REIWA Market Forecast Update Predicts a 10% Increase in House Prices for 2024

The 2024 property market quarterly update by REIWA projects a 10% growth in Perth house prices this year, with a potential rise in rents, albeit at a slower pace. Despite interest rate increases in 2023, the WA property market maintained momentum, experiencing 2.6% growth in house sale prices in the December quarter and an 8.3% increase throughout the year, reaching a new record median of $590,000.

The median unit sale price, stagnant for most of 2023, saw a 2.0% increase in the December quarter and a 0.7% rise over the year, reaching $408,000. Predictions for 2024 indicate further increases in median unit prices due to limited house supply and rising prices, making units an attractive entry point for those seeking alternatives to the challenging rental market.

In 2023, the real estate market set records for median house prices, median time to sell (eight days), and a new low in the number of properties for sale (3,648 at the end of December). Key factors influencing the market in 2024 include population growth, building completions, and the overall state of the WA economy.

Population growth, a major driver of housing demand, increased by 3.1% in the year to June, making it the country's strongest growth rate. However, the completion of new homes fell short, creating a shortfall of over 20,000 dwellings, intensifying pressure on established homes and driving up prices. Despite more anticipated population growth, the Housing Industry Forecasting Group estimates 15,000 to 16,000 new dwellings completed by June 2024, maintaining high demand for established homes.

A robust economy, characterised by strong employment growth and a low unemployment rate, further supports the real estate market. The mid-year budget review suggests continued economic strength, with State Final Demand revised up to 4.5%. Inflation, while slowing, is not expected to significantly impact the market if the Reserve Bank of Australia raises interest rates in 2024.

In the rental market, records were set in the final quarter of 2023, with the median dwelling rent reaching $600 per week at the end of December, a 3.4% increase from September and a 15.4% rise from December 2022. Median weekly house rent also reached a new high of $620, rising 3.3% in the quarter and 12.7% over the year. Units, lacking in sale price growth, compensated with a 3.6% increase in median unit rent price, reaching $570 per week at the end of the year.

Rental listings remained low, hovering around 2,000 for most of the year before dropping to 1,518 in December. Despite being low, this was still 5% higher than at the end of 2022. The vacancy rate, mostly at 0.7%, briefly rose to 0.8% and 0.9% in June and July, respectively. The challenging rental market is expected to persist due to strong demand, driven by population growth and limited supply.

The regional WA real estate market witnessed varying house price growth in 2023, with some areas experiencing substantial growth, while others saw more modest increases. Rent prices in most regional centres reached record highs, and similar trends are expected to continue in 2024. Regional centres that experienced strong growth during the pandemic might see a slowdown, while others, like Bunbury and Port Hedland, are anticipated to perform well due to affordability, proximity to key attractions, and employment opportunities.

Despite development in many regions attracting people, housing shortages and strong demand are expected to drive rent increases. The resource sector's expansion may lead to the northern regional centres experiencing the strongest rent price growth in 2024. Overall, the shortage of properties in WA and sustained demand are likely to maintain upward pressure on prices in both urban and regional markets throughout the year.

Paulette Contessi 

Director / Licensee

CONTESSI PROPERTIES