Perth property prices could soar up to 20 per cent this year, as the population continues to surge.
Real Estate Institute of Western Australia (REIWA) Chief Executive Officer, Cath Hart, said the rate of house sale price growth had accelerated in the past two quarters.
“Updated figures for December show 4.3 per cent growth over the quarter and preliminary figures for March are sitting at 4.2 per cent,” Ms Hart said.
“We can expect that to increase as more properties settle.
“The median house sale price has increased 13.6 per cent over the 12 months to March, to a record $625,000, and if the market continues to grow as it has been, 20 per cent growth is achievable between January and the end of 2024.”
Ms Hart said current market conditions were underpinning the expectation of ongoing price growth.
“As well as price trends, we look at a range of figures when preparing our forecasts and the data suggests the significant imbalance between supply and demand will remain in 2024, maintaining the upward pressure on prices,” she said.
“We have very high demand, fuelled by extremely strong population growth and this is expected to continue – we are awaiting the Cook Government’s latest population forecast in the upcoming May State Budget.
“In addition, supply of new housing remains limited, which continues to focus demand on established homes”
She said while building completions have been increasing, the state is still not building enough new homes to meet the demand rapid population growth.
“Detached houses make up the majority of the new building activity with apartment construction limited to luxury projects, which is limiting the provision of affordable and diverse housing options,” Ms Hart said.
“While completions are up, new home commencements have been declining.
“New home approvals have only just started to trend upwards.
“These figures suggest new home supply will remain below the state’s needs for some time.”
Ms Hart said the strength of the WA economy also supported price growth.
“Unemployment is low, which boosts consumer confidence as well as people’s ability to buy a home and manage a mortgage,” she said.
“The Reserve Bank’s new meeting schedule is also giving people a break from monthly concerns over rate rises and some commentators are forecasting a rate cut in the medium term which would also support buying power in WA.”
Ms Hart said there would need to be a significant change to the current conditions to slow Perth dwelling price growth.
“We will continue to watch the data and update our forecast accordingly,” she said.
According to REIWA, the median unit sale price also improved over the March 2024 quarter, increasing 3.4 per cent growth to reach $425,000.
Meanwhile, the Perth rental market remains tight, with the median dwelling rent hitting a new high of $650 per week at the end of March, up 8.3 per cent from $600 at the end of December and 18.2 per cent from the $550 recorded at the end of March 2023.
The vacancy rate dropped to a new record low of 0.4 per cent at the end of March.
“The rental market is affected by the same conditions as the sales market: strong population growth and low supply which maintain upward pressure on rents,” Ms Hart said.
“Some agents are reporting a slowdown in demand at the higher end of the market however, it remains strong in the more affordable price brackets.
“We are also seeing some self-moderation of demand.
“This includes an increase in tenant household sizes, tenants electing to buy where possible and people simply choosing to stay in the family home longer or moving back in with family to avoid the rental market.”
