Perth house prices will rise a further 10 per cent in 2022, according to REIWA’s latest figures, which show Western Australia’s strong property market is set to continue.
The prediction comes off the back of a strong 2021 that saw Perth’s property prices rise by 14 per cent.
REIWA President Damian Collins said despite the strong price growth recorded in 2021, WA was still the most affordable state in the country for housing, with prices in most regions across the state yet to catch up to their 2014-15 peaks.
Perth sales market
Sales activity was strong in Perth, with the average weekly reported sales figure in 2021 sitting at 865 – up from 680 in 2020.
“And since the spring selling season kicked off, weekly reported sales on reiwa.com have routinely been above 1000 per week, which demonstrates that the demand for housing in Perth is still very strong,” Mr Collins said.
“We anticipate sales volumes to hold at current healthy levels in 2022, which will put upward pressure on house prices over the next 12 months.”
Listings for sale should increase modestly in 2022 as sellers seek to capitalise on strong price growth, however they will remain below historic averages, Mr Collins said.
“Current listing levels are 11 per cent lower than they were this time last year and almost 50 per cent lower than what they were three years ago,” he explained.
“The increase in new listings to market next year should be offset by the resumption of migration once interstate and international borders open.
“As more people arrive in WA, this will add to the demand for housing and keep listings below historical averages.”
The outlook for 2022 is positive, however interest rate increases loom as a possible deterrent.
“Interest rate rises have the potential to slow the market in 2022,” Mr Collins said.
“Whilst most people are aware that interest rate rises will occur at some stage, if there are multiple interest rate rises too close together, this could reduce market activity and slow projected growth.
“It would be unlikely to derail the market entirely though. WA has some of the most affordable housing in the country and one of the strongest economies in the world.
“We also have very low ‘for sale’ and ‘for rent’ stock. All of these factors point to another strong year of growth.”
Perth rental market
REIWA anticipates Perth’s rental shortage will improve slightly next year as new constructions are completed and investor activity grows.
“Whilst rental listings are likely to remain lower than historical averages, we do expect to see more available rentals on the market in 2022 than we saw this year,” Mr Collins said.
“We’ve seen investor finance levels increase in WA during 2021, which should result in more properties being available to rent in 2022. Additionally, as construction projects are completed and people move into their new homes, this will free up some of the rental stock that is currently occupied.”
Median rent prices are estimated to increase between 10 and 15 per cent during 2022, which will attract investors.
“Tenant demand will remain high in 2022, which will see rents continue to rise,” Mr Collins said.
“Despite this, the Perth rental market is still very affordable, with WA tenants enjoying the cheapest rental market conditions in the country.”
A significant threat to the WA rental market in 2022 and beyond is the major changes being considered by the WA Government to the Residential Tenancies Act 1987 (RTA).
“The outcome of the RTA review could have dire consequences for the state’s rental market if investors’ rights are taken away,” Mr Collins said.
“The tenancy laws must remain fair for both rental providers and tenants, or we will see investors exit the WA market in large numbers, putting added pressure on the already short rental supply, and causing more harm to tenants in the long-run.”
Market conditions across regional WA are expected to remain strong in 2022, with lifestyle predicted to be a key growth driver by REIWA.
“Port Hedland was the top performing regional centre in 2021 for price growth, largely fuelled by the resurgent mining industry,” Mr Collins said.
“In 2022 we anticipate lifestyle to be a driving factor behind where people choose to live, especially if there are local employment opportunities in regional areas.
“We have some of the most affordable housing in the country, especially in our regional towns. They offer enviable lifestyle opportunities and are likely to attract strong demand from buyers as WA’s population starts to grow again.”