Perth home values have rocketed by 64% since the beginning of the pandemic in March 2020, according to PropTrack:
Perth’s rental inflation is also leading the nation, rising by 13.5% (houses) and 14.7% (units) in the year to May, according to CoreLogic:
Source: CoreLogic
NAB has released its dwelling value forecasts for the next two years, which tips that Perth home values will continue to lead the nation.
NAB predicts that Perth dwelling values will increase by 13.7% in 2024 and by a further 6.2% in 2025, as shown in the following chart from The AFR:
NAB’s forecasts are based on rates remaining on hold until November, lower wage growth, and rising unemployment.
The boom in Perth home values and rents is being supported by national-level population growth.
Western Australia’s population increased by 3.3% in the year to September, far above the national increase of 2.5%.
This population increase has been driven by strong net migration from overseas and interstate.
Perth’s economy is also booming, and despite recent price increases, the city’s housing remains reasonably cheap to purchase.
As a result, there is much more upside for Perth property values and rentals.
However, Perth’s market has always been volatile.
Between 2014 and 2019, Perth home values fell by 18% in nominal terms (and even more in real ones) when the iron ore market imploded.
The next commodity price crisis could deliver another big decline.
That said, Western Australia now has the GST floor, which could cushion the downside from lower commodity prices.
