The Perth property market has been a rollercoaster of growth, challenges, and opportunities. In this blog post, we’ll dive into the factors affecting Perth’s housing market, including population growth, low vacancy rates, and interest rates.
We’ll also explore the top-performing suburbs and the challenges and opportunities present in the market. Whether you’re an investor or someone hoping to buy property in Perth, researching the local market is key.
So buckle up and let’s explore the Perth property market in 2023!
Further Exploration: Knowledge is key when making a significant decision. To ensure you’re fully equipped, don’t miss our expert guide on buying a house in Perth.
Perth Housing Market Overview
Perth’s housing market, often referred to as the Perth market, is one of the most robust in Australia, defying the national downturn with strong selling data, low listings, and steady home sales.
This strength is primarily driven by population growth and low vacancy rates, which are pushing up Perth house prices and rental rates. In some of the best suburbs in Perth, you can expect to pay upwards of $1 million for a house and around $750/week for a rental.
In 2023, strategic property selection provides valuable opportunities for investors, as the Perth houses price forecast remains the only capital city market in Australia experiencing a strong property market.
However, it’s essential to understand the driving factors behind the market’s performance, such as population growth and low vacancy rates, to make informed investment decisions.
Recommended Reading: What Will Predicted House Prices in 2030 Perth Look Like?
Population Growth Impact on House Prices
Perth’s population growth is contributing to heightened demand for housing, pushing up prices in the market. With more people flocking to the city, the demand for homes and rental properties has been on the rise, causing prices to soar.
This increase in demand has also led to a tightening of the rental market, with a remarkably low vacancy rate of 0.7% as of March 2023. As a result, renters are facing increased competition for available properties, further driving up rental prices.
Low Vacancy Rates Affecting Rental Properties
Perth is currently experiencing its tightest rental market since 2013, with house rents increasing by 13.1% and unit rents increasing by 13.6% over the 12-month period ending April 2023. The decrease in the size of households and the rapid influx of people moving to Perth have contributed to this shortage of rental properties.
As a consequence of the low vacancy rates, rents have risen significantly, with an increase of 47% to $550 per week. This has put additional pressure on renters, making it increasingly difficult for them to find affordable housing options in the city.
Perth Property Price Trends
In recent years, Perth’s property prices have seen strong growth, with house prices reaching record levels. However, the quarterly house price growth in Perth decreased significantly to 1.2%, compared to the previous quarter. This contrasts with the unit market, which has not achieved the same level of performance as Perth property prices and remains relatively stagnant.
Suburbs such as Fremantle, East Victoria Park, Yangebup, Ballajura, Mount Lawley, and Success experienced the highest house price growth in January. These areas have become the best places to invest in Perth.
This variation in growth across different areas of Perth highlights the importance of carefully selecting the right location for property investment.
House Price Growth in Perth
Recent reports suggest that Perth’s house prices are likely to experience an increase between 2% and 30% from 2023 to 2027. The Real Estate Institute of Western Australia (REIWA) forecasts a 2% rise in house prices in 2023. This growth is impacted by factors such as population growth, low vacancy rates, interest rates, and the performance of the Western Australian economy.
These projections indicate that, despite potential economic headwinds and market fluctuations, house prices in Perth are expected to continue their upward trajectory in the coming years. This presents a promising outlook for both homeowners and property investors alike.
Perth Unit Prices: A Steady Climb
Although the unit market in Perth hasn’t experienced the same level of growth as houses, unit prices have been steadily climbing. The median unit price in Perth is $418,623, remaining relatively stagnant compared to the more robust growth in house prices.
This steady increase in unit prices demonstrates the potential for investors to capitalize on the growth of Perth’s unit market. Investors seeking a more affordable entry point into the property market may find opportunities in the unit market, particularly as demand for housing continues to rise.
Interest Rates and the Perth Property Market
Interest rates play a pivotal role in the Perth property market, as higher interest rates can make it more expensive for individuals to borrow money to purchase a property, resulting in a decline in demand and a decrease in property prices. Conversely, lower interest rates could increase demand and lead to an increase in property prices.
Despite the influence of rapid interest rate rises, Perth remains one of Australia’s strongest property markets due to robust migration, tight rental markets, and limited supply. Compared to other capital cities, Perth’s housing market has experienced less of an effect from the rising interest rates.
This resilience presents potential opportunities for property investors to generate satisfactory returns on their investments, even in the face of increasing interest rates.
Effects of Rising Interest Rates on Property Prices
Increasing interest rates have had a negative impact on Australia’s property market, with Perth being no exception. However, factors such as strong migration, tight rental markets, and limited supply have contributed to Perth remaining one of Australia’s strongest property markets.
The March quarter house prices established a new record average house price in Perth of $672,177. As interest rates continue to play a significant role in shaping the Perth property market, it’s crucial for investors to closely monitor market trends and consider the potential impact of interest rate changes on their investments.
How Western Australia’s Economy Influences Interest Rates
Western Australia’s export-oriented economy and its contribution to Australia’s GDP could potentially result in inflation and higher interest rates should the state’s economy experience growth.
An expansion of the economy in Western Australia may result in increased inflation, which could subsequently lead to an increase in interest rates.
As interest rates are influenced by the state of Western Australia’s economy, investors need to be aware of the potential impact of economic growth on property prices. By keeping an eye on economic indicators and understanding the relationship between the economy and interest rates, investors can make more informed decisions in the Perth property market.
Top Performing Perth Suburbs
Eight Perth suburbs have joined the prestigious million-dollar club, with median house prices exceeding one million dollars. These elite suburbs are highly sought-after due to their desirable location, proximity to amenities, and strong infrastructure.
On the other hand, Canstar has identified the top 5 suburbs for investors, considering affordable housing and future growth drivers. This information highlights the diverse range of opportunities available in Perth’s property market, from high-end luxury properties to more affordable investment options.
By understanding the unique strengths and potential growth drivers of different suburbs, investors can make strategic decisions to maximize their returns.
Million-Dollar Club: Perth’s Elite Suburbs
The million-dollar club in Perth is a group of suburbs that have a median house price of over one million dollars. These elite suburbs include Winthrop, Highgate, Leederville, Burns Beach, Fremantle, Carine, Hillarys, Burswood, Marmion, Mount Hawthorn, North Perth, Kensington, Bicton, Alfred Cove, Cottesloe, City Beach, Sorrento, and Dalkeith.
Factors contributing to these suburbs’ inclusion in the million-dollar club include their advantageous location, access to amenities, and robust infrastructure. For those looking to invest in luxury properties, these elite suburbs offer the perfect combination of prestige, strong growth potential, and exceptional quality of life.
Best Suburbs for Investors: Affordable Housing and Growth Drivers
For investors seeking more affordable options with strong growth potential, Canstar has identified South Fremantle, North Coogee, Bicton, and Sorrento as the top 5 suburbs to consider. These suburbs offer median house prices below $500,000, making them more accessible for investors looking to enter the property market.
The key factors driving growth in these desirable suburbs include clear growth drivers and exceptionally low vacancy rates. By targeting these investor-friendly suburbs, property investors can capitalize on the potential for strong capital growth and rental yields while still benefiting from more affordable entry points into the Perth property market.
Challenges and Opportunities in the Perth Property Market
The Perth property market is currently facing challenges such as a housing shortage and a rental crisis. The number of new listings has been decreasing, further exacerbating the housing shortage. Rental prices are also on the rise, putting additional pressure on renters and making it increasingly difficult for them to find affordable housing options.
Despite these challenges, there are still potential opportunities for property investors to capitalize on in the Perth property market. By strategically selecting properties in high-demand areas with strong growth potential, investors can potentially achieve significant returns on their investments.
Addressing the Housing Shortage
The housing shortage in Perth is intensifying as the number of new listings decreases. In January, there was a 24% decrease in new listings compared to a year ago. This shortage has led to increased competition for available properties, driving up prices and putting additional strain on the market.
Addressing the housing shortage is crucial for maintaining the overall health of Perth’s property market. Increased investment in new housing developments, as well as government initiatives aimed at boosting housing supply, could help alleviate the shortage and provide more opportunities for both buyers and renters in the city.
Rental Stress and its Impact on the Market
Rental stress is having a considerable effect on the Perth property market, as the limited rental market, low vacancy rates, and escalating rents are making it challenging for renters. The types of units renting best in Perth are standard apartment dwellings. The price of rent in Perth for these types of units is around $520 per week compared to $610 per week for houses.
This could result in reduced demand for rental properties in Perth and lower property values. Addressing rental stress is essential for maintaining a balanced and healthy property market in Perth.
Potential solutions to rental stress include increasing the supply of rental properties, implementing rent control measures, and providing more affordable housing options for renters. By tackling rental stress head-on, Perth’s property market can continue to thrive and provide ample opportunities for investors and renters alike.
Expert Predictions for Perth Property Market in 2023
Experts anticipate a market correction in 2023, with various banks forecasting either flat prices or moderate increases. Factors such as mortgage rates, inflation, and capacity constraints will affect the outlook for Perth’s property market.
Despite these potential challenges, Western Australia’s robust economy, low unemployment rate, population increase, and cost-effective housing are expected to remain as sustaining factors for the Perth property market in the long term. Additionally, the affordable cost of living in Perth will continue to attract local and international migrants.
SQM Research forecasts another positive year for growth in Perth, with price growth between 4% and 13% if interest rates remain below 4%. The Real Estate Institute of Western Australia anticipates low to moderate growth over the course of the year in the range of 2-5%.
These predictions highlight the potential opportunities and challenges that property investors in Perth may face in 2023.
Market Correction Expectations
Economists predict a market correction for the Perth property market in 2023, with banks such as ANZ and CBA anticipating modest increases. NAB’s most recent Perth house price forecast has been revised to a +0.1 per cent increase. Three of the big four banks opine that we have reached the peak of interest rates, whereas ANZ maintains that there is one more still to come.
These market correction expectations highlight the importance of closely monitoring market trends and economic indicators. By staying informed and adapting investment strategies accordingly, property investors can navigate the potential challenges posed by a market correction and continue to achieve strong returns.
Factors Influencing Perth’s Property Market Outlook
The outlook for Perth’s property market is impacted by factors such as population growth, job market growth, and the state of the economy. Population growth can create increased demand for housing, leading to higher house prices. Low vacancy rates can result in increased competition for rental properties and higher rental prices. The present cash rate set by the RBA is 3.85%, and increasing interest rates can make borrowing money more costly for buyers, resulting in a reduction in demand for property and a corresponding decrease in property prices.
Understanding these factors and their impact on Perth’s property market outlook is crucial for property investors looking to make informed decisions in 2023. By keeping a close eye on market trends and economic indicators, investors can better anticipate potential opportunities and challenges in the Perth property market.
Summary
In conclusion, Perth’s property market in 2023 is a complex landscape of growth, challenges, and opportunities. Factors such as population growth, low vacancy rates, and interest rates play a significant role in shaping the market.
Top-performing suburbs offer diverse opportunities for investors, while challenges like housing shortages and rental stress present hurdles to overcome.
By staying informed and understanding the factors influencing the market outlook, property investors in Perth can make strategic decisions to maximize their returns and navigate the challenges ahead.
Frequently Asked Questions
Are house prices dropping in Perth WA?
If you’re wondering if Perth house prices are dropping, the answer is unsure. Recent data from banking experts suggests that the Perth housing market is set to remain stable in 2023.
NAB’s previous prediction of a -13.1 per cent drop in house prices in 2023 has been revised to a modest 0.1 per cent gain, indicating that Perth home prices are unlikely to drop in the next two years.
Check out our round up of cheap houses for sale in Perth for budget buys!
Which Perth suburbs have falling house prices?
It appears that the suburbs of Nedlands, Tuart Hill, Shelley and Maylands in Perth have experienced a decline in house prices year-on-year, with Nedlands recording the most significant decrease of 7.5%.
This decrease is likely due to a combination of factors, such as the current economic climate, the availability of housing in the area, and the overall demand for property in the region.
The decrease in house prices in these suburbs could have a significant impact on the local economy, as it could lead to higher house prices.
What factors are driving up house prices in Perth?
Increasing demand combined with a limited housing supply have resulted in escalating house prices in Perth.
What is the current state of the rental market in Perth?
The rental market in Perth is currently tight, with limited vacancies and rising rents. This situation has been exacerbated by a lack of new housing supply in recent years.
The lack of new housing supply has been driven by a number of factors, including a decrease in government funding for public housing, a lack of incentives for developers to build.
How do interest rates affect the Perth property market?
Lower interest rates mean that buying a property is more affordable, making it a favorable market for buyers and resulting in increased demand for property.
This can have a positive effect on the Perth property market.
