Perth property market standing alone as 2023 growth prospect

In Professional help by Jeff OsborneLeave a Comment

The West Australian capital is growing in stature as an investment target for eastern states buyers drawn to low vacancy rates, rising rents and the city’s relative housing affordability.

While rising interest rates are eliciting forecasts of property price falls for the national market, Perth is being tipped to buck the trend with a small but significant degree of growth.

Cath Hart, CEO of the Real Estate Institute of Western Australia (REIWA), said history showed WA’s property market is often out of cycle with the east coast.

“Some price adjustments may occur in coming months, but we are maintaining our expectation of low to moderate growth over the course of the whole year in the range of 2-5 per cent,” Ms Hart said.

“WA will not be immune to the effect of more rate rises, but rapidly rising interest rates are not the only factors that impact a market, for example, WA property prices rose between 2009 and 2010 during a period of rate increases.

“In terms of market activity, we expect that we’ll be likely to see some hesitancy in the short term as people wait and see.

“However WA prices are currently being supported by ongoing demand and a shortage of housing across the board and this is likely to continue.

“WA has a strong economy, low unemployment, population growth and affordable housing and this will continue to support the market in the longer term,” Ms Hart said.

High rent yields attracting investors

The affordability of the Perth market, combined with strong rental yields, is now making it very attractive to the investor market in particular.

According to the Australian Bureau of Statistics (ABS), the average mortgage size in Perth is only around $478,000 compared to Sydney at $752,000, so there is much less impact on household budgets when interest rates move upwards.

Asking rents in Perth have soared, with the average weekly rental for a house jumping 15.2 per cent to $530 in the final quarter of 2022, the largest annual increase of all the capital cities.

Daniel Brennan, Director, DV Buyers Agency, said interstate interest in the Perth market was ratcheting up.

“We are now receiving a lot of enquiries and interest from investors over east simply because of the affordability and value of the Perth market,” he said.

“Low median prices ($560,000 as of December), record low vacancy rates (0.6 per cent), strong median rental yields (5.1 per cent) and increasing migration, are all key reasons that investor activity is increasing."

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