Minor turbulence doing little to slow market

Industry observers expect Perth to power through property market headwinds and deliver values growth for the remainder of 2021 and into next year, as newly unveiled May data showed the capital on a continued upward trajectory.

The CoreLogic figures confirmed last month Perth settled at a 10.3 per cent home values increase, with house prices up 10.6 per cent and units soaring slightly behind at 8.4 per cent.

Though the latest surge reflected a continuous rise since August last year, home values at the end of May were slowing slightly and still floundering 12.5 per cent beneath their 2014 peak, whilst unit prices were 22.5 per cent below the heights they reached in July 2013.

A surge in listing numbers was a key factor blamed for the slight loss of steam, with the rolling three-month change in Perth dwelling values peaking in March 2021 when values were rising at five per cent. By the end of May the rolling three-month change was 3.8 per cent.

Regardless, CoreLogic Asia Pacific Head of Research Tim Lawless said Perth’s housing market was overdue for a recovery trend and low interest rates combined with healthy levels of housing affordability should help drive it forward.

“There are a few headwinds – new housing supply is starting to ramp up and long-term fixed interest rates are starting to lift,” he said.

“But overall we are expecting housing values to continue trending higher.

“The market has become much more affordable, especially in relativity to the other large capitals, and demographic tailwinds are now forming as interstate migration turns positive.

“Economic conditions are improving, labour markets are tightening and commodity prices are high.

“Additionally, virus outbreaks and associated lockdowns have been minimal.

“So, based on all these factors, the upswing across Perth is to be expected.”

In another win for homesellers, sales activity across Perth was up 56 per cent year on year and, as of May, the amount of properties up for grabs was 23 per cent above the five-year average.

Outside Perth, values in Western Australia’s country towns spiked 1.8 per cent over the three months to May, following little movement over the previous 12 months, making them the weakest growth performers across Australia.

However, Mr Lawless noted a few strong showings, including a 16.5 per cent leap in the East Pilbara and a 5.2 per cent sprout in the Augusta, Margaret River and Busselton region.

According to Mr Lawless, most states had seen their regional markets grow at stronger rates than their capital cities over the past year, but WA had been an exception.

He said this was likely due to the sheer affordability of Perth, which meant locals weren’t incentivised to explore the regions as a homebuying option.

“Also, the weaker performance across the regional areas of WA can be attributed to the different economic performances across different aspects of the mining and resources sector, agricultural markets and lifestyle regions,” Mr Lawless said.

“Growth in home values over the past year has been skewed towards some of the more affordable regions of Perth, with Kwinana (median dwelling value of $351,981) recording the largest annual rise at 167 per cent, followed by Mandurah ($436,414) at 14 per cent and Wanneroo ($472,954) up 12.1 per cent.”

At the end of May, the median Perth house value was $545,620 – the second lowest of any capital city after Adelaide ($542,913).

The median value of units was $392,321, the third lowest of any capital city after Adelaide ($356,318) and Darwin ($332,000).