terms of rental price growth were Inglewood (up 40 per cent to $625 per week), North Coogee (up 25 per cent to $620), Karrinyup (up 21 per cent to $850) and Leederville (up 21 per cent to $668). 

On the rental supply side, data from REIWA showed there were 1,905 properties for rent on reiwa.com at the end of January, a significant increase from the 1,443 reported at the end of December.

The figures were also 10.8 per cent higher than three months ago, but 18.2 per cent lower than the same time last year. 

Ms Hart said that while the increase is a “welcome change”, the executive believes that the increasing trend will continue due to the announcement that Chinese students are required to return to face-to-face study at overseas campuses, which she believes will add pressure to the already under-stress rental market. 

The average rental listing took an average of 15 days to be leased in January, unchanged from December, and two days faster than January 2021. 

Suburbs recording the fastest median leasing times were Success (seven days); Yokine, Cloverdale, Harrisdale, Piara Waters and Westminster (nine days); Duncraig, Forrestfield and Thornlie (10 days); and Bentley (11 days).