By Craig Francis | 13-2-2023 | Residential
While the rest of the country stares down the barrel of large property price falls, Perth is tipped to buck the trend and increase in value in 2023.
A decline in housing stock is contributing to the Perth property market’s ability to weather the real estate value declines prevalent throughout much of the rest of Australia.
The West Australian capital is growing in stature as an investment target for eastern states buyers drawn to low vacancy rates, rising rents and the city’s relative housing affordability.
Cath Hart, CEO of the Real Estate Institute of Western Australia (REIWA), said history showed WA’s property market is often out of cycle with the east coast.
“WA prices are currently being supported by ongoing demand and a shortage of housing across the board and this is likely to continue.
“WA has a strong economy, low unemployment, population growth and affordable housing and this will continue to support the market in the longer term,” Ms Hart said.
High rent yields attracting investors
The affordability of the Perth market, combined with strong rental yields, is now making it very attractive to the investor market in particular.
Asking rents in Perth have soared, with the average weekly rental for a house jumping 15.2 per cent to $530 in the final quarter of 2022, the largest annual increase of all the capital cities
Strong uptick in international migration should benefit the WA economy, the capital, which already has a tight rental market, desperately needs more accommodation to house everyone.
“The city’s rental stock is at a historical low, with more than 18,000 properties removed from the rental pool since January 2021, according to the Real Estate Institute of Western Australia,” he said.
“Many investors have sold off in recent years to cash in on the capital gains, however, these rental properties aren’t being replaced, with recent ABS data showing investor lending has fallen off a cliff.
“As a result, Perth is massively undersupplied for rentals, with the city recording a 35.3 per cent annual drop in the number of available properties in January.”
New listings down 24% in January. Housing shortage to worsen
According to REIWA, the top performing suburbs for house price growth in January were Fremantle (up 2.1 per cent to $1,062,000), East Victoria Park (up 2.1 per cent to $740,000), Yangebup (up 2.0 per cent to $540,000), Ballajura (up 1.7 per cent to $500,000), Mount Lawley (up 1.5 per cent to $1,217,500) and Success (up 1.5 per cent to $593,500).
Ms Hart said the number of new properties coming onto the market was of concern.
“We saw the number of new listings decline 13 per cent in the second half of 2022 and new listings in January are down 24 per cent from a year ago,” she said.
“However, if new listings remain low, we’ll see the number of properties for sale continue to decline and the housing shortage worsen.
“And while we were expecting some relief as building completions increased later this year, HIA data showed new home sales in the last quarter of 2022 were 30.9 per cent lower than at the same time in 2022, suggesting the supply of new housing will decline.
“This will further exacerbate the housing shortage.”
https://www.apimagazine.com.au/news/article/perth-property-market-standing-alone-as-2023-growth-prospect