Perth Sales Market Update January 2024
Buying a property in Perth during current property frenzy can be hard. With record-breaking low stock on the market, down ~50% from December 2022; soaring prices, up ~8.3% since December 2022; a net population growing faster than any other Australian state, a 3.1% growth in the year to June 2023; and over 2200 Australian construction companies entering insolvency in FY22/23; the market has never been hotter thanks to such limited supply vs the overwhelming demand.
These factors have caused predictions of house prices increasing a further 10% this year, per REIWA’s 2024 property market quarterly update and this is mirrored by Westpac’s forecast. The other big three banks, whilst more conservative, also tip the Perth market to grow between 5-8%. Given current migration and population growth trends, and the now the high interest of East Coast investors into the Perth market, 2024 may see even less stock on the sales market and even REIWA CEO Cath Hart, has stated “Demand shows no signs of slowing.”
On the supply side, WA’s low level of building completions has fallen to 14,000 new homes in each of the last three financial years and coupled with seeing our fair share of construction companies going bust, many people across Australia are reluctant to take the risk to build. So far in FY23/24, per ASIC’s insolvency statistics released on the 16/1/24, a total of 1391 companies in the construction industry have, for the first time, entered external administration or has had a controller appointed. This means that the construction industry has had a staggering 28% of all insolvencies across Australia in FY23/24.
Given such supply and demand side factors, it is just the beginning for the Perth property market to pick up. Whilst Perth, and WA in general, has been historically lagging behind the other states, with an annual percentage increase of only 1.75% in between 2011-2021, perhaps this year will be the year that Perth starts to catch up.
The next quarterly report will be something to keep an eye out for, given that the reports are retrospective by nature. We have already seen a drop in the median selling days from 12 in June 2023, to 8 in December 2023 (down from 16 in December 2022), and with such above-asking-price offers being offered to sellers, Perth’s insights and growth will soon be a hot topic amongst real estate professionals across Australia.
