Market remains resilient despite rate rises
The Perth property market experienced a year of milestones during the 2022-23 financial year, according to the Real Estate Institute of Western Australia.
Despite facing multiple interest rate rises, the market witnessed an upward trajectory in house prices, setting new records for time to sell a property, rental vacancy rates, and rent prices, according to Cath Hart, CEO of REIWA.
“Resilience was the key theme for the WA property market in 2022-23, with Perth emerging as the only capital city to record moderate price growth over the financial year despite constant interest rate rises,” Hart said. “This is due to our strong economy, low unemployment rate, lower-than-average mortgages and higher-than-average wages. While the rate rises have certainly impacted household spending, many people have been able to adjust to the increase in their repayments.”
Top house markets
In terms of specific property segments, the Perth house market outperformed the unit market. Median house prices rose by 4.6% to reach a new high of $555,000, while the median unit price saw a decline of 3.2% to $399,000. Among the suburbs, Winthrop experienced the most significant price growth for houses, with a median increase of 25.3% to reach $1.25 million.
The list of Top 10 suburbs for price growth in 2022-23 showcased some noteworthy differences compared to the previous financial year. Six of the suburbs on this year's list had median house prices below the overall median, indicating a focus on affordability. While the WA market experienced moderate growth overall and strong growth in some suburbs, the pace of growth has slowed in the past 12 months, a development welcomed by experts who prefer steady and sustainable growth.
The top 10 suburbs for house price growth were:
|
Suburb |
Annual house sale price |
Change in annual house price |
|
Winthrop |
$1.25 million |
25.3% |
|
Middle Swan |
$413,500 |
21.6% |
|
Bullsbrook |
$462,500 |
20.1% |
|
Lathlain |
$940,000 |
19.4% |
|
Parmelia |
$375,500 |
19.2% |
|
Trigg |
$1.77 million |
18% |
|
South Perth |
$1.79 million |
17.4% |
|
Coodanup |
$388,000 |
17% |
|
Orelia |
$378,888 |
16.6% |
|
Cooloongup |
$420,845 |
16.4% |
Source: REIWA
Top unit markets
In the unit market, Bibra Lake stood out as the top performer, with a 32.6% increase in median prices to $315,000. Notably, half of the suburbs in the top 10 for unit price growth were priced below the median unit price, suggesting a shift towards more affordable options due to the impact of interest rate rises.
The property sales process in Perth gained speed, and June set a new monthly record with a median of just 10 days on the market. Leda emerged as the fastest selling suburb for houses, with homes being sold within a median of five days over the financial year. The trend towards fast sales was visible in the focus on affordability, with the Top 10 fastest-selling suburbs all well below the Perth median house price.
Read next: WA market resilient despite affordability declines – REIWA
On the rental front, Perth experienced a surge in demand and coupled with low supply, led to record-high rent prices over the past 12 months. In June, the median rent reached $580 per week for houses and $530 per week for units. The rental vacancy rate hit a 42-year low of 0.6% in December and remained at 0.7% for most of the past 12 months. The scarcity of rental properties is expected to continue into the first half of the 2023-24 financial year, attracting interest from Eastern States investors. As a result, the medium-term forecast indicates a moderate increase in supply and a possible easing in the vacancy rate.
For investors, units emerged as strong contenders for rental yield compared to houses, and the top 10 suburbs for units all recorded yields higher than the number one suburb for houses. This trend can be attributed to the relatively lower sale price growth of the unit market compared to houses in a rising-rent environment. Perth remains an attractive destination for investors due to its affordability and promising rental yields across all suburbs in the Top 10 lists.
The top 10 suburbs for unit price growth were:
|
Suburb |
Annual unit sale price |
Change in annual unit price |
|
Bibra Lake |
$315,000 |
32.6% |
|
Booragoon |
$687,500 |
31% |
|
Erskine |
$385,000 |
24.2% |
|
Mount Pleasant |
$735,500 |
20.5% |
|
Crawley |
$670,000 |
16.5% |
|
Orelia |
$192,000 |
16.4% |
|
Baldivis |
$360,000 |
14.5% |
|
Burswood |
$655,000 |
13.9% |
|
Melville |
$567,500 |
13.6% |
|
Balga |
$300,000 |
13.4% |
Source: REIWA
The performance of the Perth property market has drawn attention from investors, with CoreLogic naming the region as one of the best investment opportunities in the country. The market's potential for strong capital growth, combined with solid rental yields and affordability, positions it favourably for investors.
Bayswater emerged as a standout performer in terms of yield, boasting a median unit sale price of $243,000 and a median weekly rent price of $450, leading to an impressive yield of 9.6%.
Jolimont and Shelley recorded significant rent price growth for units and houses, respectively, indicating the market's dynamic nature. Properties were leased quickly during the financial year, with the median leasing time averaging around two weeks.
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