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Autumn 2024: Perth Real Estate Market Wrap

Perth’s sales and rental markets are the strongest in the country right now.

We explore why.

Perth’s property market is the country’s outstanding performer right now, with CoreLogic reporting that the city’s median value lifted 5.6% over the March quarter and 19.8% over the past 12 months to stand at $703,502.

The same CoreLogic data shows that rents have also grown rapidly over the past year, with the median apartment rent rising 15.9% in the 12 months to March 2024, and the median house rent lifting 13.7%.

How Perth’s property market became Australia’s strongest

For the past decade or so, Perth’s property cycle has often been a little out of kilter with the rest of the country’s. Sales prices in our city previously peaked in 2014 when the median dwelling value hit $545,000. They then endured a long period of stagnation and decline, before rising again during the COVID-19 pandemic.

It wasn’t until 2023 that prices recovered to 2014 levels. But since then, the only way has been up, with the median citywide property making $136,391 for its owners over the past year.

The reasons for this growth have to do with the forces of demand and supply.

On the demand side of the equation, ABS Data shows WA’s population is growing at the rate of 3.3% – faster than any other State – with almost 100,000 new people coming to call it home in the year to September 2023. Every one of these people needs a place to live and, unless housing stock can keep up, this naturally causes prices to rise.

That said, population growth isn’t the only thing driving demand in Perth right now. A strong economy, growing wages and even FOMO (fear of missing out) are also contributing too.

But, while demand is surging, on the supply side, we’re seeing listings fall. According to REIWA, since July 2023, fewer than 4,000 properties have been on the market at any one time – that’s less than half the long-term average.

The result is that days on market have collapsed to just eight, REIWA reports – the lowest on record.

Quite simply, Perth doesn’t have enough properties to absorb growing demand. Although many have been calling for more medium and high-density construction throughout the city, the lack of development sites and skilled construction labour means this is unlikely to change anytime soon. So long as this continues, we expect to see prices rise.

The rental market remains as tight as ever

As we noted above, rents also continue to grow rapidly. In fact, as CoreLogic recently said , population growth tends to have a more immediate impact on the rental rather than the sales market. That’s because most new arrivals to a city tend to rent for a period before they buy.

Competition for rental properties across our city has become so tight that the citywide vacancy rate has plummeted to just 0.4%, REIWA data reveals. This means that for every 1,000 rental properties in the city, just four are available for rent at any one time.

This is the lowest on record, and it’s in line with what we’re seeing on the ground. We can’t ever remember the number being quite this low or a time when every single suburb and property type was in demand the way it is today.

Again, there are exceptionally few properties available for rent— just 1,434 houses and 611 apartments in all of Perth, according to REIWA. In line with this, the median Perth rental property now spends just 14 days on market before being leased.

Why Perth delivers stronger yields than other capital cities

While these conditions are trying for renters and buyers, they are delivering strong returns to property investors. Perth’s median rent now stands at $650 for houses and $595 for apartments, REIWA reports.

Meanwhile, CoreLogic data shows the median yield for houses in our city has risen to 4.4% and for apartments, it now stands at 6.2% – the strongest of any major capital city.

We think there are key reasons Perth property continues to deliver such strong income for investors. First, again, is the strong rental demand that comes from migration. On top of this, Perth property prices remain relatively affordable, despite recent growth, especially in light of the fact that Perth workers tend to be among the country’s highest-paid.

Another reason not often reported, however, is that Perth tends to be a city of homeowners rather than renters. Just 26.6% of properties in our city are rented out, compared to 30.2% in Melbourne and 35.9% in Sydney, Census data shows. This scarcity value means there are too few properties for the growing number of people who want to rent a home.

What’s in store for the remainder of the year?

Barring a tumultuous economic event, Perth’s market dynamics will not change anytime soon. The economy is booming, people want to move here, and there aren’t enough properties to satisfy demand in the sales or rental markets.

The challenge going forward remains that we need more construction, especially close to the city and public transport.

As we’ve written before there is a pressing need for infill development to solve our housing shortage, including greater density in inner suburbs as well as Perth’s CBD.

Want more?

Are you looking to invest in Perth real estate, rent out your Perth property or find your next Perth rental home? We can help. Get in touch with our specialist Perth rental team today.

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