by Hayden Groves
Perth’s All Groups inflation rate is running above the national average at 7.6 percent, the share market has taken a hit and interest rates are rising. Not the ideal set of circumstances for Perth’s property market to take off. However, the Real Estate Institute of Australia’s (REIA) Real Estate Market Facts for the March quarter reveal some remarkable numbers that puts WA in an enviable position for solid property growth in the short to medium term.
When looking at median house prices sold during the first quarter of 2022, Perth returned a median price of $525,800 across all detached home sales for the period. In the context of housing affordability, we are the cheapest place in Australia to buy a house – by some margin. Buyers dabbling in the Hobart property market parted with $820,000 during the quarter, in our nation’s capital they paid $982,000 and in Brisbane $760,000. In Darwin, the median house price reached $583,000 and Adelaide put on a tremendous 7.1 percent spurt from the previous quarter to reach a median of $649,000.
blowing its chilly winds across price-bloated east coast cities
Melbournian buyers paid a median of $1,121,500 for a detached house and Sydney topped the list with an extraordinary median of $1,590,900 for the quarter. Remembering that these are the median prices (the middle sale of the entire sales sample) for the March quarter’s sales, housing affordability challenges in eastern Australia are significant. Nationally, the combined median house price for the March quarter was $1,033,600 up 17.1 percent in twelve months.
In contrast to the national average, Perth’s median house price growth over the past year has been 4.1 percent. Compared to the twelve-month gains in Hobart (31.5 percent), Brisbane (26.7 percent) and Adelaide (24.8 percent), Perth’s property price gains are comparatively very modest.
It makes little sense to me that Sydney’s median house price is at three times that of Perth’s. Sure, Sydney’s a true international city attracting more international investment, but is its real estate justifiably worth triple ours? In 2004, Sydney’s median house price was $485,000, Perth’s was $480,000. Sure, I don’t expect Perth’s property values will once again rival Sydney’s, but two-thirds of its value feels about right, not one-third. That puts our median at around $667,000 and Sydney’s at a re-calibrated $1,000,000.
It seems irrational that Hobart’s median house price was $820,000 for the quarter, nearly $300,000 more than Perth’s. In six years, the moving weighted annual median house price in Hobart has gone from $405,000 to $745,000. In Perth, the same measure shows prices shifting from $523,000 in 2017 to $521,000 today.
Our isolation, smaller capital market, moderate population growth, COVID lock-outs and mining-dependent economy are all factors contributing to a our sluggish property market, but Perth as a destination city cannot be overlooked for long.
Even though the recent interest rate rise has taken some of the heat out of the market, Perth is an attractive destination for investors (yields) and owner-occupiers (affordability) alike. The time is right for Perth to weather the inflationary storm currently blowing its chilly winds across price-bloated east coast cities. Western Australia is a brilliant place to live, work and play and cashing-out east coasters ought to look our way as the sun sets on their peaking property markets.
