Perth prices set to climb through 2024: REIWA

While this could be said for a number of capitals, what’s significant in Perth is that many markets have finally surpassed the previous highs seen almost a decade ago during the mining boom.

According to the Real Estate Institute of Western Australia (REIWA), the median house price in Perth now sits at $590,000, 8.3 per cent higher than the previous peak of $545,000 reached in 2014.

With prices having steadily declined through 2020, the new median house price is a substantial 24.2 per cent higher than the low of $475,000 recorded in 2020.

As REIWA CEO Cath Hart explained:

“After a slow start, house sale price growth accelerated over the year, recording 2.6 per cent growth in the December quarter and 8.3 per cent over the year to reach a median of $590,000. This is a new record for Perth house prices.”

Units, however, have not quite made up the losses in price growth since the city’s downturn.

The median unit sale price stagnated for much of 2023, starting to increase only at the end of the year, rising 2 per cent over the December quarter and 0.7 per cent over the year to a median of $408,000. This is 9.3 per cent below the record of $450,000 set in 2014.

Even so, REIWA expects to see those prices lift substantially over the course of the year.

“We can expect more increases in the median unit price in 2024. With houses in limited supply and prices rising, more people, particularly those seeking to escape the challenges of the rental market, are looking to units as an affordable way to enter the market,” Ms Hart said.

Across the course of 2021, Perth dwellings reached new records for not only median house price, but also for the median time to sell, falling to just eight days. Correspondingly, the city’s market reached a new low for the number of properties for sale – just 3,648 at the end of December.

Rents trend upwards

New records were also set in the rental market in the final quarter of the year.

The median cost of rent hit a new high of $600 per week at the end of December, up 3.4 per cent from $580 at the end of September and 15.4 per cent higher than the average weekly cost of $520 at the end of December 2022.

The median weekly house rent price also set a high bar, rising 3.3 per cent over the quarter and 12.7 per cent over the year to $620.

Rents for units moved far more substantially than sale price. The median rent for a unit rose 3.6 per cent from the end of September and 20 per cent from the end of 2022 to $570 per week – another record high.

Rental listings, similar to sales, remained low, hovering around 2,000 for most of the year before dropping to 1,518 in December. Though vacancy rates are extremely tight, this is still 5 per cent higher than at the end of 2022.

The city wasn’t able to crack 1 per cent vacancies the entire year, sitting at 0.7 per cent for many months, rising briefly to 0.8 and 0.9 per cent in June and July respectively.

Population growth to exert pressure

Based on projections of REIWA accounting for the number of homes available and expected to come to market, as well as the anticipated number of residents in the city, the organisation predicts that Perth house prices are set to grow 10 per cent in 2024.

Rents are also expected to rise, although the rate of growth may slow.

In Ms Hart’s view, much of the sales and rental markets’ movements will be driven by population growth, as well as building completions and the Western Australian economy.

“WA recorded a 3.1 per cent increase in its population in the year to June, the strongest growth rate in the country, according to the Australian Bureau of Statistics,” Ms Hart noted.

“That saw our population grow by nearly 87,000 people, with immigration and natural increases. That’s about 35,000 additional households in 12 months, if you assume there are 2.5 people per household.

“However, in the same time frame about 14,000 new homes were completed. That’s a shortfall of over 20,000 dwellings, which is putting incredible pressure on the established homes market and driving up prices,” she explained.

More population growth is expected over the next year, with the state government revising its estimates in population growth for 2023–24 from 1.7 per cent to 2.4 per cent.

And while more homes are expected to be completed, it’s still not enough to meet demand.

The Housing Industry Forecasting Group expects about 15,000 to 16,000 new dwellings to be completed in Perth in the year to June 2024.

“Based on these figures, we can expect demand for established homes to be high for some time to come,” Ms Hart said.

And much like last year, she doesn’t expect interest rate increases to hold significant sway so long as the population is bursting at the seams.

Regional forecast a tale of each town

REIWA reported that house sale price growth in the regions varied in 2023, with some prices rising sky high and others increasing more steadily.

Rent prices rose more universally, with most regional centres at record highs.

When it comes to 2024, Ms Hart said that most areas will continue on their current trajectory.

“The rate of house price growth is likely to slow in those regional centres that saw strong growth during the pandemic, such as Busselton and Albany.

“Bunbury was one of the stand-out performers in 2023 and is likely to continue to perform well. Housing is affordable, it has the benefit of being close to both Perth and the attractions of the South West, and offers the benefits of a South-West lifestyle. Port Hedland is also looking to perform well in the coming year,” she commented.

Development across the state has attracted more people to regional lifestyles, but the availability of rental properties has failed to keep pace. As such, REIWA expects vacancy rates to find little relief in the next 12 months.

“Increasing [rental] supply in the regions is a huge challenge, and this will maintain upward pressure on prices.”