Perth buyers forced to turn to units as market remains tight

Tight stock and strong competition has forced Perth buyers to turn to units, according to the Real Estate Institute of Western Australia (REIWA).

While Perth is traditionally a market that favours freestanding homes, new data shows that units are being sold in just nine days, almost on par with houses that are selling in eight days.

REIWA Chief Executive Officer Cath Hart said houses had been selling quickly for some time, but the speed of unit sales had accelerated in the past few months.

“Units are selling 13 days faster than they did a year ago,” Ms Hart said.

“Traditionally buyers prefer houses – we all like to have our own patch of land, and houses generally perform better than units in terms of capital growth.

“However, competition for houses is high, many buyers are missing out and they are turning to the unit market to find a home.”

Ms Hart said units had started to play catch up after underperforming for a number of years.

“House prices have risen strongly in recent years, while units have remained relatively stable,” Ms Hart said.

“This makes units a more affordable option for people seeking home ownership, particularly first home buyers or tenants looking to escape the rental roundabout.”

According to REIWA, the fastest selling suburbs in February were Parmelia, Camillo, Cooloongup, Craigie and Kardinya (four days); and Coolbellup, Forrestfield, Golden Bay, Heathridge and Meadow Springs (five days).

The fastest selling suburbs for units were Atwell (four days); Spearwood, Tuart Hill and Wembley (five days); and Midland, Balga, Bentley, Dianella, Joondalup and Nollamara (six days).

The growing demand for units means prices have started to rise.

The median unit sale price increased 1.2 per cent in January and was 3.8 per cent higher year-on-year.

The suburbs with the most unit price growth in February were Mosman Park (4.8 per cent ), Mandurah (3.7 per cent), Claremont (2.8 per cent), Tuart Hill (2.6 per cent) and Belmont (2.4 per cent).

Meanwhile, the median house price rose 0.8 per cent to $605,000 over the month – up 10 per cent from February 2023.

The suburbs that saw the most house price growth in February were Como (4.1 per cent ), Two Rocks (2.9 per cent), Southern River (2.6 per cent), Armadale (2.6 per cent) and Greenfields (2.3 per cent).

Active listings rose slightly in February, settling at 3991 at the end of the month.

This was 5.1 per cent higher than January, but remained 43.6 per cent lower than a year ago.

Ms Hart said properties were still coming to market in good numbers, but demand exceeded supply, keeping active listings low.

“A review of our data shows new listings for houses in the past 12 months were just 2.2 per cent below the five-year average and unit listings were 12.8 per cent higher,” Ms Hart said.

“However, house sales by REIWA members have been 8.5 per cent higher than the five-year average, while unit sales have been 30.6 per cent higher.

“This is why active listings remain so low.

“At the moment, new listings coming to market are slightly outpacing the number of sales, which is why we’re seeing active listings rise.”

Meanwhile, Perth rents rose again to $630 per week in February, up 2.4 per cent from January and 18.9 per cent higher than a year ago.

The median weekly rent for houses increased 1.2 per cent over the month and 18.2 per cent year-on-year to $650.

The median weekly rent for units held steady at $580 but was 18.4 per cent higher than 12 months ago.

There were 1728 properties available for rent across Perth at the end of February, 8.4 per cent lower than January 2024 and 1.1 per cent lower than the same time last year.

Ms Hart said rental supply remained challenging.

“We have been hearing a lot about Eastern States investors snapping up property in Perth and increased lending to investors, but we haven’t yet seen an increase in the number of rental properties,” she said.

“The problem is local investors are still leaving the market and these new investors are essentially replacing those that have left.

“We are going to need to see sustained increases in investor lending before we see a significant change in supply.”

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Rowan Crosby

Rowan Crosby is a senior journalist at Elite Agent specialising in finance and real estate.