More than meets the eye to Perth changes

Ronald ChanSponsored
Finbar Chief Operations Officer Ronald Chan.
Camera IconFinbar Chief Operations Officer Ronald Chan. Credit: The West Australian.

Almost everybody living in Perth – whether they are a homeowner or currently renting while keeping an eye on home prices – will be aware Perth has been rapidly catching up with other state capitals in terms of city dwelling values.

It has been an extraordinary performance since the onset of the COVID-19 pandemic in Perth – albeit from a low base compared with some of the other capitals, with the gains not being shared equally across the country.

Overall, national home values have risen by 35.6 per cent since March 2020, according to CoreLogic data.

However, over that same period, Perth dwelling prices have jumped by 62.6 per cent to lead the nation from Adelaide (61 per cent) and Brisbane (59.8 per cent).

In contrast, dwelling prices in Melbourne are just 11.2 per cent higher now than March 2020.

However, it should be remembered that Perth has been historically cheaper than the other mainland state capitals. When measured over a longer time period – the past 10 years – Perth prices are up 41.1 per cent, which lags behind Hobart (84.7 per cent), Brisbane (83.6 per cent), Adelaide (82.9 per cent), Sydney (81 per cent), Canberra (70.6 per cent) and Melbourne (58.5 per cent).

The variance in price movements reflects the different economic and social fundamentals facing each city.

It also reflects the different price points of each city. Perth units and apartments, although they have enjoyed the same strong growth as the broader Perth market, have a median value of $521,835 as measured by CoreLogic.

This is a record high for Perth but leaves it behind every state capital except for Adelaide.

The Sydney median price for apartments is $848,961, meaning we are almost 40 per cent cheaper than Sydney.

This implies there is still room for further growth in Perth apartment prices, particularly when the basic fundamentals of reduced supply and increasing demand are considered, along with the strength of the local economy.

Western Australia’s net migration remains high at more than 10,000 annually and, certainly, the anecdotal evidence is that the majority of this is interstate, rather than international migrants who tend to want to enter the rental market initially before buying.

Actual sales of dwellings in Perth continue to outstrip the number of new listings by a ratio of 1.1 to 1.0, demonstrating the strength of demand compared with supply.

Despite several major apartment projects nearing completion in Perth, the lag we have seen in new supply coming on stream means it is unlikely to match the growing demand.

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