Property prices across Perth have finally reached a new record high of $552,128, according to the latest data from CoreLogic.
Perth dwelling values have risen a cumulative 24.5 per cent since the start of an upswing in June 2020, with the 1.1 per cent rise in values through April taking values above their previous high level from June 2014.
Data from CoreLogic indicates Perth dwelling values saw a peak to trough decline of -20 per cent between June 2014 and September 2019 – the equivalent of a $95,000 fall in dwelling value over a period of 5.3 years.
CoreLogic Head of Research Australia Eliza Owen said Perth dwelling values have been driven by demand for houses.
“Growth in the Perth dwelling market has been led by houses, with unit values still -13.6 per cent below the record high seen in September 2013,” Ms Owen said.
“Recent growth in home values has been supported by a recovery in mining activity, a sub-4 per cent unemployment rate, strong jobs growth and positive interstate migration to WA since the September 2020 quarter.”
Ms Owen said values in Perth have seen another increase after the reopening of the state’s borders.
“Housing market values looked as if they could be easing towards the end of 2021, but the trend rate of growth has seen a resurgence through the March 2022 quarter,” she said.
According to Ms Owen, Perth property values have moved in boom and bust fashion in line with the commodities cycle.
The previous resources boom in the early 2000s saw prices double in value before peaking in 2014.
Ms Owen said the recent surge in commodity prices could help the resources sector and property values.
“The expansion of mining employment should see some upside amid the global recovery from the pandemic and, perversely, disruptions to commodity exports from Russia and Ukraine,” she said.
“However, capacity constraints from a tight labour market and materials shortage may prevent these potential gains from being fully realised.”
Given the sharp increase in property prices on the East Coast during 2021, Perth also looks affordable, Ms Owen noted.
“Despite the recent recovery in values, with a median dwelling value of $552,128, Perth still has the second-lowest dwelling value of the capital cities (behind Darwin at $501,182),” she said.
“Perth may also see a short-term increase in demand from the investor segment.
“Rental yields across Perth dwellings are averaging 4.4 per cent gross – the highest of any state capital.”
Despite positive movements in property prices, Ms Owen warned that higher interest rates could slow down the recovery in Perth.
“While there are several tailwinds for the Perth dwelling market which suggest a continued upswing, the recent tightening of interest rates may be a blunt force for housing demand,” she said.
“Perth may eventually follow other Australian markets into a broadbased downswing as a result, just as record-low interest rates aided the recent recovery.”