Perth real estate prices are surging, with Bicton, North Beach and Sorrento leading the pack

May 24, 2021

Perth real estate prices are surging, with Bicton, North Beach and Sorrento leading the pack

May 24, 2021
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Real estate agents say “absolutely crazy” demand is behind 20 Perth suburbs’ median house prices growing by over 10 per cent in the first third of this year.

Data released by the Real Estate Institute of WA (REIWA) today revealed prices in the riverside suburb of Bicton had grown 20 per cent since December, going from $950,000 to $1.14 million — the biggest increase in the metropolitan area.

Of the 20 suburbs in the list, nine are below the median house sale price for all of Perth.

“Over the latter half of 2019 and into 2020 it was certainly a top-end recovery in the market,” REIWA president Damian Collins said.

“We saw mainly the higher-priced suburbs starting to do well, but since the latter half of 2020 and now particularly in 2021 we’ve seen a significant across-the-board movement in price.”

Mr Collins said there were a number of factors behind that change, including an increase in general confidence in the market.

“A lot of these suburbs where you can still buy houses under $300,000 are certainly very affordable when you can borrow and get a home loan at two per cent, so people are taking that opportunity to get out of renting,” he said.

He said that trend had also partially been fuelled by the end of the rental moratorium in late March.

“The end of the rental moratorium has seen people, where they are seeing rent increases, look at the assessment of affordability and realise that in many cases in a significant number of suburbs in Perth it’s now cheaper to buy than rent,” he said.

“Of course not everybody can get out of the rental market, but we certainly are seeing more people take advantage of that opportunity to buy a house, and at the same time also decrease their cost of accommodation.”

Real estate agents ‘can’t quantify’ demand

In Medina the average median house sale price jumped 13 per cent from December to April, increasing from $230,000 to $260,000.

Real estate agent Sue Done said after a quiet period in the area, demand suddenly picked up earlier this year.

“We were very short on listings, people couldn’t get rentals [and] people were just desperate to buy,” she said.

“I’ve been doing this for eleven years and I’ve never seen that before.”

Lauren Mandolene is also a real estate agent in the area, and said demand had been “crazy”.

“We can’t really quantify what has caused all of a sudden everyone to come out,” she said.

“We even asked people when we are at home opens and most people just said they felt like it was the right time.

“A lot of people are saying they want to purchase now before it really booms, and they don’t want to overpay for property.”

Market ‘not delivering’ for lower end

But the chief executive of Shelter WA, Michelle McKenzie, said the increasing prices were worrying because they meant an already strained rental market was shrinking, as investors looked to sell their properties.

“We know that rents have increased by 15 to 20 per cent, and if more rental properties are lost what does that mean for rent prices?” she said.

“The market is not delivering housing for people at the lower end of the market, and there’s a key role for governments — federal and state — to invest in social housing … and affordable rental houses.”

She said the only solution to the issue is to direct more funding to social and affordable housing.

“As more stimulus is put into the demand side, like first home owners [grants] … it’s making the market worse,” she said.

“Without that commensurate supply-side response, which is an increase in affordable rental homes and social housing … we’re not going to get ahead of the game.”

Prices expected to continue increasing

REIWA had forecast the value of homes across WA to grow by 15 per cent this year, with six per cent growth recorded already.

“Obviously some suburbs will do more than that and some will do less, and while we’ve seen certainly some suburbs already up 15 plus per cent, some are just starting their growth journey,” Mr Collins said.

“We overall expect price to still continue to rise this year, likely up another eight or nine per cent from where they are today.”

In Medina though, Ms Mandolene expects things to level out from the surge in demand this year.

“The beginning of this year was just unbelievable, and a lot of the stock’s now been sold and we’re finding now it’s kind of steadying off a little bit,” she said.

“My personal opinion is that it might just slow down a little bit, but still keep quite steady, just not as crazy.”

Source: Abc.net.au