After a mining exodus, this capital city is ready for a remarkable turnaround
Perth’s property market is on the cusp of another boom after years stuck in the doldrums, as expats and young buyers flood auctions across the city.
Homes in Australia’s westernmost capital city were one of the biggest casualties of the mining boom’s end in mid-2014.
Prices fell almost instantly and kept declining for six years, with the average Perth house price plunging from $564,000 in June 2014 to $490,000 in December 2020, according to data supplied to The New Daily by property analytics firm CoreLogic.
But the tide has now turned.
CoreLogic head of research Eliza Owen said buyers in Perth were enticed into the market last year by the city’s relative affordability (no capital city has cheaper homes), as well as a revival in mining, record-low interest rates, and state and federal government incentives.
Ms Owen said Perth’s jump in the number of sold homes (22.4 per cent) was the largest of any Australian capital over the past 12 months, despite the number of advertised properties falling 30 per cent compared to the previous year.
Coupled with a slowdown in construction, the increased selling activity has produced ripe conditions for a boom, she said, with prices having already risen by 2.8 per cent in the final three months of 2020.
“Part of this cyclical shift we’re starting to see is a result of limited supply and a moderation of supply that’s happened for years, as well as a big withdrawal of investor participation, which is tightening the rental market,” Ms Owen told The New Daily.
We’re at a point where prices seem to have bottomed out, and investor participation may soon pick back up as we have seen rapid increases in the price of rent.”
According to SQM Research, the average asking rent price jumped from $440 in January 2020 to $493 in December 2020.
The run up in rents has prompted analysts to upgrade their price forecasts for the western capital.
ANZ economists now predict the average home price in Perth will rise by 12 per cent this year, while AMP Capital chief economist Shane Oliver said prices will jump by 10 per cent.
Although he doesn’t expect prices to hit those heady heights, the director of boutique real estate agency The Haus Exchange, Rasmus Nielsen, said buyer interest had doubled since COVID-19 restrictions were eased.
“It’s not uncommon to get 50 people through the door in the first two weeks any more. That’s across the board for a two-bedroom apartment or a detached home,” Mr Nielsen told The New Daily.
It’s almost like you have a whole bunch of kids in a candy store, but the store does not have enough stock to satisfy their sweet tooth.”
Mr Nielsen said returning expats and first-home buyers formed a significant part of the buying cohort, which has helped push down the average time a property is on the market from four weeks to about two.
“I’ve never seen anything like this,” he said.
“I’m actually starting to get people registering to buy the property before they see it – of the last seven properties I’ve sold since November, half were sight unseen, and it’s simply so they don’t miss out.”
Curtin University property lecturer Dr J-Han Ho told The New Daily that during the six years of the “dead housing market”, prospective buyers built up savings instead of diving into the market.
With housing now showing signs of life and borrowing costs expected to remain cheap, buyers are armed with reserves of cash in Perth’s highly affordable market, he said.
“Households who would have normally taken out a $300,000 loan can now take out a $450,000 loan because interest rates are no longer at 7 to 9 per cent, so all of a sudden, earning the same income has instantly helped people become more aspirational,” Dr Ho said.