Perth on winning streak, new data shows strong growth again

3 June 2023

Perth real estate has continued its winning streak, sustaining the third highest price growth across all Australian capital cities in May.

The CoreLogic Hedonic Home Value Index, published on June 1, shows Perth property prices surged by 1.3% last month, trailing Sydney where dwelling prices grew by 1.8% and Brisbane, which experienced 1.4% growth.

Property in Perth also appears to be playing the long game, recording the greatest annual growth of any capital city.

While Perth saw a 2% increase in dwelling values for the past year, prices slipped in six of the eight states, including by 12.6% in Hobart, 9.3% in Brisbane and 8.2% in Sydney. Adelaide was the only other state to record growth for the year, with a 0.4% rise.

The median property price in Perth is now $580,023.

Growth values for apartments and units remained stronger than houses in Perth in May, with 1.2% growth for houses and a 1.7% boost for units. But the longer term data shows greater strength in houses with 2.2% growth compared to 1.0% for units.

Perth’s rental market is the best performer in the country. In the past year, it has seen the greatest growth in rent prices of all capital cities, recording a 13% increase. In the past three months alone, Perth rents rose by 5.2%.

The rental yield in Perth is now 4.9% – up on the national average of 4.2%.

Mont Property Managing Director Matthew Podesta said Perth’s market position was continuing to strengthen, fuelled by robust competition and a limited availability of stock.

“What is especially encouraging is that CoreLogic has noted Perth as the only capital city where dwelling values have returned to record highs,” Mr Podesta said.

“This shows that the Perth market is continuing to be one of the best performers in the country and achieving excellent growth and sales results, while other cities are achieving less than optimum results.

“The lack of available stock and increased competition has put upward pressure on prices for some time now, so it is likely the usually subdued winter season will have more spark.”

CoreLogic Research Director Tim Lawless said the strengthening national market was a symptom of persistently low levels of supply running up against rising housing demand.

“With such a short supply of available housing stock, buyers are becoming more competitive and there’s an element of FOMO creeping into the market,” Mr Lawless said.

“Amid increased competition, auction clearance rates have trended higher, holding at 70% or above over the past three weeks. For private treaty sales, homes are selling faster and with less vendor discounting.”

Mr Lawless said with national selling conditions improving, it was possible that more homeowners would test the market to take advantage of improving market conditions.

But the potential for increased mortgage stress was high.

“The coming months will see a sharp rise in the number of fixed rate home loans reaching term,” he said. “As more borrowers refinance we should get a better understanding of how well borrowers are placed to service their debt at a substantially higher interest rate.”

Meanwhile, the Reserve Bank of Australia Board is due to meet on Tuesday (June 6) to make a monetary policy decision and discuss another possible interest rate rise.

In May, the RBA lifted the cash rate another .25 percentage points to 3.85% after a month’s pause, marking the 11th interest rate rise in the past year.

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