Low stock levels and high demand will continue to see property prices rise in Australia’s most affordable capital city – Perth – in 2023.
Data from the Real Estate Institute of Western Australia (REIWA) shows strong property market conditions experienced in 2022 are expected to continue this year, with Perth house prices tipped to rise between two and five per cent.
Rental conditions are also forecast to remain tight.
REIWA Chief Executive Officer Cath Hart said Perth’s median house price rose 2.86 per cent in 2022 and finished the year at $540,000, surviving eight consecutive interest rates while its east coast counterparts saw prices fall.
“Perth remains the most affordable capital city by median house price, and while prices have risen in the past two years, in most areas they are still below the previous peak of 2014/15,” she said.
“Perth’s forecast price growth in 2023 will be supported by ongoing low supply and strong demand.”
Ms Hart said an average of 895 properties sold each week in Perth in 2022, which was up from 870 per week in 2021.
Sales volumes are tipped to remain at about this level in 2023.
“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.
“As building completions increase over the next 12 to 18 months, we anticipate listings will start to increase, however they will remain below historic averages.”
Demand for housing is forecast to remain relatively strong, with population growth likely to offset any increase in new listings.
“Western Australia’s population grew 1.3 per cent in the year to June 2022 and the State Government’s recent mid-year Budget review forecast further growth of 1.5 per cent in 2022-23,” Ms Hart explained.
“As more people arrive in WA, this will maintain the demand for housing and keep listings low.”
Ms Hart said buyers had become more cautious and price sensitive as a result of rising interest rates, but a strong economy, low unemployment and population growth meant the market had weathered the hikes well.
More cautious buyers means REIWA expected greater sales activity in the low to mid price brackets in 2023.
“We are closely watching what the RBA does but are cautiously optimistic for the outlook in WA over 2023 based on current conditions,” Ms Hart said.
Regional markets are tipped to remain strong in 2023 with affordable housing and lifestyle opportunities among the drawcards.
Ms Hart said property prices rose in all regional centres in 2022, with Bussleton the top performer.
“It has been a consistently strong performer over the past few years, both quarterly and annually, which is driven by population growth,” she said.
“There are three mining companies that fly out of Busselton, so the area is attracting fly-in fly-out workers who come down to enjoy the lifestyle.
“Regional areas have also benefited from an increase in the work-from-home/micro business trend; the idea of having to live where you work has changed significantly post-Covid.”
Rental listings hit a 12-year low in September and while they rose slightly in the last few months of 2022, Ms Hart said they were still nearly 17 per cent lower than this time in 2021.
“The vacancy rate lifted slightly during the year before dropping back to 0.7 per cent and the median weekly rent was $500 at the end of November, which was $60 higher than a year ago,” Ms Hart said.
Similar conditions are expected in 2023, with positive net migration expected to maintain demand and put upward pressure on weekly rents.
However, Ms Hart said there were some positive signs for the coming year.
“After seeing investors leaving the market in the past two years, with more than 18,000 fewer rentals in the market now since the peak in January 2021, we are starting to see some improvement in investor interest, particularly from eastern state investors who see value in WA’s house prices and the potential for strong rental returns,” she said.
“This is a positive indication in regard to boosting rental stock levels but will take some time for the impact to be felt.
“Rental listings will remain low in the medium-term but are expected to improve over the next 12 to 18 months, as both building completions and investor activity increase.”
The proposed changes to the Residential Tenancies Act (RTA) remain a concern.
“The rental shortage is a critical issue,” Ms Hart said.
“We desperately need more investors in the market to help provide housing and keep rental prices affordable.
“Changes to WA’s tenancy laws that discourage existing owners and would-be investors will make an already tough situation worse.
“REIWA has been working with the State Government to achieve a sensible outcome to the RTA Review that is fair and equitable for all parties.”