As Perth’s ongoing housing crisis continues to break records, experts have warned the state’s booming property prices will continue to rise in 2024.
Recently released statistics for November showed the median house price in the City of Light reached $585,000, a jump of $44,335 in the last 12 months alone.
The upward pressure shows no signs of abating, with houses continuing to change hands in a record median of eight days and several suburbs (Beechboro, Brabham, Greenfields, Seville Grove and Warnbro) showing a record-breaking median of four days.
Meanwhile, vacancy rates remain among the nation’s lowest for sale and rental properties.
There were hopes that recent unit price stability would alleviate some housing pressures; however, a $5,000 median increase in the last month alone is set to kickstart more gains in the unit market.
Reasons behind property pressures
Real Estate Institute of Western Australia CEO Cath Hart says an influx of new residents was one of the main reasons behind the state’s continued housing crisis.
“There are several factors behind the ongoing strength of the Perth property market,” she said.
“One is population growth. WA’s population rose 2.8 per cent in the year to March. Data for June will be published in mid-December, and the background indicators suggest we can expect similar growth until March.”
The state’s rental crisis means more residents are looking to avoid the state’s spiralling rents, with Perth’s median rental dwelling rising to a record of $600 per week. 20 per cent higher than the same time last year.
“Secondly, the ongoing challenges in the rental market are seeing people look to buying if they can.”
Ms Hart said the out-of-control rents were forcing Western Australians to search for ways to avoid renting entirely.
“Demand may fall slightly if we see a greater increase in tenant household sizes, more people electing to buy – although this has challenges of its own – or people simply choosing to stay in the family home longer or moving back in with their parents to avoid the rental market,” she explained.
Making matters worse, a spike in building approvals during the pandemic has not translated to increased new build completion, meaning many Western Australians were also turning to the established homes market to get on the property ladder.
“The constraints in the building industry are also seeing people turn to the established homes market,” she said.
“Many people have been waiting for years for their new home to be finished. People considering building are looking to buy instead.”
“We don’t see the strong focus on the established homes market changing in the near future, so more price rises are extremely likely.”
Rapid growth forecast to continue
Experts have warned the state capital’s housing crisis will continue, with Perth-based property group Momentum Wealth forecasting a further 10 per cent growth in 2024.
Momentum Wealth’s managing director and former REIWA president Damian Collins said a robust economy, further population growth and supply and demand were behind the predicted price gains.
“With the increase in population and smaller household sizes due to COVID-19, over the past four years to March 2023, the demand for dwellings in WA has increased by over 80,000, but when you consider building completions less demolitions, we have only been able to add around 48,500 dwellings to the market,” he said.
“This is creating a supply shortage that will continue to place upward pressure on house prices for some time to come.”
With recent ABS statistics showing WA is the most popular state to move to nationwide, Mr Collins says continued interstate and international migration would apply further pressures to the housing market.
“As we look towards 2024, WA’s job prospects are set to continue attracting workers to WA, and these new residents will need somewhere to live, which will drive further demand,” he said.
Perth still more “affordable” than other capitals
Mr Collins said despite Perth’s record-breaking property market, there was a sense of irony with the city simultaneously remaining one of Australia’s most affordable state capital markets.
“Perth’s affordability is reflected in the proportion of income required to fund a home,” said Mr Collins.
“According to REIA’s latest Housing Affordability Report, only 35 per cent of a family’s income goes towards home loan payments in WA compared to 56 per cent in NSW, 46.5 per cent in Victoria and 42.4 per cent in Queensland.”
That relative affordability, coupled with current interest rates, would ensure Perth remains an attractive proposition for local, interstate and international investors.
“As we head into 2024, the Perth property story is only just starting to warm up, and I am confident that Perth is set for exceptional property gains in the new year,” he said.
“For investors who aren’t familiar with the local market, my advice would be to consider engaging someone on the ground who can conduct this due diligence on your behalf and who will ensure you’re paying the right price for a property that’s going to deliver in long-term value.”
