Houses for sale in Perth, like housing prices in all major Aussie cities, have been caught up in the nation’s widespread economic crisis. In May, CoreLogic’s Home Value Index–a tool used to measure movements in capital city housing markets–recorded its first national fall since September 2020.
There was a 0.9% decrease in home values across the five major cities of Australia. It appears as if the “property boom” that had engrossed Perth property prices is decelerating at last as the prices of houses stall for the third time since the start of the year. However, those planning to sell their homes shouldn’t be worried because according to experts, the stagnation may only be temporary.
What’s Expected in 2023?
According to Commonwealth Bank, Perth property prices are expected to fall 8% next year as the impact of the Reserve Bank of Australia’s interest rate increase kicks in. In addition, according to CoreLogic research director Tim Lawless, the impact of rising interest rates on the Perth property market and the increase in the cash rate are causing growth in housing prices to slow. He also stated that the housing market conditions have been weakening since last year.
Gareth Aird, head of Australian economics, also noted that the cash rate is a blunt tool for addressing some of the supply issues facing the domestic and global economies right now. Higher interest rates are expected to increase the rate of traditional and modular fabricated home prices in Perth.
All Is Not Gloomy
“While May’s housing market activity was disrupted by the federal election, the growth of housing prices has been slowing down for some time,” said PropTrack economist Paul Ryan. “The speed of official interest rate hikes and wage growth remain the key factors for price growth moving forward. Perth is one of the Aussie cities that has experienced a smaller circle in the post-pandemic period than most of the other cities–but it is still experiencing growth, different from the large cities on the east coast.”
Like the other cities, Perth has also seen a slowdown in growth this year as interest rates have significantly increased.
Despite the recent property market crash in Perth, many investors still prefer Perth, as it offers investors considerable value for their money. A recent survey conducted by Perth property advisory Momentum Wealth revealed that two out of five active investors nominated Perth as their preferred property market.
In a Nutshell
The property market across the globe is cyclical—if it falls, it will eventually bounce back. In the worst property market crash in history, property values fell 37% for six years, but five years later, the housing market had bounced to its pre-cession peak and continued on to increase 59% in value over the next five consecutive years.
Even if Perth is experiencing a property market crash, the property market is likely to return to its peak despite the rising rates and higher inflation.
