Perth Real Estate Market Marches On

Almost daily now, various media outlets report about the rapidly changing Perth Real Estate market. Stock levels are low, demand is high and property values are rising along with residential rents.

Core Logic’s latest figures reveal the extent of the current bullish trend and, if history repeats, it is somewhat inevitable that both prices and rents will continue to rise for at least the rest of 2021 and it could be the start of a sustained growth period for several years.

Buyers, cautious about buying in an inflated market, ought to consider that Perth’s median house values remain 14.2 percent lower than their June 2014 peak. Apartment values are still 23.8 percent adrift of their best, now rising but at May 2006 levels. For those complaining about the affordability of house prices, Perth is significantly more affordable than every other capital except for Adelaide and Darwin.

In March 2006, Perth’s and Sydney’s median house values crossed paths just shy of $500,000. Today, Sydney’s median house value is $1,112,671; we are less than half that at $527,833. On average, property owners in Perth spend about 24 percent of their income on their mortgage commitments, in Sydney its closer to 44 percent. I know where I’d rather live.

Perth’s property value growth curve

Perth is seeing a steep property value growth curve at 6 percent over the past year with most of that (5 percent) in the last quarter alone. Sales volumes, coming off a very low base, are climbing too at levels 29 percent above the decade average in the past six months alone.

Owner occupiers are driving the market forward with mortgage commitments in this sector more than doubling in the past twelve months. Investors are slowly creeping back but remain well below the fifteen-year average as a proportion of total buyers. Only 14 percent of new loan commitments are investors, well below the long-term average of 26 percent and whilst recovering, investor borrowings are at their lowest levels in fifteen years.

Rents continue to rise across Perth although median rents remain below their 2014 peak. At a median of $400 per week, Perth remains enviably more affordable than east coast cities with renters parting with only 18 percent of their hard-earned compared to Sydney renters’ 33 percent.

Investors are yet to return to the market in meaningful numbers and when they do, price rises inevitably follow.

All this makes for continued growth in both property values and rents. Perth is busily recovering its losses sustained over the past five years and it is doing it in spectacular fashion. If current trajectories continue throughout the remainder of 2021, Perth’s median house prices will be around $610,000 and median weekly rent will be $458 by year’s end.

If proved correct, that’s a compelling case to buy now.