Perth boasts the most competitive housing market in Australia, characterized by a scarcity of properties for both buyers and renters.
Home prices in the city have surged by 10.90% over the past year, exceeding the historic average, potentially reaching a 12% increase by year-end. The rental market in Perth faces challenges, marked by a 14.9% year-on-year rise in rents. The shortage of available properties and a limited supply pipeline intensify competition, with record-high inquiries per rental listing. Perth’s property market has outperformed other capitals, becoming the top-performing market due to high demand and limited supply, despite last year’s interest rate hikes.
Perth’s housing market is thriving due to several factors, primarily driven by its affordability compared to other major Australian cities. The PropTrack Housing Affordability Index ranks Western Australia highest in housing affordability, attracting buyers from various regions. The robust population growth, particularly in the rental market, has been a significant driver, with a 2.8% population increase in the 12 months leading to March 2023, the highest among all states and territories. This population growth is also motivating homebuyers, as challenging rental conditions prompt some to consider purchasing sooner. The Western Australia government’s efforts to attract skilled regional migrants and the regional area designation for the entire state make Perth a unique capital city. The future outlook for Perth is promising, with ongoing strong net migration, population growth, and historically low housing vacancies.
Western Australia, historically known for its economic volatility, has experienced a notable turnaround. After a period of economic stagnation following the mining boom, the state has rebounded. Driven by robust export demand, Western Australia’s economy has outperformed all other states in the past year, with state final demand increasing by 2.8% in the 12 months leading to March. With a low unemployment rate of 3.4% and high participation rates, the state’s strong economic performance, growing demand for labor, and a decade of lagging behind eastern capitals are expected to continue supporting Perth’s housing market. These conditions are unlikely to change soon, given resurging population growth, limited new home constructions, and robust housing demand. The combination of affordable homes, population growth, housing shortages, and tight rental markets is likely to sustain both home price and rental price growth in Perth.
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