As we approach the end of the financial year, it’s time to pop the bubbles (if you’re a homeowner) and toast the stellar performance of the Perth property market.

May 2024 has proven to be a corker of a month, showcasing further robust growth.

Let’s take a Red Fox plunge into the specifics of the sales and rental market, and its annual performance to date.

Sales Market Performance

May 2024 saw continued momentum in the Perth property market, much to the delight of those who have been holding off selling and the woe of those hoping to buy.

According to the CoreLogic Home Value Index, Perth’s dwelling values increased 2.0% for the month, contributing to a remarkable 22% annual growth.

This positions Perth at the top of the leaderboard, outpacing other major cities like Sydney and Melbourne.

The pace of sales also showed no signs of slowing. Houses sold in a median of eight days in May, unchanged from April but four days faster than the same time last year. Units sold in a median of ten days, one day faster than April and twelve days faster than a year ago.

Our median days on market here at Red Fox are five, with almost all our properties Under Offer in less than a week.

While last year we were seeing a discrepancy in the time taken to sell units, which typically sat on the market much longer than houses, the unit market in Perth’s inner north is now the most active we’ve ever seen it. Units are attracting substantial numbers of buyers at home opens, translating into multiple offers and record prices. Those who hung on through the slump are finally being rewarded and can, for the most part, sell for more than they paid for their properties.

If you’re trying to buy, the market is merciless. With just over 3,200 properties available, including houses, units, and land, 41.5% less than a year ago, it’s no wonder conditions have been likened to the Hunger Games. Buyers need to be vigilant, persistent and organised if they hope to secure a home.

Rental Market Performance

The rental market in Perth has mirrored the sales market’s strength but with signs of easing.

According to REIWA, Perth’s median rents remained unchanged for the second month in a row. The median weekly dwelling and house rents held steady at $650 per week in May, while the median unit rent was stable at $600.

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REIWA CEO Cath Hart noted that properties in higher price brackets are taking slightly longer to lease, with fewer offers of higher rent and some discounting. This shift is attributed to new supply coming onto the market, particularly in the northern corridor, and some tenants moving into newly built homes, freeing up established supply.

Despite this recent stability, rents remain significantly higher than a year ago, which is a pain point for renters. The median unit rent has increased by 20.0% since May 2023, and the median house rent by 14.0%. This growth underscores the ongoing demand and the pressure on rental affordability in Perth, with no short-term let-up in sight.

Annual Performance Overview

Looking at the broader picture from May 2023 to May 2024, Perth’s property market has been nothing short of exceptional:

  • Dwelling values have climbed by 22%, indicating robust buyer confidence and strong market fundamentals.
  • Gross rental yields have also improved, reaching 4.5%, the highest among capital cities. This increase in yields provides a cushion for investors against rising mortgage rates, which currently average around 6.7%.

Market Dynamics and Future Outlook

Several factors have driven the Perth property market’s strong performance. Low housing supply relative to demand has been a critical factor, with CoreLogic noting a 17.6% drop in listings compared to the previous five-year average. This imbalance has kept the market skewed in favour of sellers, with properties selling quickly with minimal discounting.

While there are signs of easing on the rental front, the market remains tight with a near-record low vacancy rate. The recent stability in rental prices is not yet widespread, with affordable homes still seeing significant competition.

REIWA advises landlords to consult with their property managers about current market conditions to make informed decisions on lease renewals and pricing, particularly in relation to changes to the Residential Tenancies Act that will limit rent increases to annually on new leases.

Looking ahead, while high interest rates and affordability challenges pose potential risks, the underlying demand-supply mismatch is likely to continue supporting property values. The expectation of sustained demand, coupled with limited new housing supply due to construction constraints, suggests that Perth’s property market will remain resilient in the near term. If you’re looking to buy, the longer you put off making a decision, the more expensive it will likely be.

Conclusion

The Perth Inner North property market has had a stellar twelve months, marked by significant growth in both sales and rental markets. As we look to the end of the financial and calendar years, the market dynamics indicate continued strength, making it an exciting time for local investors and homeowners, but signalling further pain for buyers wanting to get a foothold into the market or upgrade their current digs.

For detailed insights and personalised advice in relation to the suburbs surrounding and nearby Beaufort Street, feel free to reach out to us at Red Fox Property Group.

We’re here to help you navigate this dynamic market with confidence and expertise. Look forward to hearing from you soon.