Perth’s property market recovery is well underway with house prices recording their strongest annual growth in six years, new data shows.
Median house prices are at a three-year high of $563,214, while unit prices are at a median of $347,585 – the highest in roughly a year, the latest Domain House Price Report for the December quarter, released on Thursday, revealed.
Despite the economic turmoil of 2020, it has been a year marking a turnaround for Perth home owners, with house prices increasing 6.3 per cent over the past year, and units rising 4.4 per cent as expats return, and buyers take advantage of low interest rates.
“Prospective home owners may now be feeling the pinch of rising home values, but houses are $53,000 lower, and units $74,000 lower, than the 2014 record highs,” Domain senior research analyst Nicola Powell said.
“Perth remains the second-most affordable capital city to purchase a house or unit. This affordability, together with record low home loan rates, generous government incentives and an improved economic outlook, has boosted buyer confidence.”
LJ Hooker WA state director Shane Kempton said Perth was experiencing the classic symptoms of the supply and demand cycle – high buyer (and tenant) demand in a poorly supplied market, which was putting upwards pressure on prices.
“There are several causes for the high demand of Perth properties. Firstly, we have an increase of Australians returning from overseas due to COVID,” he said.
“These returning Australians are either existing home owners returning to their properties that would normally be rented out, meaning these tenants are looking for alternate rentals, or they are returning to Australia and looking for a property to buy or rent.
Perth’s top regions for the highest house price growth rate were led by Mosman Park, where prices increased 15.2 per cent year-on-year to $1.4 million. Armadale ranked second, up 12 per cent to $420,000 and Vincent placed third, with growth of 11.5 per cent to $792,500.
Mundaring and Joondalup rounded out the top five with growth of 9.7 per cent and 8 per cent respectively.
Dr Powell said the top five represented a broad spectrum of price points and buyers, with first-home buyers active in some of the locales due to generous incentives and low interest rates.
“Not only will that help first home buyers or any up-sizer buyer, but those in the more premium end are also being supported by historically low interest rates,” she said.
Dr Powell said buyers were continuing to snap up homes quicker than they were listed for sale, ultimately reducing the total number of homes on the market.
“A stark turnaround in Perth’s rental market may provide further reason for investors to look west, as well as the rental moratorium ending soon and the prospect of future capital gains,” she said.
“The upcoming election could place housing policy under the spotlight, with discussions around stamp duty reform and other housing incentives becoming a more permanent measure. While these are only speculative, if they come to fruition, any changes could have a positive impact on housing activity.”
Harcourts WA chief executive Paul Blakeley said the high level of buyer activity and demand amid dwindling stock resulted in buyers offering on average $20,000 above the asking price.
“As long as it’s presented well and priced right [homes] are selling in the first week, or certainly in the first couple of weeks,” he said.
“The challenge we have got at the moment is getting stock, so we are finding a lot of off-market sales – properties that have been appraised recently, or been on the market in the past 12-18 months.”
Mr Kempton said there was a sense of urgency among buyers who did not want to pay too much before prices rise.
“Sellers are a little bit more apprehensive; although they know they will achieve a great selling price, they worry they won’t find another property to move into. This perception is causing some property sellers to delay putting their property on the market, lowering supply,” he said.
Buyers were warned to make their best offer or risk missing out, Mr Blakeley said, with multiple offers becoming the norm.
“Hence, agents are saying, ‘You have to go in with your best foot forward; you get one chance at it’. The best advice we give is to go in at a price you are comfortable to miss out on.”