Pain and gain as Perth home values surge $212000 since the ...
Rate hikes and cost of living pressures did little to dampen Perth’s red-hot housing market with home values surging by more than 15.2 per cent in 2023 to a record median of $660,754.
Home values in Perth have soared 47.2 per cent to a median of $211,949 since the onset of COVID in March 2020, according to CoreLogic’s national Home Value Index released on Tuesday.
Home values in Perth have increased by 47.2 per cent, a median of $211,949, since the onset of COVID, Credit: Ross Swanborough
It’s a similar trend in regional WA with home values rising 48 per cent, or $150,402, since the World Health Organisation declared a global pandemic.
Nationally, the index rose 8.1 per cent in 2023, a significant turnaround from the 4.9 per cent drop seen in 2022, but well below the 24.5 per cent increase recorded in 2021.
CoreLogic research director Tim Lawless said one of the main trends through the year was the widening disparity in the rate of home value growth across the capital cities.
“Dwelling values have been rising at more than 1 per cent each month on average across Perth, Adelaide and Brisbane since May, while in Melbourne and Sydney the pace of growth has slowed sharply since the June rate hike,” he said.
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“In Perth, Adelaide and Brisbane, housing affordability challenges haven’t been as pressing relative to the larger cities, and advertised supply levels have remained persistently and substantially below average.”
Melbourne values declined through November and December while Sydney home values are stabilising with a monthly growth rate of just 0.2 per cent in the final two months of the year.
The smaller capital cities have been soft through most of the year, with Hobart (-0.8 per cent) and Darwin (-0.1 per cent) recording a decline in values in 2023, while the ACT recorded a rise of just 0.5 per cent.
Perth continues to outpace the other capitals recording a 1.5 per cent increase in home values in December, and up 5.1 per cent over the past three months.
Despite five interest rate rises last year, 13 by the Reserve Bank of Australia since May 2022, strong migration was putting upward pressure on WA’s established homes market according to REIWA chief executive Cath Hart.
“Over 73,000 people moved to WA in the year to June according to the latest data from the Australian Bureau of Statistics,” Ms Hart said.
“If you assume there are 2.5 people per household, that’s an additional 30,000 households in that time.
“However, we are building about 14,000 new homes per year, so we have a significant shortfall in supply versus demand.”
The more affordable suburbs of Perth have recorded the steepest gains, led by the cities of Armadale (25.2 per cent), Gosnells (22.6 per cent) and Rockingham (21.5 per cent).
Some economists are predicting a rate cut could come as early as September, and potentially several more cuts before the end of 2024.
Lawless said, although another cash rate hike can’t be ruled out, the trend towards lower inflation, weakening economic conditions amid low consumption and a loosening labour market, suggests another rate hike is looking increasingly unlikely.
That, he said, would likely mean an uptick in house and unit values.
“Stoking a housing value rebound on the back of lower interest rates is arguably an outcome that policymakers would like to avoid,” he said.
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The latest Housing Affordability Report from ANZ showed a worsening across every affordability metric over the first three quarters of 2023.
Based on median household income estimates and dwelling and rent values to September, the analysis showed the portion of household income required to service a new mortgage is close to record highs at 46.2 per cent.
The average household would take 10 years to accumulate a 20 per cent deposit and the portion of household income dedicated to rental payments rose to 31 per cent.
Perth is a clear outlier for rental growth, with house and unit rents leading the nation in 2023 and no signs of an easing in the annual growth rate said Lawless.
“Perth unit rents rose by 16.5 per cent, or approximately $80 per week on the median value over the year, while house rents were up 12.9 per cent or roughly $73 per week,” he said.
Hart said the vacancy rate has been below 1 per cent since August 2022 and the last time it was above 2 per cent was May 2020.
The RBA next meets on February 6.
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