Perth's Housing Market on the Rise: Potential for 20% Increase in 2024

According to the latest update from the Real Estate Institute of Western Australia (REIWA), Perth's median house sale price could potentially increase by 20% between January and the end of the year. This forecast is based on recent data showing accelerated growth in property prices.

In the last quarter of 2023, figures revealed a 4.3% increase in house sale prices. Preliminary data for the first quarter of 2024 suggests growth of 4.2%, indicating a continued upward trend as more properties complete settlement. Over the past year, the median house sale price has seen an increase of 13.6%, reaching a record high of $625,000. Should the market maintain its current trajectory, achieving 20% growth between January and the end of the year is feasible.

The conditions currently seen in the market suggest a continued increase in prices. One of the main factors contributing to this expectation is the ongoing imbalance between supply and demand, which is likely to persist into 2024. This imbalance continues to exert upward pressure on prices. Moreover, strong population growth, coupled with limited new housing supply, is causing a focus on established homes.

In addition to these factors, Western Australia's economy is also playing a role in supporting price growth. Low unemployment rates contribute to higher consumer confidence, as well as an increased ability to purchase homes and manage mortgages. Another potential contributing factor to buying power in Western Australia is the Reserve Bank's adjusted meeting schedule, which has provided relief from monthly concerns about potential rate increases. Some commentators have even forecasted a possible rate cut in the near future, which would further support buying power.

The rental market in Perth has also experienced record highs in the first quarter of 2024 due to strong demand and limited supply. At the end of March, the median weekly dwelling rent had increased to $650, marking an 18.2% rise compared to the previous year. Vacancy rates have dropped to a new record low of 0.4%.

The median weekly house rent price reached a new peak, rising by 4.8% over the quarter and 18.2% over the year to $650. Meanwhile, the median unit rent price rose 5.3% from the end of December and 20.0% from the end of 2023, reaching $600 per week. This marked yet another record high.

Despite the strong rental market, some moderation in demand is beginning to emerge in certain sectors. While demand remains strong for properties in more affordable price brackets, a slowdown has been reported at the higher end of the market. Self-moderation of demand is also being observed as tenants choose to buy homes where possible or stay in family homes to avoid the rental market. Additionally, newly built homes owned by Eastern States investors are being introduced to the rental market, primarily in outer-lying suburbs with available land for development.

In regional Western Australia, house prices are also being affected by the state's strong population growth. This trend is expected to continue as long as the state's population keeps growing and home building remains constrained. In the South West region, lifestyle continues to be a major drawcard, benefiting from the changing nature of mining work. Busselton airport's fly-in-fly-out arrangements are allowing more workers and their families to live in the region, contributing to its appeal.

Similarly to the Perth market, regional areas are experiencing severe shortages of rental stock, and unless there is a significant drop in demand or a rise in supply, regional rents are likely to continue to climb.

The impact of these changes can be seen in other parts of the state as well. Local economies in various regions are experiencing both positive and negative effects as they adapt to these new market conditions. As Western Australia continues to attract new residents and businesses, the housing market will need to adjust to meet the evolving needs of the population.

REIWA plans to release its regional March 2024 quarter report in May, which will provide further insights into the trends and changes affecting the regional housing markets throughout the state.

In conclusion, Perth's property market is poised for significant growth throughout 2024, driven by strong demand and limited supply. This dynamic is affecting both house sale and rental prices, with the potential for record increases in the coming months. As the market evolves, it will be essential for stakeholders to keep an eye on changes in supply and demand, as well as broader economic factors, to understand the potential impact on the state's housing market and its residents.

Paulette Contessi

Director / Licensee

CONTESSI PROPERTIES