According to the CoreLogic Home Value index, Perth house prices rose 0.9% in August, bringing the total change for the quarter to 2.9%.
The market recovery seems firmly entrenched, with Australian house values trending higher for the past six months.
One key contributor to the increase is supply. CoreLogic reports that listings in Perth, Adelaide and Brisbane are more than 40% below their 5-year average. REIWA reports that as of the end of August, active listings (the number of properties on the market) were 38.6% lower than the same time in 2022 and a whopping 66% below the 2015-19 average.
So does this mean that 40%+ less properties are coming onto the market?
While it might seem like newly listed properties are scarcer than accommodation on Rotto in the school holidays, there are only 7.5% fewer properties coming to market than a year ago, and 12% less than in 2021.
So what’s keeping stock levels so low? Demand.
Homes are selling almost as fast as Brittany Spiers tickets. Well, not quite, but the fastest they’ve sold in 10 years.
In June and July, the median days on market were 10. Pre-COVID, it was over 40.
At Red Fox, our median days on market are 7. And they’re only that high because we don’t deal with offers before our first home opens. And we do a minimum of two home opens. (We like to let the process froth and bubble so we can find the best buyer, not just the first one).
Anecdotally, it seems consumer sentiment has settled thanks to the pause in interest rate rises, and of course, the low stock levels are contributing to highly competitive conditions in the market.
While we expect listings to pick up now we’re into Spring, we don’t see it reaching levels commensurate with demand any time soon, which means sellers, and buyers, can expect to see prices continue to rise. By how much, is the question. We think affordability might limit the increases to something sustainable, which is much preferred to a boom.
Rents hit new highs in August.
And thanks to the scarcity of rental stock, lower than-needed numbers of new builds, and immigration rates, are likely to increase further still.
Perth’s median weekly rent rose to $575 in August ($600 for houses and $550 for units) after sitting at $550 per week since March.
REIWA expects vacancy rates to tighten further towards the end of the year.
The primary issue is of course supply.
Anecdotally, and from talking to other industry colleagues, we at Red Fox are seeing landlords leaving in droves. Why? Because prices have finally recovered and their mortgage repayments have doubled, or in some cases, tripled.
Yes, rents have increased, but nowhere near enough to cover the costs of holding onto their investment properties.
So what are we anticipating going forward?
For the Perth inner north market, we expect to see demand for quality homes continue and prices rise. We’ve also noticed significantly increased numbers (and offers) for multi-residential properties, including units, villas, townhouses and apartments, as first-home buyers opt out of renting and become owners instead.
Investors are coming back, but due to current interest rates, they are not at the numbers the market needs them to be. The bulk of buyers we’re meeting locally are still owner-occupiers.
We are seeing more Eastern States investors, but they don’t have the advantage of being aware of the market to the same degree as locals do.
If you’re looking to sell, now is a great time.
If you’re trading up your existing home, while it might be challenging to find something to buy, the risk of waiting is that the gap between where you are now and where you want to be will widen.
And if you’re looking to buy, you need to be organised.
Sellers can often take their pick of offers and will choose to work with the buyers that present the best price and conditions. If you haven’t yet engaged with a mortgage broker, in particular, you need to.
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Wanting advice about your own specific home and circumstances? Call me now on 0405 812 273 – we’re here to help.
Red Fox are ratemyagent Agent of the Year award winners in Mount Lawley, Inglewood and Bedford. We specialise in the suburbs surrounding Beaufort Street and beyond.