Perth property prices could soar as much as 10 per cent in 2024, according to Damian Collins, who is the past president of the Real Estate Institute of Western Australia (REIWA).
Mr Collins, who is also the managing director of Momentum Wealth, said a strong local economy, overseas and interstate migration and a continued tightening in supply levels were tipped to make the WA capital attractive for investors.
He said the WA economy had achieved a Gross State Product (GSP) of $445.3 billion in the 2022-2023 financial year, which was equal 17.4 per cent of Australia’s Gross Domestic Product (GDP).
The strong GSP results were largely driven by the mining industry, which contributed $200 billion alone.
The healthy economy means Western Australia has its highest ever level of employment, and Mr Collins said this had a positive impact on the property market.
“Unemployment remains very low at 3.8 per cent and is expected to remain low in 2024,” he said.
“With more people employed, there is generally an increase in disposable income within the economy, which can lead to higher demand for housing, as more people can afford to buy homes.
“This demand can drive up property prices, especially in areas with limited housing supply.”
Mr Collins said WA’s robust economy meant the state was attracting new residents at a record pace and this could also push property prices up.
Data from the Australian Bureau of Statistics shows that in the year to March, the state’s population grew 2.8 per cent, the highest across Australia.
This was fuelled by both interstate and international migration.
“As we look towards 2024, WA’s job prospects are set to continue attracting workers to WA, and these new residents will need somewhere to live, which will drive further demand,” Mr Collins said.
While demand remains high, dwelling approvals and completions have held at record lows throughout 2023 due to challenges in the construction sector.
Mr Collins said these factors combined would provide further impetus for price growth.
“With the increase in population and smaller household sizes due to COVID-19, over the past four years to March 2023, the demand for dwellings in WA has increased by over 80,000, but when you consider building completions less demolitions, we have only been able to add around 48,500 dwellings to the market,” he said.
“This is creating a supply shortage that will continue to place upwards pressure on house prices for some time to come.
“While we may see an increase in household sizes due to the increased prices, we are a long way from being back to balance between supply and demand.”
On December 3, REIWA reported that just 4755 properties were listed for sale, significantly below the 13,500 listings regarded as the benchmark for a ‘balanced’ market.
Despite the intense demand for Perth homes, the WA capital continues to offer one of Australia’s most affordable housing markets.
The median dwelling value in Perth is currently $646,520, second only to Darwin ($496,792), and almost half the median price of Sydney ($1.125 million), according to CoreLogic figures.
“Perth’s affordability is reflected in the proportion of income required to fund a home,” Mr Collins said.
“According to REIA’s latest Housing Affordability Report, only 35 per cent of a family’s income goes towards home loan payments in WA compared to 56 per cent in NSW, 46.5 per cent in Victoria and 42.4 per cent in Queensland.”
“This relative affordability is particularly attractive in the current interest rate environment, and is driving interest from interstate investors as well as locally.”