Prices, Rents to Rise in 2022

You will be hard-pressed to find a property commentator that will predict a declining property market for Western Australia next year.

Some of the major banks, off the back of likely interest rates rises in 2023, predict Perth property values will retreat as much as 9 percent throughout that year. This prediction feels like an after-thought predicated on assessment of the white-hot markets of Sydney and Melbourne. Representing 10 percent of the national market, accurate assessment of our local markets from national commentators should be afforded the same level of attention they give us; not much.

Earlier this year, national property data analysts, Core Logic have admitted they ‘got Perth wrong’, promptly adding a further 8 percent growth to their numbers and they’re the best in the business. Hat’s off to them for owning up and fixing it.

There are no underlying economic fundamentals (that I can find) that point to a market downturn in Perth next year.

Our borders open in February paving the way for a flood of new and returning arrivals to the state chasing high-paying jobs, lifestyle, security and affordable property. The Real Estate Institute of Australia’s latest Housing Affordability Report reveals Western Australia as the nation’s most affordable state to buy or rent.

Based on analysis of median weekly family incomes and the proportion of that required to meet loan or rent repayments, WA’s numbers make us the ‘go-to’ state once the borders open. On average, 26.3 percent of our wages go to paying our mortgages, 19.8 percent goes to paying rent. Compare this to those in NSW where an eye-watering 44.7 percent of a weekly wage goes to paying the mortgage or 26 percent to paying the rent.

Next time you pay your rent, spare a thought for Tasmanians who now part with 29.7 percent of their hard-earned to meet their obligations. Even South Australians who have previously enjoyed very stable market conditions for decades are faced with 30.8 percent of their income being used for mortgages and 24 percent on rents.

Meanwhile, whilst Perth’s median house prices have risen by about 10 percent, we are performing well below east coast markets. The weighted average capital city median house prices increase for Australia for the twelve months ending September 2021 is a record-breaking 23.4 percent. According to this measure, Perth’s growth is a paltry 8.3 percent. In comparison, Hobart grew 30.3 percent, Sydney 30.4 percent.

In short, we have significant capacity in our market for further growth, unrestrained by the affordability issues that will inevitably hamper further growth for the east-coast cities. Throw in interest rate rises that most commentators predict for 2023, and Perth will become an even more appealing destination for those cashing out when east-coast markets peak.

The sheer weight of population growth likely to follow off the back of our enviable affordability will inevitably push up rents and values here, exacerbated by our property under-supply.

Buyers and tenants awaiting a market downturn here are not likely to get it during 2022.