Perth expected to buck downward property trend as house prices rise

Strong demand, low supply, and increasingly savvy buyers mean early 2023 could be the perfect time to sell in one Australian state – as prices plunge everywhere else.

Perth appears to be defying a national downturn in the housing market brought on by rising interest rates, cost of living pressures, and a shortage of homes.

The Real Estate Institute of Western Australia (REIWA) is staying positive in their 2023 outlook, predicting moderate growth of between 2 and 5 per cent in Perth’s house prices over the next 12 months.

The prediction reflects the cautious optimism of property analysts hold for the city’s outlook.

REIWA anticipates greater sales activity in the low-mid price brackets in 2023. Source: NCA NewsWire / John Gass

“Longer-term, as prices decline, interest rates stabilise and wages grow, we expect to see market conditions improve,” PropTrack’s director of economic research Cameron Kusher said.

“Hopefully, we will also see more investors return to the market, creating more rental supply.”

According to CoreLogic research, house prices in rest of the nation for the end of 2022 were weaker, with an overall drop of 5.2 per cent in property values.

CoreLogic’s research director Tim Lawless said capital city values fell sharply after the first four months of last year, as the RBA began the fastest rate tightening cycle on record.

Executive Director for the Property Council of WA Sandra Brewer said there’s normally an undersupply of housing in Perth. Source: NCA NewsWire / Damian Shaw

“Our daily index series saw national home values peak on May 7, shortly after the cash rate moved off emergency lows,” said Mr Lawless.

“Since then, CoreLogic’s national index has fallen 8.2 per cent following a dramatic 28.9 per cent rise in values through the upswing.”

However, the same data shows Perth finishing the year up 3.6 per cent, with a 5.7 per cent boost for WA’s regional areas.

The state was only outperformed by South Australia, with Adelaide and metro areas enjoying 10.1 per cent growth, and regional SA recording a whopping 17.1 per cent increase in property values.

REIWA’s CEO Cath Hart said Perth’s forecast price growth this year will be supported by ongoing low supply and strong demand ⁠ — although listings remain low.

“Current listing levels are 10 per cent lower than they were this time last year, and almost 34 per cent lower than what they were three years ago,” Ms Hart said.

REIWA CEO Cath Hart said Perth’s forecast price growth in 2023 will be supported by ongoing low supply and strong demand. Source: REIWA

“As building completions increase over the next 12-18 months we anticipate listings will start to increase, however they will remain below historic averages.”

Executive Director for the Property Council of WA Sandra Brewer agreed that was the projection for the post-Covid property market.

“WA has benefited from Covid stimulus packages, with a huge number of housing starts,” she said.

“But generally there has always been an undersupply of housing in Perth.”

For buyers, it may be better to act sooner than later, as the Reserve Bank resumes interest rate decisions from next month.

Further interest rate rises could spell reduced borrowing power and cause buyers to temper their expectations accordingly.

Busselton was a top performer in regional WA in 2022, with three mining companies flying FIFO workers from the regional city. Source: NCA NewsWire / Dylan Coker

REIWA signalled they are anticipating greater sales activity in the low-mid price brackets in 2023.

Looking to regional WA, Busselton was a top performer last year, as all regional centres saw median price growth.

“Regional areas have also benefited from an increase in the work-from-home/micro business trend,” said REIWA’s Cath Hart.

“The idea of having to live where you work has changed significantly post-Covid.”