Perth’s property market is on the rise as reduced travel increases buyer activity, with expectations the median house price could grow by as much as 10 per cent during 2021.
According to data from the Real Estate Institute of Western Australia (REIWA), December 2020 saw a jump of 42.5 per cent in house sales compared to December 2019.
REIWA president Damian Collins said reduced travel during December had allowed people to benefit from the favourable real estate market.
“Traditionally December experiences a reduction in the number of house sales due to buyers going away for the festive period,” he said.
“Yet this year we have seen a significant increase in buyer activity, which suggests that people are taking advantage of the market conditions whilst they are unable to travel.”
Perth’s average house price remained stable in December, sitting at $480,000, while REIWA data showed 45 per cent of suburbs saw an increase in property value during the month.
Kelmscott saw the largest increase in its median sales price during December, jumping 6.2 per cent to $375,000.
Yokine followed with a 4.8 per cent increase to a median price of $650,000 house price average, while the median price in Wellard rose 4 per cent to $399,500.
“With listings for sale decreasing 16.5 per cent in December, it is only a matter of time before median prices start to increase,” Mr Collins said.
‘If they don’t buy, it may well be gone’
Ray White chief executive Mark Whiteman said both buyers and sellers could take advantage of the current market.
“At the moment, to buy a property, you would be paying interest rates that have never been this low before,” he said.
“Buyers have nearly every condition they need to buy — low rates, good prices, affordability of the established property market is very good.
“The only thing forcing them to make the decisions is if they don’t buy the property, it may well be gone.
“That’s the only thing making the purchase market difficult, is there is not the same amount of supply coming through.”
Mr Whiteman said the balance of power was starting to shift.
“We are seeing increased buyer demand, fewer properties available for them to choose from, and that’s really starting to throw the balance of power towards the seller,” he said.
“We are seeing record numbers of bidders at auctions which is a great litmus test for who is willing to buy.
“We have had five years of a poor market, so the sellers deserve to have a win.”
Investors likely to re-enter market
Mr Collins said Perth remained very favourable for investors, and he expected Perth’s median house price to rise by between 6 and 10 per cent during 2021.
“I would advise those who are thinking of about purchasing their first home, trading up or investing, to act soon before prices inevitably rise,” he said.
Mr Whiteman said the Perth market had shaped into an investor’s dream.
“Investors are having a look and realising it’s a cheap price to buy out, the interest rates are low, and there is every chance [they’re] going to get a tenant willing to pay a higher rent,” he said.
“Investors were reluctant to enter the declining market in the past five years. But we now have a rising market, we have full occupancy and investors will start to come back and create more stock for tenants.”
Rents set to continue increasing
There were 3,655 properties leased in Perth’s rental market in December, a 9 per cent increase on the previous month.
Mr Collins said it was pleasing to see the rental market pick up in a time when activity traditionally slowed down.
“As we see the rental stock levels continue to remain low, we can expect rents to continue increasing, however we need to remember that rents are still a lot cheaper than they were in 2014,” he said.
Mr Whiteman said government stimulus measures were expected to create some relief in the next few years.
“We continue to see the decline in the amount of property on the market, but consider the fact the big property players are beginning to put more supply in place,” he said.
“The stimulus that drove the new home construction, which saw our local building industry swamped by inquiry to the point they couldn’t build anymore than what they could sign up.”