It’s fair to say that it has been a sobering six years for Perth’s property market.
Perth dwelling values have fallen by over 22% from their June 2014 peak:
Rents have also declined by 23% from their 2014 peak:
The market is turning around, however, according to CoreLogic’s head of research, Eliza Owen:
While transaction activity is gradually improving across the country, Perth stands out as a market primed for recovery. For the four weeks ending 20th of September, Perth and regional WA were the only dwelling markets where new listings volumes exceeded the numbers in the equivalent four week period of the previous year.
Listings is not the only transaction data suggesting more confidence in the Perth dwelling market. This is shown in the chart below, which capered capital city sales numbers in August, with a 6-month average of pre-COVID sales volumes. Perth is the only capital city where sales numbers where above the pre-COVID average.
These higher levels of transaction activity are also showing up in mild value increases across the Perth dwelling market. In the 28-days to September 23rd, the Perth home value index increased 0.6%.
While a positive turn in Perth dwellings may be surprising during a recession, the WA economy has been supported by a 4.8% increase in mining investment over the year. ABS payroll data suggests since the start of the pandemic, payroll jobs across WA fell less than 1%, compared with national declines of 4.5%.
Perth dwelling values are also relatively affordable, sitting 22.2% below the record dwelling value in June 2014, and there is a strong mix of state and federal first home buyer incentives in place, which may be encouraging demand as well.
A consistent upswing in Perth property values will depend on the resilience of the market through the end of mortgage repayment deferrals, whether there are further reductions in the cash rate, and how successfully COVID-19 can be contained.
CoreLogic’s assessment makes sense, given the Western Australian economy is currently the best performing in the nation:
Population growth into WA has also accelerated, adding to demand, while supply has tightened:
Finally, Perth housing is at its best relative value in around half a century:
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
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